In what appears to be a bad PR for India and its Federal Government, the Japanese automaker Nissan has begun international arbitration against India to seek more than $770 million (Rs 5,000 crores) in a dispute over unpaid state incentives, reports Reuters.
The company is claiming Rs 2,900 crore in unpaid incentives, Rs 2,100 crore in damages, plus interest and other costs.
Nissan and its global alliance partner Renault set up a manufacturing plant in the southern state of Tamil Nadu back in 2008, and the agreement included promises of several incentives and tax refunds that were never fulfilled.
Nissan had sent a legal notice to Prime Minister Narendra Modi last year, and the notice mentions that repeated requests to state officials for the payment, due in 2015, were overlooked and even a plea by the company’s chairman, Carlos Ghosn, to Modi in March of last year seeking federal assistance did not yield any results.
The notice was followed by more than a dozen meetings between federal and state officials and Nissan executives. The federal officials, from several ministries, assured Nissan that the payment would be made, and it should not bring a legal case. But, in August, Nissan gave India an ultimatum to appoint an arbitrator, and the first arbitration hearing will be in mid-December.
The Prime Minister’s Office did not respond to an email seeking comment.
The case, brought against India for alleged violations of its Comprehensive Economic Partnership Agreement with Japan, is the latest in a string of international arbitration proceedings against the country by investors concerned about issues ranging from retrospective taxation to payments disputes.
There are over 20 cases pending against India, among the highest against any single nation.