MUMBAI, Feb 19 (Reuters) - Vodafone Group blamed theIndian government on Wednesday for the collapse of talks aimedat settling a $2 billion tax dispute relating to its acquisitionof Hutchison Whampoa's mobile business in the country.
India's finance ministry is preparing to seek the federalcabinet's approval to withdraw conciliation proceedings afterVodafone wanted a separate tax dispute to be made part of thetalks.
"Vodafone entered into discussions with the Indiangovernment in good faith and with a desire, as one of India'slargest international investors, to achieve a fair outcomeacceptable to both parties," Vodafone said following mediareports on the government's move to scrap the talks.
"Throughout, Vodafone has responded to the government'squeries in a timely manner, notwithstanding, at one point, asix-month delay by the Indian government in responding tocorrespondence sent by Vodafone," it said in statement.
Uncertainties over policy in India have unsettled investors,with tax claims on foreign companies a major concern. IBM, Royal Dutch Shell Plc and Nokia areamong foreign firms contesting local tax claims.
Vodafone, the world's second-biggest mobile operator bysubscribers, entered India in 2007 via the Hutchison Whampoadeal. It is contesting a tax bill of about 112 billion rupees($1.8 billion) relating to the acquisition.
The Indian Supreme Court ruled in 2012 that Vodafone was notliable to pay any tax over the transaction. But the governmentchanged the rules, allowing it to make retroactive tax claims oncompleted deals and drawing criticism from business groups.
The Indian cabinet gave the go-ahead for conciliation talkswith Vodafone last June. While formal talks are yet to begin,Vodafone and Indian government representatives had a series ofmeetings last year.
Vodafone had insisted that the conciliation talks include atransfer pricing dispute involving a unit offering call-centreservices to group companies.
The Indian government disagreed leading to its move to scrapthe talks.
A finance ministry spokesman did not have any immediatecomment on Vodafone's response.
Vodafone said in its statement it had made clear anyresolution to the tax dispute would need to include all aspectsof its acquisition of Hutchison assets and that New Delhi wasseeking to tax one event twice by claiming tax on transferpricing.