India, UK vow to fight tax evasion, up fin service synergy

New Delhi: India and the UK today pledged to combat cross border tax evasion, enhance cooperation in financial services and boost investments by encouraging Indian companies to raise funds through masala bonds.

Both sides have also agreed to explore the possibility of regulatory cooperation agreement between the Financial Conduct Authority (FCA) of the UK and the Reserve Bank of India in the April-June quarter of 2017.

Committing to free markets and free trade, India and the UK reaffirmed “non-discriminatory treatment” of foreign investors, said the joint statement issued after the 9th UK-India Economic and Financial Dialogue between UK Chancellor of the Exchequer Philip Hammond and Finance Minister Arun Jaitley.

“The UK and India share a common commitment to addressing cross-border tax evasion and avoidance and agree to collaborate in determining the status of wealth deposited in foreign financial accounts by nationals of both countries. We look forward to enhanced cooperation in this area,” it said.

Both countries agreed to work together to ensure effective implementation of the Financial Action Task Force’s (FATF) anti-money laundering and counter-terrorist financing standards globally.

The UK also ‘welcomed’ the plan of NHAI to issue masala bonds in London in the next few months and Ireda’s expected green bond issuance on the London Stock Exchange within six months.

Energy Efficiency Services Ltd (EESL) and the Indian Railway Finance Corporation (IRFC) are also preparing to issue masala bonds in London in coming months, the statement said.

Both the countries have also agreed to set up a forum comprising representatives from the RBI, Sebi, the Ministry of Finance and the Bank of England, among others, to share experiences and best practices on issuance of green and masala bonds.

The Ministerial India-UK Energy for Growth Dialogue on April 7 will identify further opportunities for the UK to engage in the India’s highly successful green finance sector, the statement added.

The two sides also recognised the importance of developing strong pension systems, agreeing that India and the UK can share experiences in this area.

Both highlighted the vital role of technology in improving provision of accessible, secure, high-quality financial services to increase financial inclusion and monitor and stem flows of black money.

They agreed to deepen bilateral collaboration on financial technology and explore the possibility of a regulatory cooperation agreement between the FCA and the RBI in the second quarter of 2017, which will enable the regulators to share information about innovations in their respective markets.

The feasibility of a UK-India FinTech Bridge will also be explored, it said, adding that next round of economic and financial dialogue will be held in London in 2018.

The two countries also welcomed the recent launch of a Fast Track investment promotion mechanism, which provides a single window to help UK companies while establishing and expanding their business in India.

They also committed to taking forward measures to improve regulatory environment in India. Reforms, including the GST and insolvency legislation, are significant steps towards improved business conditions in India.

“Both sides welcomed UK’s support to India in implementing these reforms, drawing upon the UK’s experience to share knowledge, best practices and build capacity in areas including regulation, insolvency and tax administration,” the statement read.