Visa Curbs, VAT Refund High On Agenda For Talks

12 Apr 2013

India wants Germany to ease restrictions in its visa regime to facilitate movement of professionals and refund value added tax (VAT) paid by Indian companies operating in the country.

Both the issues, in addition to a strong defence of India’s intellectual property regime, feature prominently in Commerce and Industry Minister Anand Sharma’s agenda for his meeting with Germany’s Minister of Economics and Technology Philipp Roesler and Finance Minister Wolfgang Schaeuble.

Sharma is part of the ministerial delegation accompanying Prime Minister Manmohan Singh on his Germany visit. “Germany follows one of the most restrictive visa regimes amongst the EU countries and the Indian Government is putting pressure on it for easing conditions,” a Commerce Department official said.

Qualifications such as high income requirements, work and language proficiency-related restrictions on spouses of professionals and restrictions in changing the status from short-term to long-term employment make things difficult for Indian companies.

Germany, as a part of its initiative to recruit highly qualified foreign workers, awarded 4000 ‘Blue Card’ work permits since August 2012, of which 983 were given to Indians. However, India feels this is not enough and there should be an overall easing of restrictions.

“Minister Sharma is likely to have made a strong pitch for removal of unnecessary visa restrictions in his meetings with the top German ministers,” the official, privy to the Minister’s agenda in Germany, said.

Another issue on top of the Minister’s programme is convincing Germany to refund VAT paid by Indian companies. Germany does not accept reciprocity on VAT refund on the ground that there is a substantial difference between the Indian sales tax and the German value added tax, which doesn’t allow credit of sales tax against VAT in Germany.

India, on its part, argues that Indian sales tax is not a VAT and that reciprocity condition is met because there is no discrimination between German companies in India under sales tax systems, and all MNCs are treated alike.

Since the US, which also has a sales tax system similar to India, is given VAT refund, so should India.

Sharma, who strongly defended India’s intellectual property regime in his interaction with the industry in Geneva early this week, stating that it was compliant with international norms, adopted the same pitch in his meetings in Germany.

“More than 50 compulsory licences have been issued worldwide and the recent one given to Natco for a German pharma company’s anti-cancer drug Nexavar is just the first one given by India,” the official said.

Source: http://www.thehindubusinessline.com/news/international/germany-voices-support-for-fta-between-india-and-eu/article4605652.ece