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Nissan, the company which not only sells its car in India but also builds them within India is suing the Indian government over unpaid dues. It all started in 2008, when Nissan and its global alliance partner Renault had an agreement to set up a car plant in Chennai where the state government had promised to provide several incentives which included tax refunds too.
Nissan honoured its part of the agreement and complied with all the requirements of the government, but when it came to receiving the benefits there wasn’t any response from the government officials regarding the same till 2015.
Subsequently, Nissan took the legal recourse and sent a legal notice in July 2016 to Prime Minister Narendra Modi. In order to not raise a legal case against the Government, Nissan appointed an International arbitrator to settle the dispute between them.
There are plethora number of cases pending against India regarding non-payment dues but this case apart from the dues is also based on disputes related to taxation. It was solely based on the violations of the Comprehensive Economic Partnership agreement with Japan. This dispute not only demonstrates the violation of the agreements with Japan but also shows the challenges that various companies face in India.
The main reason for Nissan bringing up this legal notice was because of the losses incurred by them due to the non-payment by the State Government. According to the agreement between Nissan and Government, they were entitled to receive the incentives as it was clearly evident that Nissan and Renault had both invested and set up a plant. Nissan has not only claimed the unpaid incentives but also the damages incurred by them. It must be kept in mind that due to the insignificance on the part of the Government, it not only reduces the attraction of foreign investments but also decreases the creation of new jobs.
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