India

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New Delhi's proposed introduction of retrospective taxation of cross border flows and a General Anti-Avoidance Rule (GAAR) on investment from traditional tax havens is another blow for foreign investors, and highlights the cracks appearing between the judiciary and the legislature. While we would not be surprised to see these proposals eventually watered down, we believe that such policies would further dampen the country's already unattractive business environment. We have once again downgraded India's ratings to reflect the deteriorating risk profile.