'There is no link between MFN withdrawal and Nestle'

Nestle India chairman and MD, Suresh Narayanan, in an interview with Fortune India, has clarified that the recent withdrawal of the most favoured nation (MFN) status to India by the Government of Switzerland would not in any way, impact the Swiss multinational's focus on the Indian market. "We planned to invest ₹7,500 crore between 2020-2025. There is no change as far as those plans are concerned, no change in the importance and focus of Nestle business in India, no change in our commitment to this country."

"This is a bilateral agreement between the Government of India and Switzerland, signed in 2010, giving the tax on dividend at 10%, and if India were to negotiate with an OECD (Organisation for Economic Co-operation and Development) country at a rate lower than 10%, that rate will be applicable for Switzerland. Lithuania came on board at a rate of 5% and became a member of OECD, which is when Nestle and the Government of Switzerland invoked the treatment of tax on dividend at 5%. It went through the High Court where it was upheld, it went through the Supreme Court, where it was struck down on the consequence that MFN in itself does not trigger a concessional tax rate, it has to be codified in the local tax laws. As a consequence of this, the Swiss Government, because of a very clear interpretation of the MFN by the Supreme Court, withdrew the most favoured nation status to India. We will continue to deduct 10% as tax on dividend unless there is any further change in tax laws," explains Narayanan.