India confirms tax rule delay India's government has delayed the introduction of a series of controversial tax avoidance laws, the latest in a series measures intended to rebuild trust among foreign investors worried about the nation's faltering economy. Palaniappan Chidambaram, the finance minister, confirmed plans to postpone the introduction of the general anti-avoidance rules from April 2014 until April 2016, while also creating exemptions allowing many foreign investors to avoid them altogether. Even though the rules form an internationally recognised framework for cutting tax avoidance, India's plans to introduce the new rules were fiercely criticised when first announced in the government's last annual budget, in March 2012. Critics said the measures could lead to double taxation, potentially leading foreign investors to withdraw some of the more than $200bn they hold in Indian equity markets, according to the Asia Securities Industry & Financial Markets Association, a trade body. Speaking to reporters in New Delhi, Mr Chidambaram said: "I think these decisions have by and large addressed the concerns which were raised by investors. Most of the apprehensions have now been removed. The rules were part of a package of proposals which have badly dented investor confidence in both India's economic prospects and the competence of its government, at a time when Asia's third-largest economy badly needs foreign investment to fund its growing current account deficit. The government of Prime Minister Manmohan Singh has since responded by introducing a range of market-friendly reforms, including measures to liberalise foreign investment in the retail and airline sectors. Although economic growth remains subdued overall, dropping to 5.3 per cent in the last quarter of 2012, these measures have both boosted foreign investment flows and helped India's benchmark Sensex index of leading shares to jump 16 per cent over the past six months. Mr Chidambaram in particular has won enthusiastic reviews for his attempts to win over foreign groups worried about India's changeable investment climate, while also trying to curb the country's growing budget deficit in the lead-up to the next budget in March. "The government is now continuing to show that whatever it says it will do, it will actually do," says Andrew Holland, chief executive of investment advisory at Ambit, a Mumbai based brokerage and investment group. People are asking now if we could we see more reforms ahead of the budget, rather than just in the budget itself. The market is becoming super-bullish about what the finance minister might do next. Monday's announcement was broadly in line with recommendations from an independent review of the rules commissioned by the government, which released its recommendations in September. Mr Chidambaram also confirmed that the new rules would not apply to investments made before August 2010, relieving concerns that the rules could allow India's authorities to reopen historic tax claims. "This is a significant development, given it confirms the law will not apply retrospectively," says Dinesh Kanabar, head of KPMG India's tax practice. This should provide a further breather to the stock market, given that for an extra two years nothing will happen, and even then old transactions won't come into it.