"India at the moment is perhaps the most attractive country for investment... Whenever anything like this happens, people make lot of noise," Lord Paul said when asked whether the controversy over the proposed amendment of the Income Tax Act from retrospective effect would affect investor confidence.
Paul told PTI the investment decisions are not made only by the taxation issues.
"People see the whole package. Is it a friendly country to invest? " he said, however, adding that it may have some impact in the short-run.
The government proposes to amend the Income Tax Act with retrospective effect. The move followed the Supreme Court ruling in favour of British telecom major Vodafone in the Rs 11,000 crore tax dispute arising out of its acquisition of 67 per cent stake in Hutch Essar from Hong Kong-based Hutchison Telecom.
Several global industry bodies have supported Vodafone and written to Prime Minister Manmohan Singh. During his recent visit to India, UK Chancellor for Exchequer George Osborne also raised the issue with Finance Minister Pranab Mukherjee.
Lord Paul, who is on a India visit, said Britain had also made similar changes. "The first time the retrospective tax case came up was in Britain...nobody (investor) holds money. This tax is not the only thing which affects...".