India P-notes on hold over tax muddle

Asset managers who invest into India via P-notes have been warned they may face costs passed down by issuing dealers, despite recent assurances from finance minister Pranab Mukherjee. Many managers gain exposure to Indian equities through participatory notes, issued by financial institutional investors (FIIs), such as investment banks and brokerages incorporated in Mauritius, to mirror the performance of underlying securities. Under the Direct Tax Avoidance Agreement (DTAA) that…