The government will not appeal a regional court ruling in favour of Vodafone Group Plc in a long-running tax dispute, the cabinet decided on Wednesday, in a move aimed at boosting investor confidence in Asia's third-largest economy.
Vodafone, the biggest foreign corporate investor in India, has been involved in a series of tax disputes since it entered the country seven years ago.
In one such case, India's tax office had accused a unit of the British group of under-pricing shares in a rights issue to its parent company and demanded tax of about 30 billion rupees ($489 million).
The Bombay High Court had in October ruled in favour of Vodafone, and later the attorney general had recommended the government to refrain from appealing that ruling at the Supreme Court.
"Investors' confidence has been shaken in the past because of the very fluctuating tax policy," telecommunications minister Ravi Shankar Prasad told a news conference after a cabinet meeting.
"The government, led by the Prime Minister Narendra Modi, wants to convey a clear message to investors world over that this is a government where the decisions will be fair, transparent and within the four corners of the law."