India's politicians have given in to the concerns of the international investor community and deferred plans to introduce General Anti-Avoidance Rules (GAAR) by two years.

News of the delay of the GAAR came as the Indian finance minister P. Chidambaram presented the country's budget for 2013/14.

The GAAR had come under scathing criticism from multinationals that do business in India - among those caught recently by stringent tax rulings, including retrospective legislation, was Vodafone. In January the Indian dropped hints of a settlement with Vodafone following a £1.4bn tax spat .

In parliament on Thursday, Indian finance minister P. Chidambaram highlighted that the economy was expected to slow down to 8% as following the effects of the global financial crisis during his presentation of the budget. He also emphasised the need for investment and growth, and indicated his concern about the current account deficit as exports slow down.

Commenting on plans to delay the GAAR, Ameet Patel, a partner at SKP Group in India said that on an overall reading, it is clear the actions of the finance minister are 'not sufficient'.

'The finance minister has ignored the recommendations of the Shome Committee relating to grandfathering of investments and providing a suitable monetary threshold for the applicability of GAAR to keep small taxpayers out of the net. This is very surprising since just a few weeks back, he had assured investors that grandfathering of investments would be factored into the GAAR provisions.

'The steps taken by him in the direction of doing a rethink on GAAR only raised the expectations of foreign investors and tax professionals in the country. In that backdrop, it was hoped by many that the Budget 2013 would bring in many amendments which would be aimed at attracting foreign investment into India - something that India badly needs.,' said Patel.