Sunday, February 19 2006 12:08 Hrs (IST) - World Time -

New Delhi: Unfazed by reports that the proposed Double Taxation Avoidance Agreement (DTAA) with India could be threatened because of the Mittal takeover row, 'DTAA should not be 'victim' Luxembourg has said the mutually-beneficial treaty should not fall 'victim' to the controversy involving a business deal.

Luxembourg Ambassador Paul Steinmetz said the second round of talks to finalise the agreement was slated to be held 'very soon' and the Indian government had not conveyed anything officially regarding cancellation of the meeting.

"We have not been informed by the Finance Minister (P Chidambaram), with whom we are engaged in the dialogue, or the Prime Minister (Manmohan Singh) about scrapping of the proposed agreement," Steinmetz told sources here in an interview parts of which were issued two days back.

"Why should it become a victim of the Mittal deal? It should not be as it is as beneficial for India as it is for us," he said.

He went on to add that if Mittal succeeded in taking over Arcelor and established his headquarters in Luxembourg as he has announced, he may require the treaty more.

Steinmetz was responding to a question about reports that the Indian government would not sign the DTAA with Luxembourg as it was opposing bid by NRI business tycoon L N Mittal to take over Luxembourg-based steel major Arcelor.

The threat had reportedly been issued by the Commerce Ministry.

The Netherlands-based Mittal Steel has made a 22.3 billion dollar bid for Arcelor, which would create a steel company with an output three times bigger than its three nearest rivals combined.

The bid has sparked objections from the governments of Luxembourg, France and Spain and from labour unions, who are worried about job losses even though Mittal has assured that no worker would lose jobs and cited all his operations in various countries had not resulted in retrenchment.

The Luxembourg envoy made it clear that the Commerce Ministry was not involved in the talks and so he would not take note of what Nath had stated.

"As far as I know, this has not been cancelled. We have not been told anything about it by the Finance Minister," he said, adding "As long as don't hear from the Finance Minister or the Prime Minister, we will believe it is on."

Steinmetz said the two sides have held one round of talks and the next was scheduled to be held 'between Spring and Summer.'

He said the dates had not been finalised yet for the meeting as the two sides did not get time to talk about it.

"But finalisation of dates has not been affected by the Mittal controversy which has surfaced just now," he said.

The Ambassador said things could be easier for Mittal if he chose to go for merger with Arcelor rather than taking it over.

"The Luxembourg government will listen to him if he talks about merger," he said, noting that Arcelor already was a company set up through merger.