The favourable verdict telecom giant Vodafone got in its UK arbitration case against the Indian government over its retrospective demand of Rs 22,000 crore in taxes has raised the hopes of Cairn Energy, which is also locked in a dispute with the revenue authorities over a tax demand.

The tax demand was made on Vodafone over its $11.7-billion takover of the Indian assets of Hutchison Whampoa in 2007.

Analysts said India’s stand in the Vodafone case would be keenly watched by international investors as they weigh options to shift from China. The merit of the two cases could be different, but the verdict going in favour of Vodafone could certainly have implications for Cairn Energy.

They said the Modi government could send a positive signal to investors by not going in an appeal against Vodafone judgment.

In 2014, former finance minister Arun Jaitley said the government will not go in for more retrospective taxation, a move taken by the previous UPA regime.

But, the Modi government never withdrew the cases against Vodafone, which has been a cause for concern of international investors.

“The government will consider all options and take a decision on further course of action including legal remedies before appropriate fora,” India’s finance ministry said in a statement.

“This is the opportune time to send the right signal…if they go on appeal, it would clearly send the message the Modi government is no different on the issue of retrospective tax as it is keen to pursue it,” the analysts said.

The UPA government had said that the Hutchison-Vodafone deal was liable for tax deduction at source under the Income Tax Act.

While the Supreme Court subsequently quashed the demand in January 2012, the government amended the IT act retrospectively in the Union budget, putting the liability back on Vodafone Group.