GAMMON INDIA LIMITED

Indian stock exchanges and other regulatory bodies that, in some cases, have had a negative effect on
market sentiment. Similar problems could occur in the future and, if they do, they could harm the market
price and liquidity of the Equity Shares.
Economic developments and volatility in securities markets in other countries may cause the price of our
equity shares to decline.
The Indian economy and its securities markets are influenced by economic developments and volatility in
securities markets in other countries. Investors‘ reactions to developments in one country may have adverse
effects on the market price of securities of companies located in other countries, including India. For
instance, the economic downturn globally has adversely affected market prices in the world‘s securities
markets, including the Indian securities markets. Negative economic developments, such as rising fiscal or
trade deficits, or a default on sovereign debt, in other emerging market countries may affect investor
confidence and cause increased volatility in Indian securities markets and indirectly affect the Indian
economy in general.
Currency exchange rate fluctuations may affect the value of our equity shares.
The exchange rate between the Indian Rupee and the U.S. Dollar has changed substantially in recent years
and may fluctuate substantially in the future. Fluctuations in the exchange rate between the U.S. Dollar and
the Indian Rupee may affect the value of your investment in the Equity Shares. Specifically, if there is a
change in relative value of the Indian Rupee to the U.S. Dollar, each of the following values will also be
affected:
the U.S. Dollar equivalent of the Indian Rupee trading price of our equity shares in India;
the U.S. Dollar equivalent of the proceeds that you would receive upon the sale in India of any of
our equity shares; and
the U.S. Dollar equivalent of cash dividends, if any, on our equity shares, which will be paid only
in Indian Rupees.
You may be unable to convert Indian Rupee proceeds into foreign currencies or the rate at which any such
conversion could occur could fluctuate. In addition, our market valuation could be seriously harmed by the
devaluation of the Indian Rupee, if non-India investors analyze our value based on the foreign currency
equivalent of our financial condition and results of operations.
You may be liable for capital gains tax.
Under current Indian tax laws and regulations, capital gains arising from the sale of shares in an Indian
company are generally taxable in India. Any gain realized on the sale of listed equity shares on a stock
exchange held for more than 12 months will not be subject to capital gains tax in India if securities
transaction tax (―STT‖) has been paid on the transaction. STT will be levied on and collected by a domestic
stock exchange on which the Equity Shares are sold. Any gain realized on the sale of equity shares held for
more than 12 months to an Indian resident, which are sold other than on a recognized stock exchange and
on which no STT has been paid, will be subject to long-term capital gains tax in India. Further, any gain
realized on the sale of listed equity shares held for a period of 12 months or less will be subject to shortterm
capital gains tax in India. Capital gains arising from the sale of the Equity Shares will be exempt from
taxation in India in cases where the exemption from taxation in India is provided under a treaty between
India and the country of which the seller is resident. Generally, Indian tax treaties do not limit India‘s ability
to impose tax on capital gains. As a result, residents of other countries may be liable for tax in India as well
as in their own jurisdiction on a gain upon the sale of Equity Shares. See ―Taxation‖.
You may be subject to certain foreign exchange regulations of India.
Under the foreign exchange regulations currently in force in India, transfer of equity shares between nonresidents
and residents are freely permitted only if they comply with the pricing guidelines specified by the
RBI. If the Equity Shares sought to be transferred are not in compliance with such pricing guidelines then
the prior approval of the RBI shall be required. Additionally, shareholders who seek to convert the Rupee
proceeds from a sale of Equity Shares in India into foreign currency and repatriate that foreign currency
from India will have to comply with the guidelines issued in this regard. Further, prior to such repatriation
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