The world’s biggest operator in terms of revenue, Vodafone, looks to have lost its fight against the Mumbai High Court and now faces the reality of a $2bn tax bill.

The bill is based on capital gains tax resulting from Voda’s $11.7bn acquisition of a 67 per cent stake in Indian GSM carrier Hutchison-Essar in 2007.

The Big V naturally fought the claim, but it seems the Indian court has dismissed the challenge. Vodafone now plans to lodge an appeal with the country’s highest court, the Supreme Court, in a bid to have the ruling overturned.

Vodafone’s main defence is that the deal took place between two foreign companies, both based in the Cayman Islands, and as a result is not subject to Indian law.

The upshot of the case is that many other foreign investors may be thinking twice about moving into the Indian market.