India is likely to sign an agreement on the Foreign Account Tax Compliance Act (FATCA) with the US during PM Narendra Modi?s visit to the country this week.

Under FATCA, the US Internal Revenue Service (IRS) requires foreign financial institutions to undertake due diligence and report to it or the tax administration of the host country, any accounts or investments held by a person or entity residing in the US. It is aimed to increase compliance by US taxpayers and is intended to bolster efforts to prevent tax evasion by the US taxpayers with offshore investments.

While FATCA has been in force since July 1 in most tax jurisdictions, it will be applicable to Indian financial institutions like banks, investment banks, fund houses and asset management companies, from next year once the proposed agreement between the two countries is signed.

India has sought reciprocity on the issue. Hence, the IRS will also have to inform the Indian Tax Department about Indian residents opening accounts or depositing money with American financial institutions.

Modi embarks to his much awaited U.S visit on September 26. In New York and then Washington, where he will meet U.S President Barack Obama, Modi will also interact with investors, CEOs of major American companies, other World Leaders at the United Nations, and of course the huge Indian diaspora.

?When the PM meets officials from the Obama administration and the business leaders, he will pitch India as a future manufacturing destination, in line with his ‘Make In India’ initiative,? a senior government official said, explaining the other items on Modi’s agenda. Modi will also exhort bigwigs from Wall Street and bluechip U.S companies like GE, Lockheed Martin and IBM, among others, to invest in India’s infrastructure and defence space, especially after the recent decisions to allow 26% foreign direct investment in defence and 100% FDI in railways. He will also pitch another pet initiative, developing a 100 smart cities.

This apart, Modi will discuss pending reforms in World Bank and IMF with the Obama Administration as well as representatives from the two Bretton Woods institutions.

As reported by FE earlier, exploration of unconventional resources such as shale gas in India would be one of the agendas for discussion. The US has emerged as the world?s leading producer of shale gas and energy-deficit India, which has taken steps towards mining such hydrocarbon, needs technology to drive exploration.