Why has India appealed for the Cairn suit in the US to be dismissed, when it has anyways withdrawn retrospective tax?

Now these are two different things. Even though the retrospective taxation has been scrapped, India still has to contend with the legal cases that are already pending in various courts. That is why the Indian government has asked a US federal court to dismiss Cairn Energy’s suit to enforce the $1.2 billion arbitral award. Cairn had actually sought to recover this amount by selling assets of Air India, which it sees as a proxy for Indian government.

One of the conditions that Cairn has set for dropping of retrospective tax demand is that the aggrieved party must undertake to withdraw demands of any kind against the Indian government to be eligible for this benefit. However, as a measure of safety to avoid any legal complications, the government has sought protection under the US Foreign Sovereign Immunities, 1976, which is applicable to sovereign governments.