Budget offers opportunities
Foreign investors should be more comfortable with India which is to further liberalise the Foreign Direct Investment (FDI) policy following proposal to abolish Foreign Investment Promotion Board (FIPB), announced in Budget 2017-18, Abhijit Ghosh, India Desk Leader and Tax Market Leader at #Pricewaterhousecoopers (PwC) in Singapore, told fii-news.com.
“Hopefully this will aid in streamlining processes for making inward investments and reduce time and effort required to set up business operations in India,” said Ghosh.
Further the clarification pertaining to non-applicability of indirect transfer provisions to overseas investors who hold investments, directly or indirectly in Foreign Institutional Investors (FII) and Category I and Category II Foreign Portfolio Investors (FPI) and extending tax neutrality to conversion of preference shares into equity shares, should be warmly received by the international investor community.
Touching on potential projects, he highlighted massive spending presented in the budget in parliament on 1 February 2017.
As expected, significant budget of around Rs.3.96 trillion has been allocated for development and improvement of infrastructure covering rail, roads, shipping, aviation and power sectors.
Further, the Budget also proposed to put in place a mechanism to facilitate dispute resolution for infrastructure related construction contracts, Public Private Partnership (PPP) contracts and public utility contracts. “This should send a positive signal to the global investor community looking to invest in infrastructure opportunities in India,” stressed Ghosh.
The Budget has proposed a tax incentive to facilitate development of Amaravati, the new capital city of Andhra Pradesh. As per the proposal, all the land owners (individuals and undivided families) who have transferred their land for development of Amaravati city under the land pooling scheme, will be exempt from capital gains tax on gains arising as a result of such transfers.
“This should facilitate in peaceful acquisition of land for building Amaravati (and may apply for development of other potential smart cities). This in effect should give confidence to the international investors looking to bid to support government in its Smart Cities initiative,” said Ghosh.
He underlined the budget’s offers for FDI/foreign investors/portfolio investors.
The biggest relief provided by the Budget to Foreign Institutional Investors (FIIs) and Foreign Portfolio Investors (FPIs) is in form of clarification on non-applicability of Indian indirect transfer provisions to overseas investors who hold investments, directly or indirectly in such FIIs and Category I and Category II FPIs.
Further relaxation in the conditions pertaining to special tax regime for offshore funds, extension of lower withholding tax of five per cent in respect of interest pay-outs on Rupee denominated bonds issued outside India and extension of capital gains exemption to transfer of Rupee denominated bonds from non-residents to non-residents, will be warmly received by the FIIs/FPIs.
Ghosh sees opportunities in demonetization, announced by Prime Minister Narendra Modi on 8 November 2017.
“The recent demonetisation initiative coupled with the Budget’s thrust to go digital and embrace a more cashless ecosystem should lead to business opportunities for international Fintech and Ecommerce companies,” he said. fii-news.com
