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Foreign Portfolio Investors Suggests Tax Stability For Improved Investments

Tax stability must, to invest in the Indian market: FPIs to FM

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tax stability
Finance ministry called a meeting with FPIs and domestic institutional investors on Friday. Pixabay

The government gave a patient hearing to the suggestions coming from foreign portfolio investors (FPIs) on the new tax proposed in the Budget but is yet to take a call on either revoking or minimising the impact of the new surcharge that has already seen investors taking out over Rs 22,000 crore since July 5.

The finance ministry had called a meeting with FPIs and domestic institutional investors on Friday to hear their concerns about some of the recent changes in taxation for overseas investors. Representatives of the FPIs met the Finance Minister and secretaries in North Block.

Participants comprising all major foreign institutions investors were, however, left high and dry with finance ministry officials giving no comments on their suggestions but heard everyone on each point they raised.

There was speculation that the government might come with some decision on Friday itself as a confidence-building measure. Reports of tax withdrawal have already pushed up the Sensex by over 900 points in the two-day session.

In the meeting, FPIs sought tax stability from the Finance Minister to be able to invest and stay invested in India while seeking rollback of the tax surcharge on them.

tax stability
FPIs sought tax stability from the Finance Minister to be able to invest and stay invested in India. Pixabay

Nandita Parkar, President, AMRI (Association of Asset Management Roundtable of India) an association of FPIs, said “We talked about taxation, ease of doing business. We told them that India can attract 25-35 billion-dollar investment just in equity FPI flows and in order to do that to let that happen one of the conditions is a stable tax regime which is very important so that the tax does not act as a hurdle and tax needs to be predictable for investment. So that was a big issue which we discussed.”

She said quick fixes are needed for the revival of stock in India. “We made a presentation to the five secretaries and the finance minister. I feel our suggestions were listened to very very carefully.”

Asked if she hopes the government will roll back the FPI tax, she said: “I am just hoping”. She told IANS that if the FPI tax is allowed to continue it would do a lot of damage to the investments in India by the FPIs.

tax stability
The meeting comes in the wake of growing concerns among FPIs over the increased tax surcharge on trusts and association of persons. Pixabay

The FPI association chief also said “Apart from tax surcharge and LTCG issues, we also brought forth ease of investing in India. We told them there is a need for a stable tax regime for the next five years. The fear of prosecution is holding back investors,” Parker stressed.

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All participants said the government had no comment to make after the suggestions which they keenly heard but all the FPIs were unanimous in saying the fact that they were calling even after the Budget has been passed itself was a positive reaction from their side. But what happens next depends on the government.

The government had increased the tax surcharge on all the non-corporate entities which earn over Rs two crore in income annually. About 40 per cent of the FPIs would be impacted by this tax hike. (IANS)

Next Story

India to Set Up “Border Haats” with Myanmar

The Minister said, The success of the "Border Haats" running along the Bangladesh border in Meghalaya and Tripura has prompted us to go for similar 'haats'

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India, Border Haats, Myanmar
To carry out border trade with Myanmar, the location for the construction of 'Border Haat' has been identified in four places -- Hnahlan, Zote, Vaphai (Saikhumphai) and Sangau (Pangkhua) in southeastern Mizoram. Pixabay

The success of the “Border Haats” with Bangladesh has prompted other northeastern states of India to go for similar arrangements with Myanmar. At the instance of the Mizoram government, the Centre is likely to set up four “Border Haats” (market) along the border with Myanmar to boost local trade and livelihood of the people living there.

“To carry out border trade with Myanmar, the location for the construction of ‘Border Haat’ has been identified in four places — Hnahlan, Zote, Vaphai (Saikhumphai) and Sangau (Pangkhua) in southeastern Mizoram,” Mizoram Commerce and Industries Minister R. Lalthangliana told IANS.

The Minister said, “The success of the “Border Haats” running along the Bangladesh border in Meghalaya and Tripura has prompted us to go for similar ‘haats’ with Mynmar in Mizoram.”

Mizoram Commerce and Industries Department Director J. Hmingthanmawia said that the state government has sent the detailed proposals in this regard to the Ministry of External Affairs (MEA) for its approval.

India, Border Haats, Myanmar
The success of the “Border Haats” with Bangladesh has prompted other northeastern states of India to go for similar arrangements with Myanmar. Pixabay

“Once we get the green signal from the MEA, we would seek funds from the Union Industries and Commerce Ministry,” Hmingthanmawia told IANS. He said that officials of the Mizoram government and Myanmar have recently conducted a joint survey and identified the locations to set up the “Border Haats”.

Mizoram Chief Minister Zoramthanga in his Independence Day speech had said that the proposed “Border Haats” would become important trade points between India and Myanmar.

“Land Custom Station (LCS) at Zokhawthar, the lone trade route for Mizoram with South East Asian countries, is being proposed for upgradation. Construction of Trade Facilitation Centre at Tlabung has already been completed.”

“The Indian government has also proposed construction of an Integrated Check Post (ICP) at four places at the border in Mizoram — Marpara, Tuipuibari, Silsuri and Nunsury. The construction of ICP at Kawrpuichhuah is also expected to commence shortly,” the Chief Minister added.

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Mizoram has an unfenced international border of 404 km with Myanmar and 318 km with Bangladesh. The Border Security Force (BSF) has been guarding the Bangladesh border and Assam Rifles personnel are posted on the border with Myanmar.

Experts and various studies suggest that if the “Border Haats” are set up, smuggling of drugs and other commodities would be checked to a large extent. Security expert Manas Paul said that large-scale smuggling of drugs from Myanmar via Mizoram and other neighbouring states has increased in the last few years.

“What is really worrisome is the fact that these synthetic drugs have got a domestic market inside the state, especially among the younger generation. Cross border legal activities including setting up of “Border Haats” could curb the smuggling of drugs and other contraband,” Paul, who has authored books on security and terrorism in the northeast, told IANS.

The CUTS International, a Jaipur based international NGO, with support from the World Bank, had conducted a study in 2016 to understand and examine the effect of “Border Haats” on poverty alleviation and other multiplier effects such as informal trade.

India, Border Haats, Myanmar
At the instance of the Mizoram government, the Centre is likely to set up four “Border Haats” (market) along the border with Myanmar to boost local trade and livelihood of the people living there. Pixabay

CUTS International Executive Director Bipul Chatterjee said that trade will increase income, curb smuggling, and cross-border crimes will also go down.

“‘Border Haats’ have contributed to the border area development, roads have improved, trafficking of women has stopped, unemployment issues have been addressed,” said Chatterjee.

Currently four “Border Haats” are operational in Meghalaya and Tripura. The first “Border Haat” was started on July 23, 2011 at Kalaichar (India)-Kurigram (Bangladesh) in the West Garo Hills of Meghalaya. Three other “haats” followed in Meghalaya and Tripura.

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The Union Industries and Commerce Ministry has been spending on an average Rs 3.5 crore to develop the infrastructure and necessary facilities for each “Border Haat” along the Bangladesh border. The Bangladesh government is not providing any funds for the purpose.  (IANS)