Modi’s government has offered hope to his people and investors that there is every intention to arrest the slowdown in India’s economic growth. The steps announced in the Budget and some policy initiatives have been listed. Investment was clearly the substratal theme in the Budget. The growth rate of the economy is inextricably linked with investment rate.
I’m listing down the initiatives which were informed to the House in the winter session. Although there are many more, this was put up on PIB as a press release by Planning Commission.
■ Make in India campaign launched for boosting industrial confidence and performance by facilitating investment, fostering innovation, enhancing skill development and protecting intellectual property.
■ The Government is also addressing the negative sentiments that arose among the international business community in the 2012-13 Budget by way of a retrospective amendment to tax indirect transfers. This year’s Budget announced that all fresh cases arising from the retrospective amendments in respect of indirect transfers will be scrutinized by a High Level Committee to be constituted by the Central Board of Direct Taxes.
■ In the present budget, a “roll back” provision in the APA scheme has been introduced so that an APA entered into for future transactions may also be applied to international transactions undertaken in the previous four years. This practice is followed in developed nations where APA programs exist. It is therefore a good move for India to converge with international best practices.
■ To align the transfer pricing regulations in India with the best available practices, the Budget proposed to introduce the range concept for the determination of arm’s length price.
■ The proposed move to treat income arising from transactions conducted by foreign portfolio investors (FPIs) as capital gains, rather than business income that attracts higher taxes, would help to remove long-standing uncertainties related to characterization of income, and encourage fund managers to consider setting up base in India.
■ FDI in Defence, Construction development sector and Insurance sectors.
■ Incentives for Real Estate Investment Trusts (REITS) – This is significant as it removes double taxation for REITs and allows investors to plan their taxes.
■ Setting up of a National Adaptation Fund to meet the vagaries of climate change.
■ Establishing a Price Stabilization Fund to mitigate the risk of price volatility in the agriculture produce.
■ Technology driven second green revolution with focus on higher productivity and including Protein revolution.
■ Setting up of Long Term Rural Credit Fund for providing refinance support to Cooperative Banks and Regional Rural Banks.
■ Setting up a National Industrial Corridor Authority and development of industrial corridors with emphasis on Smart Cities linked to transport connectivity.
■ Scheme for development of new airports in Tier I and Tier II Cities and increased investment in road sector.
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