FIIs say bullish on India, seek tax changes

Foreign institutional investors (FIIs) are bullish on India but are seeking changes in some of the country’s tax laws on investments, finance secretary Ashok Chawla said on Wednesday.

Finance minister Pranab Mukherjee and his aides met top officials of foreign and domestic institutions and sought their opinion on how to improve the investment climate and attract more investment into India.

“The idea was to get their perception on the investment climate for India and the difficulties, procedural hurdles that they face,” Chawla told reporters after the meeting. “What came through was that FIIs are bullish on India. They raised some issues on taxation, especially STT (securities transaction tax) and capital gains tax.”

“We also discussed ways to strengthen secondary and bond markets,” he added.
Chawla said as regards FIIs concerns on taxation, especially the capital gains tax, “They should send their comment (on the direct tax code). That will be taken into consideration.”

The government has already put up for public debate the direct tax code, which proposes abolition of STT. The code also proposes rationalisation of capital gains tax, lowering of corporate tax rate and other reforms.

FIIs have invested $7.57 billion in Indian shares so far this year, compared with net sales of $11.97 billion in 2008.

Meanwhile, the government has decided to constitute a panel comprising officials from regulators to address the concerns of FIIs and suggest procedural simplification. “A group will be set up of the regulators and government agencies to address their (FIIs) issues,” Chawla told reporters.

With PTI inputs