Jun. 23 – India is considering lifting its foreign direct investment cap on the insurance sector from 26 percent to 49 percent according to Finance Minister Pranab Mukherjee.
“We have committed to allow 49 percent and the necessary legislation is pending before the House, as the leg process will be completed it will be done…in a year or so.” Pranab Mukherjee told NDTV during an Indo-U.S. CEO forum in Washington. Continue reading
May 18 – India’s Commerce and Industry Ministry has released a discussion paper that suggests increasing foreign direct investment in the defense sector from 26 percent to 74 percent to improve manufacturing and technology transfer in the country.
The response to the proposal has been varied, with some suggesting an increase of 49 percent instead to keep majority shares under Indian management. “We are for 49 percent FDI which will allow control of a company to remain in the hands of Indians,” Brigadier Khutub Hai, chief executive officer of Mahindra Defense Systems told The Economic Times. Continue reading
May 11- Authorities are said to be considering foreign direct investment in multi-brand retail if foreign retailers invest heavily on back-end infrastructure like warehousing and cold storage.
The Department of Industrial Policy and Promotion paper on FDI in retail may include a provision that requires global retailers to put a significant part of their investment in the back-end infrastructure, a source told The Economic Times. Continue reading
May 3 – Finance ministry officials called for reforms to India’s tax structure for services like shipping, aviation and telecom to make them competitive.
In a working paper titled, “Policy for India’s Services Sector,” finance ministry senior economic adviser H.A.C. Prasad and additional economic adviser R. Sathish said that the government should rationalize the tax structure in the shipping industry, which pays 12 direct and indirect taxes currently.
Taxes like corporate tax, minimum alternate tax, dividend distribution tax, withholding tax on interest paid to foreign lenders, wealth tax, VAT, lease tax and service tax raise the effective tax rate of around 2 percent under the tonnage regime to around 9 percent. Continue reading
Apr. 23 – Ford plans to expand production of the Figo compact car in its Chennai plant in response to strong consumer demand.
The American car company is planning to add 700 more people to its workforce. “We do need to ramp up production to cope with the increasing demand for Figo and so we are starting a second shift from the end of June at our Chennai plant. This will increase our production capacity of the small car by 30-40 percent,” Ford India President and Managing Director Michael Boneham said in a statement. Continue reading
Apr. 20 – India is considering negotiating tax treaties in nine territories to help curb tax avoidance.
The nine identified territories include: Cayman Islands; Bermuda; British Virgin Islands; Gibraltar, all British overseas territories; Guernsey; Isle of Man; Jersey, all British crown dependencies; Netherlands Antilles, an autonomous part of the Kingdom of Netherlands; and Macau, a Special Administrative Region of China. Continue reading
Apr. 12 – India is considering opening multi-brand retail to more foreign direct investment with the Department of Industrial Policy and Promotion (DIPP) in talks with the Finance and Agricultural Ministry on the issue.
“The move to open up retail sector is part of the government’s strategy to plug gaps in the existing food supply chain and more importantly, help bring down the difference between farm-gate prices and retail prices,” a high ranking top DIPP official told The Economic Times. Continue reading
Apr. 7 – As previously mentioned here and here, the Indian government has simplified some foreign direct investment policies that affect investment coming into the country. These are largely to be welcomed.
Here we highlight the items that are likely to affect the majority of foreign investors into India.
The general sectors now included in the 100 percent FDI automatic route are: Continue reading
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