Mark Boleat,Policy Committee chairman,City of London Corporation,the municipal authority for the financial district,says key reforms,if passed,will send out a clear signal to foreign investors that the Indian government is prepared to take action at a time when its economy is slowing. Excerpts from an interview:
How do you view the Indian Budget through the eyes of a foreign investor?
This years Budget proposals have some welcome news for foreign investors. Chidambarams proposed Standing Council of Experts should provide a measure of reassurance in the long-term that the government takes Indias international competitiveness seriously.
The Budget is silent on
the retrospective taxation issue…
Clarity on retrospective taxation is vital for Indias growth programme and for the confidence of foreign investors. If India wants to remain globally attractive and return to near double-digit growth,the long-term investment climate needs to be right for business.
There were expectations among foreign investors that withholding tax on debt instruments for FIIs would be reduced,but it didnt happen. Whats your suggestion on this count?
FIIs play an important role in the Indian capital markets,and measures which simplify foreign investments are key to reviving growth in Indias economy. We had hoped to see progress on reducing the withholding tax on debt instruments for FIIs to 5 per cent,and we hope that this reform will not be delayed.
Whats your take on reforms?
Chidambarams commitment to introduce the Insurance and Pension Bills to Parliament is important,but the key indicator that the reform process is back on track will be the passing of the Bills. The reforms,if passed,will send out a clear signal to foreign investors that the Indian government is prepared to take action at a time when its economy is slowing.
Is the overall economic climate conducive for more foreign fund inflows?
Our companies want to do more business in India… But there are a number of pending reforms which will help to make India a more attractive. Sectors such as banking and insurance await the passage of Bills. Others,including stamp duty and a goods and services tax,can help to standardise Indias business environment.