Simplified FDI, reduced corporate tax rates will greatly enhance capital inflows: Deloitte India
New Delhi, Jul 24 (PTI) The budget announcements of simplifying the FDI and overseas investment regulations, along with reduced corporate tax rates, will greatly enhance capital inflows into the country, Deloitte India said on Wednesday.
Additionally, the abolition of the Angel tax in all forms is a positive step towards encouraging investment in startups, it said.
Rumki Majumdar, Economist at Deloitte India, said that India needs stable capital for investment, and foreign direct investment (FDI) can significantly boost private capex in greenfield and brownfield investments.
However, FDI flows have been declining globally, and India felt the impact of global liquidity tightening and uncertainties, she said.
"While measures have been announced to improve ease of doing business and reduce the fiscal deficit to boost investor confidence, simplified FDI and overseas investment regulations, along with reduced corporate tax rates, will greatly enhance capital inflows," Majumdar said.
On customs duty rationalisation, Saloni Roy, Partner at Deloitte India, said that changes are made to support domestic manufacturing, deepen local value addition and promote export competitiveness.
Changes in basic customs duty (BCD) rate have been announced for various sectors, including medical, mobiles, minerals, solar energy and telecommunications.
"To give further impetus to the phased manufacturing programme and the exponential growth in domestic production and export in the mobile industry, BCD is reduced on mobile phone, mobile PCBA (printed circuit board assembly) and mobile charger from 20 per cent to 15 per cent," Roy added.
She said that an increase in BCD rates will discourage the import of concerned items and give direct support to domestic manufacturing.
Siddhartha Tipnis, Partner & Technology Sector Leader, Deloitte India, said that rationalization of custom duties on mobile handsets, components and accessories is a welcome step as this is expected to drive greater handset affordability.
"Price sensitive customer segments, particularly in hinterland are expected to drive consumption and potentially accelerate the pace of 5G adoption," Tipnis said.
Anand Ramanathan, Partner and Consumer Products and Retail sector Leader, Deloitte India, said that the policy to set up e-commerce hubs will help the long tail of marketplace vendors which are largely MSMEs to take advantage of the opportunities of being part of a larger cluster giving them access to cheaper capital and export markets.
"It is an opportunity for India to increase its exports in various segments such as textiles, apparel, footwear, gems and jewellery which depend on skilled artisans, weavers who can now be trained and mobilized effectively," Ramanathan said.
Rajat Bose, Partner, Shardul Amarchand Mangaldas & Co, said that in Customs laws, the amendment of Section 28DA to accept different types of proof of origin is a forward thinking change for ease of doing business.
Winnie Shekhar, Partner, INDUSLAW, added that the pledge to simplify FDI and overseas investment rules is a critical step towards boosting India's global competitiveness.
"By streamlining regulations and promoting the use of the Indian Rupee for international transactions, we can attract more diverse investments and enhance economic resilience," Shekhar said.
Shashank Mishra, Partner, Shardul Amarchand Mangaldas & Co said that the reduction in duties for mobile phones and components seems to be aimed at increasing competition within the market, better affordability and consumer welfare.
On Plug and Play, Ashoo Gupta, Partner, Shardul Amarchand Mangaldas & Co added that This innovative reform, in collaboration with states and the private sector, can significantly boost industrial growth and city planning. PTI RR RR MR MR
