The governments decision to nullify retrospective taxation provisions has brought fresh lease of life to its strategic disinvestment plan with growing overseas investor interest in picking up management control of public sector undertakings put on the block for privatisation.
Government sources said that they have received enquiries from foreign multinational corporations about participation on its strategic disinvestment plan and the pace has increased post the Centre’s decision to amend retrospective taxation provisions in the Income tax Act, bringing about certainty on taxation regulations and improving country’s ranking several notches on ease of doing business index.
Accordingly, the strategic disinvestment proposals of companies Ferro Scrap Nigam Limited (FSNL), Rashtriya Ispat Nigam Ltd, Container Corporation, IDBI Bank Ltd., Neelanchal ispat Nigam ltd may get extensions if more time is required to bring larger number of overseas investor participation. Also, government is seeing increased interest of foreign investors in the proposed initial public offer of Life Insurance Corporation (LIC) that is like later this year.
“The government’s move (on scrapping retrospective taxation proposals) would also build confidence of foreign investors to attract new investments that are crucial for reviving economic growth,” said Vipul Jhaveri, Managing Partner-Tax, Deloitte India.
“This amendment (retrospective taxation) tainted India’s image as an investment destination. The new changes will not only end prolonged litigation in numerous cases but will also uplift India’s image internationally as a fair and equitable taxing nation, said Mukul Bagla, Chair, Direct Tax Committee, PHDCCI.
While the government has not yet made its stand clear on the pending cases of disinvestment where the process has reached financial bidding stage, sources said that a second thought on re-inviting investors even in these cases may be considered. This could help increase the participation of MNCs in disinvestment of containers such as Bharat Petroleum Corporation Ltd (BPCL), Air India, BEML, Shipping Corporation, Pawan Hans.
Disinvestment department Dipam’s views on this could not be ascertained but recently it’s secretary Tuhin Kanta Pandey has said that in all these enterprises, government has got sufficient interest from bidders, who are now at the second stage of due diligence.
Both portfolio investors and direct foreign investors have shown increased interest in running and investing in Indian companies up for privatisation.
The government had budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including 2 PSU banks and one insurance company, in 2021-22. It is hoping that larger overseas participation would help in completing strategic disinvestment of larger PSUs quickly.
So far, government has mobilised only Rs 8,368.56 crore as disinvestment proceed from minority equity sale in PSUs under the offer for sale route (OFS).
(Subhash Narayan can be contacted at firstname.lastname@example.org)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
For more information call us at 9891563359.
We are a group of best insurance advisors in Delhi. We are experts in LIC and have received number of awards.
If you are near Delhi or Rohini or Pitampura Contact Us Here