Govt Panel to Push Reforms in Foreign Investment Norms

The government is looking to rationalise existing norms of
foreign portfolio and NRI investment, a move that is to have a major impact on
the flow of venture capital and private equity money into the country. A working
group of industry experts has been formed which includes members of both the
government as also the industry, to consider reforms.

Among the top issues in the agenda for the working group will
be to review the existing policy on foreign inflows (other than Foreign Direct
Investments) and ways to attract more foreign investment and reduce policy
hurdles while maintaining the “Know Your Customer” (KYC) requirements.

The group will also identify challenges in meeting the
financing needs of the Indian economy through foreign investment. It would look
at various forms of foreign investment including investment in listed and
unlisted equity, derivatives and debt, including the markets for government
bonds, corporate bonds and external commercial borrowings.

The group will also re-examine the rationale of taxation of
transactions through the STT and stamp duty. Although the government has in the
past refrained from scrapping STT, despite demands from capital market
participants, any change in the policy related to STT will have a major impact
on the stock markets.

(Source: Internet & Media Reports, dated 14.01.2010)