Foreign Direct Investment in India is mainly being brought by increased consumer confidence and positive sentiment around the world. India remains the third largest country in terms of direct FDI. The Indian government confirmed today that it won’t review its FDI policies for its banking sector. It had been widely expected to pronounce changes in the Indian banking sector. With this refusal to review its FDI, some entities such as HDFC have had to do with their foreign entity status. These banks had earlier requested a clarification of the issue. India continues to witness consistent economic performance regardless of the few after effects of its recession woes. The number of domestic and foreign investment has held steady with great performances both in the production and service industry; without forgetting the financial services sector.
There has been great ease in the Realty market with property acquisition on the rise. Major Real estate firms have even contemplated plans to float funds for acquisition of real estate developments. The venture capital and private equity markets have followed suit with the real estate companies adopting the money making mechanism of these financial sector businesses. Lots of investors have been encouraged to invest in this opportunity and reap returns over a time period. In the private equity market for instance, Dealmaking is fully back. The cost in residential property increased significantly marking a corresponding growth in the real estate sector. The National Housing Bank warned against firms that are providing teaser rates because of the risks they pose to the housing sector.
India special economic zones may have to wait longer as the Indian government considers providing tax benefits to investors in these zones. The government plans to abandon the income tax act and instead replace it with a direct tax regime that is yet to be finalized. Foreign direct investment in India in the sectors represented in the economic zones stand to benefit highly. Most likely, a favorable tax regime might be able to attract more new foreign investment opportunities. The direct taxes code, as it is called, will have deductions based on the investment for developers who invest in the special economic zones. This greatly differs from the Income Tax Act that deducts with regard to profit for investor companies or individuals in the SEZ. Investors have a liking for suitable tax policies and may just flock into the SEZ in droves should it go through.
6 May 2010