Major Policy Announcements – Budget 2019

Foreign Direct Investments (FDI)

• Roadmap for Airline and International Financial Services Centre (IFSC)
  • As a measure to make the airline industry self-reliant, creating aircraft leasing business, creating jobs in the aviation finance and tapping the underlying potential in the International Financial Services Centre (IFSC), the Government intends to devise a regulatory roadmap to make India a hub for such activities.
• Investment by FII/FPI in Debt Securities
  • The Government proposes to permit investments made by FIIs/FPIs in debt securities issued by Infrastructure Debt Fund – Non-Bank Finance Companies (IDF-NBFCs) to be transferred/sold to any domestic investor within the specified lock-in period.
• Rationalization of KYC Norms for FPI
  • The Government intends to harmonize the existing Know Your Customer (KYC) norms and provide a hassle free investment experience for Foreign Portfolio Investors. The proposals are to rationalize and streamline norms for FPIs to make it more investor friendly without compromising the integrity of cross-border capital flows.
• FDI in Insurance and Single brand retail
  • 100% FDI in Insurance Intermediaries shall be permitted
  • Local sourcing norms for FDI in Single Brand Retail sector will be eased.
• Annual Global Investors Meet
  • The Government is contemplating to organize in India, using National Infrastructure Investment Fund (NIIF) as the anchor, to get all three sets of global players-top industrialists/corporate honchos, top pension/insurance/sovereign wealth funds and top digital technology/venture funds to mobilize global savings, mostly institutionalized in pension, insurance and sovereign wealth funds.
• Statutory limit for FPI to be raised, permit to subscribe debt securities issued by ReITs and InvITs
  • The Government proposes to increase the statutory limit for FPI investment in a company from 24% to sectoral foreign investment limit with option given to the concerned corporate to limit it to a lower threshold.
  • FPIs will be permitted to subscribe to listed debt securities issued by ReITs and InvITs.
• NRI-Portfolio Investment Scheme Route to be merged with Foreign Portfolio Investment Route
  • With a view to provide NRIs with seamless access to Indian equities the NRI-Portfolio Investment Scheme Route to be merged with Foreign Portfolio Investment Route.
• Foreign shareholding limit to be raised in PSU units
  • The Government shall take necessary steps to meet public shareholding norms of 25% for all listed PSUs and raise the foreign shareholding limits to maximum permissible sector limits for all PSU companies.

Start-ups

The Government has vision to attain a US$ 5 trillion economy in the next few years for which start-ups have been considered as an area of prime focus. It is proposed to take following initiates to promote start-ups:

1. To start a television programme within the DD bouquet of channels exclusively for start-ups. This shall serve as a platform for promoting start-ups, discussing issues affecting their growth, matchmaking with venture capitalists and for funding and tax planning.
2. The start-ups and their investors who file requisite declarations and provide information in their returns will not be subjected to any kind of scrutiny from Income Tax Department in respect of valuations of share premiums received on issuing equity shares. Further, in order to save time on compliances, the issue of establishing identity of the investor and source of his funds will be resolved by putting in place a mechanism of e-verification.
3. Special administrative arrangements shall be made by Central Board of Direct Taxes (CBDT) for pending assessments of start-ups and redressal of their grievances. It will be ensured that no inquiry or verification in such cases can be carried out by the Assessing Officer without obtaining approval of his supervisory officer
4. Start-ups will not be required to justify fair market value of their shares issued to even Category-II Alternative Investment Funds
5. It is proposed to relax some of the conditions for carry forward and set off of losses. It is also proposed to extend the period of exemption of capital gains arising from sale of residential house for investment in start-ups up to 31.3.2021.

Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India

The government has also laid emphasis on Automotive sector. The following key proposals have been made:

1. Phase II of Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) scheme to commence from 1st April, 2019. The cabinet has approved an outlay of 10,000 crores for a period of 3 years commencing from 1st April, 2019.
2. Deduction up to INR 1.5 lacs introduced for interest paid on loan taken to purchase an electric vehicle
3. Scheme to be announced for incentivizing the setup of mega manufacturing plants for lithium batteries and solar PV cells etc., to make India the global hub for manufacturing electric vehicle
4. It is suggested to GST council to reduce GST from 12% to 5% for electric vehicle
5. It is suggested to GST council to reduce GST from 12% to 5% for electric vehicle
6. It is proposed to exempt custom duty of certain electric vehicle parts.