The Budget 2019-20 has proposed to attract foreign investments in hi-tech industries by providing tax incentives to take advantage of the opportunities emerging out of the US-China trade war and promised further open up sectors like aviation, insurance and media to foreign direct investment.
Presenting her maiden Budget, finance minister Nirmala Sitharaman said: “I propose to further consolidate the gains in order to make India a more attractive FDI destination: a) The Government will examine suggestions of further opening up of FDI in aviation, media (animation, AVGC) and insurance sectors in consultation with all stakeholders. b)100% Foreign Direct Investment (FDI) will be permitted for insurance intermediaries. c) Local sourcing norms will be eased for FDI in Single Brand Retail sector."
Seeking to take advantage of the US-China trade war where a lot of multinational technology companies are looking to shift their manufacturing hubs from China, the Budget proposed to launch a scheme to invite global companies through a transparent competitive bidding to set up mega-manufacturing plants in sunrise and advanced technology sectors and provide them investment linked income tax exemptions and other indirect tax benefits. These include Semi-conductor Fabrication (FAB), Solar Photo Voltaic cells, Lithium storage batteries, Solar electric charging infrastructure, Computer Servers, Laptops, etc.
Sitharaman proposed to increase the statutory limit for FPI investment in a company from 24% to sectoral foreign investment limit with option given to the concerned corporates to limit it to a lower threshold. “FPIs will be permitted to subscribe to listed debt securities issued by ReITs and InvITs," she said.
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