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Reforms and stake sales in state-run companies will continue even as India refines rules and procedures to make life easier for businesses and strives for self-sufficiency, finance minister Nirmala Sitharaman assured business leaders on Monday.

The government’s programme to sell stakes in state-run firms will accelerate in the coming days, the minister said at a virtual conference organized by industry chamber Confederation of Indian Industry (CII) on multinational firms operating in India.

“Momentum of reforms shall continue. Several more active reform-related steps are taken up. The financial sector is professionalized. Disinvestment agenda continues. We shall go with greater momentum in getting privatization—that which has been cleared by the cabinet—to go forward," Sitharaman said.

India has set a 2.1 trillion disinvestment target for this fiscal but has so far managed just above 6,100 crore due to covid. On Monday, the finance ministry invited bids for hiring a consultant for one year to assist with disinvestments.

Amitabh Kant, chief executive officer of federal policy think tank NITI Aayog, said at the conference earlier in the day that the government has identified several assets for monetization which will give robust investment opportunity to long-term investors. “We have identified several assets for monetization, including pipelines, gas grids, power lines, ports, airports and non-core PSUs," Kant said.

Sitharaman said sovereign wealth funds (SWFs) are showing interest in participating in India’s infrastructure development. She said the National Investment and Infrastructure Fund Ltd, an investment platform anchored by the government, has been engaging with SWFs to support them in availing tax concessions meant for their infrastructure investments. “SWFs want to tie up with the national infrastructure pipeline we have announced. In the past month, two new SWFs asked if they also can benefit." India has already granted income tax exemption to investments by UAE’s sovereign wealth fund MIC Redwood 1 RSC Ltd into infrastructure and other priority sectors.

The Modi administration offered tax incentive for SWFs in the Finance Act of 2020, making the income earned by these investors here eligible for a deduction while calculating taxable income.

The tax incentive applies to income earned as dividend, interest or long-term capital gains in a company carrying on the business of infrastructure development. In order to be eligible for the tax exemption, the investment needs to be made on or before 31 March 2024 and needs to be held for at least three years.


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