FinanceAsia Print Edition

Issue: July/August 2014

Issue: July/August 2014

The new Narendra Modi-led government has introduced a slew of proposals aimed at boosting capital markets activity and attracting foreign investment.

To create a more investor friendly environment, the government has curbed the use of retrospective taxation, a move aimed at allaying concerns among investors raised by Vodafone's long-standing tax dispute with the government.

In addition, the Indian government has raised the foreign direct investment limit on insurance and defence companies from 26% to 49% – which opens the door for foreign companies to raise their stakes.

On the bonds side, the Indian government has proposed lowering the withholding tax on foreign currency bond issuance from 20% to 5%. In the past, only infrastructure companies were allowed to tap the bond market at a tax rate of 5% but that has now been extended to all borrowers. Companies can tap the markets at a 5% tax rate up till July 1 2017 and the lowered tax rate will take effect from October 1 this year.

Companies with refinancing needs, such as Tata Steel, are expected to benefit from this change. The steel maker is eyeing the US dollar bond market as part of a giant refinancing package and deciding between the Reg S and Reg S 144a market, according to one source familiar with the matter.

Lending to the beleaguered infrastructure sector also got a leg up as the government has allowed banks to raise long-term debt that is exempt from statutory liquidity requirements and cash reserve requirements -- which typically ties up about a quarter of the funding raised.

The government has also proposed tax incentives for real estate investment trusts (Reit), though the actual details will have to be hammered out before India can see its first Reit listing. Indian regulator Sebi had released draft guidelines for Reits last year but the government's proposal is another step towards opening up the market to Indian real estate and infrastructure companies that now typically head to Singapore, which has an established Reit market, to list.

 

 

About FinanceAsia Print Edition

Established in 1996, FinanceAsia is the leading publisher of financial news in the Asia-Pacific region. Our combination of print and online products provide the latest news, analysis and insight into Asia’s financial markets.

Published monthly from our office in Hong Kong, FinanceAsia magazine provides our readers with the latest financial trends, interviews, features and investigative reports. The publication has a readership of key decision-makers at corporations, governments, investment and commercial banks, institutional investors, asset managers, brokers, traders and financial intermediaries.

Our regular sections include:

Data Story
We look at the key data behind a topical theme in Asian finance, showcased with an array of graphs and tables.

Greenshoe
A monthly opinion column from the FinanceAsia editorial team. We provide our thoughts on a topic making the headlines.

Deal of the Month
Our regular two-page spread with its signature artwork and in-depth analysis examines the equity, debt or M&A deal that we feel has had the biggest impact on the Asian capital markets that month.

Investor Dialogue
For company CEOs and CFOs, what investors think is a critical concern, and in this column we help them understand just this. Each month we speak to a Chief Investment Officer of a top fund and outline their views on corporate governance, what stocks they like and where they expect to generate the best returns.

Soapbox
A monthly opinion piece from a respected author or commentator on Asian business, finance or economics.

People on the Move
Here we summarise the key hires, fires and moves at the region’s banks, highlighting at least one major move each month.

Deal Tracker
We examine the major primary markets deals of the month and comment on the quality of the debt or equity transaction and the secondary market performance.

The Arts of Finance
A light-hearted look at investment opportunities surrounding the arts business in Asia.