Finance Minister Arun Jaitley increased the foreign direct investment limit in insurance and defence to 49% from the current 26% through the FIPB route
Presenting the first Budget of the Narendra Modi government, finance minister Arun Jaitley increased the foreign direct investment limit in insurance and defence to 49% from the current 26%.
"The insurance sector is investment starved. Several segments of insurance sector need expansion. The composite cap of the insurance sector is proposed to be increased to 49% from the current level of 26% with full management and control through the Foreign Investment Promotion Board (FIPB) route," he said while presenting the Budget for 2014-15.
The move would help insurance companies to get much needed capital from overseas partners.
The proposal to raise FDI cap has been pending since 2008 when the previous United Progressive Alliance (UPA) government came up with Insurance Laws (Amendment) Bill to hike foreign holding in insurance joint ventures to 49 % from the existing 26 %.
He said the government will take up the Bill soon.
On defence sector, Jaitley said the composite cap of foreign exchange is being raised to 49% with full Indian management and control through the FIPB route. Currently, the government permits 26% FDI in defence manufacturing.
"India today is a largest buyer of defence equipment in the world. Our domestic manufacturing capabilities are still at a nascent stage,” he said.
"We are buying a substantial part of our defence requirements directly from foreign players, companies controlled by foreign governments and foreign private parties are supplying our defence requirements to us at a considerable outflow of foreign exchange," he added.
Further, to encourage development of smart cities which will also provide habitation for the new middle class, the Finance Minister announced that the requirement of the built up area and capital conditions for FDI is being reduced from 50,000 sq m to 20,000 sq m and from $10 million to $5 million respectively with a three years post completion lock in.
Lok Sabha Speaker said the break was given since Arun Jaitley felt “slightly unwell” and was later allowed to resume the budget presentation, which he delivered from his seat
In an unusual situation, the presentation of the Union Budget for 2014-15 was halted in the Lok Sabha for five minutes after finance minister Arun Jaitley requested a break. This is probably for the first time that the Budget speech was broken.
Acceding to the minister’s request, Speaker Sumitra Mahajan gave a five-minute break as he seemed to be feeling exhausted after a 40-minute fast-paced speech.
When the House reassembled, the Speaker said the break was given since he felt “slightly unwell.” She then allowed him to resume the budget presentation, while being seated.
According to Lok Sabha sources, the 61-year-old Minister also felt back pain and was seen leaning on the lectern at one point in his speech.
Earlier, during his speech he was seen frequently drinking water.
Jaitley said all fresh cases arising out of the 2012 amendment of I-T Act will be looked into by a high level committee of CBDT
Assuring investors that retrospective amendments to tax laws will be undertaken with extreme caution, Finance Minister Arun Jaitley on Monday said all fresh cases arising out of the 2012 amendment of Income Tax (I-T) Act will be looked into by a high level committee of Central Board of Direct Taxes (CBDT).
However, the existing tax disputes arising out of Retrospective Amendment to the Income tax Act, 1961, which are pending in Courts, will be allowed to reach their logical conclusions, he said.
"The sovereign right of the government to undertake retrospective legislation in unquestionable. However, this power has to be exercised through extreme caution and judiciousness keeping in mind the impact of each such measure on the economy and the overall investment climate.
"This government will not ordinarily bring any change retrospectively which creates a fresh liability," Jaitley said while presenting the Budget for 2014-15.
He said consequent upon the retrospective amendment of the I-T Act, 1961, undertaken by Finance Bill of 2012, a few cases have come up in various courts and legal fora.
"These cases are at various stages of pendency and will naturally reach their logical conclusion," he said.
He said the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government is committed to providing a stable and predictable taxable regime which would be investor friendly and spur growth.
"...Henceforth all cases arising out of retrospective amendment of 2012 in respect of indirect transfer and coming to the notice of Assessing Officers will be scrutinised by a high level committee to constituted by the CBDT before any action is initiated in such cases," he added.