Reforms and stake sales in state-owned companies will continue even as India refines rules and procedures to make life easier for companies and strives to achieve self-sufficiency, Finance Minister Nirmala Sitharaman told business leaders on Monday.
The government’s program to sell stakes in state-owned companies will accelerate in the coming days, the minister told a virtual conference organized by the industrial chamber Confederation of Indian Industry (CII) on multinational companies operating in India.
“The momentum of reforms will continue. Several more active steps related to reform are taken. The financial sector is professionalized. The divestment agenda continues. We will go with greater impetus to make the privatization, which has been approved by the cabinet, go ahead, “said Sitharaman.
India has established a ₹Divestment target of 2.1 trillion for this fiscal year, but so far it has exceeded ₹6,100 crore due to covid. On Monday, the Finance Ministry launched a tender to hire a consultant for a year to help with divestments.
Amitabh Kant, executive director of the federal policy think tank NITI Aayog, said at the conference earlier in the day that the government has identified several assets for monetization that will provide a strong investment opportunity to long-term investors. “We have identified various assets for monetization, including pipelines, gas grids, power lines, ports, airports, and non-central power supplies,” Kant said.
Sitharaman said sovereign wealth funds (SWF) are showing interest in participating in the development of infrastructure in India. He said National Investment and Infrastructure Fund Ltd, a government-anchored investment platform, has engaged with sovereign wealth funds to help them take advantage of tax concessions for their infrastructure investments. “Sovereign wealth funds want to link up with the national infrastructure pipeline that we have announced. Last month, two new sovereign wealth funds asked if they can also benefit. “India has already granted income tax exemption to UAE sovereign wealth fund MIC Redwood 1 RSC Ltd investments in infrastructure and other priority sectors.
Modi’s management offered a tax incentive for sovereign wealth funds in the 2020 Finance Act, which made the income earned by these investors here eligible for a deduction when calculating taxable income.
The tax incentive applies to income earned as dividends, interest, or long-term capital gains in a company that conducts the infrastructure development business. To be eligible for the tax exemption, the investment must be made before March 31, 2024 and must be held for at least three years.
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