Simplified FDI, reduced corporate tax rates will greatly enhance capital inflows: Deloitte India

The Budget announcements of simplifying the FDI and overseas investment regulations, along with reduced corporate tax rates, will greatly enhance capital inflows into the country, Deloitte India said on Wednesday. Additionally, the abolition of the Angel tax in all forms is a positive step towards encouraging investment in startups, it said. Rumki Majumdar, Economist at Deloitte India, said that India needs stable capital for investment, and foreign direct investment (FDI) can significantly boost private capex in greenfield and brownfield investments.

However, FDI flows have been declining globally, and India felt the impact of global liquidity tightening and uncertainties, she said.

“While measures have been announced to improve ease of doing business and reduce the fiscal deficit to boost investor confidence, simplified FDI and overseas investment regulations, along with reduced corporate tax rates, will greatly enhance capital inflows,” Majumdar said.

On customs duty rationalisation, Saloni Roy, Partner at Deloitte India, said that changes are made to support domestic manufacturing, deepen local value addition and promote export competitiveness.

Changes in basic customs duty (BCD) rate have been announced for various sectors, including medical, mobiles, minerals, solar energy and telecommunications.
“To give further impetus to the phased manufacturing programme and the exponential growth in domestic production and export in the mobile industry, BCD is reduced on mobile phone, mobile PCBA (printed circuit board assembly) and mobile charger from 20 per cent to 15 per cent,” Roy added.

She said that an increase in BCD rates will discourage the import of concerned items and give direct support to domestic manufacturing.