Reply: Some of the tax incentives to promote investment in manufacturing are as below:
Section 35AD of the Income Tax Act provides for investment linked deduction of 100% of the capital expenditure (other than on land, goodwill and financial instrument) incurred wholly and exclusively, for the purposes of the "specified business" during the previous year in which such expenditure is incurred. Under Sections 80 IB(4), 80 IC and 80 IE of the Act, incentives have been provided for industrial undertakings/enterprises in the State of Jammu and Kashmir, Himachal Pradesh, Uttrakhand and North Eastern States. For further details, the Income Tax Act may be viewed on www.incometaxindia.gov.in.
On indirect tax front, the applied tariff for goods (equipment, machinery, capital goods etc.) required for the initial setting up of large projects are at a concessional rate of 5%.
34. The report states that in the financial services sector there are limits on foreign ownership, and while there may be permit conditions, or specific market access issues, in some cases these conditions may be more restrictive than expressly imposed, such as a cap on investments. Could India explain what kind of restrictions on ownership and access to markets it maintains? (Page xiv, paragraph 25)
Reply: Foreign investment in India is governed by FDI policy and rules framed under Foreign Exchange Management Act, 1999. Extant regulations for foreign investment in financial services are as follows:
Foreign investment in private Banks is permitted up to 74% and for nationalized banks the limit is 20%. There are also guidelines for setting up of branches/subsidiaries of foreign banks.
Foreign investment up to 49% is permitted in credit information companies, stock exchanges, depositories and clearing corporations, commodity exchanges. Investment in these services needs prior approval of FIPB/RBI. FII may invest in these companies only through secondary market.
