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India Budget 2008-09: Highlights

March 3, 2008

Analysis of:Budget Highlights (India) | www.thehindubusinessline.com

The Finance Minister of India, Mr. Palaniappan Chidambaram, presented the budget of the government of India for fiscal year 2008-09.  With the general election due in early 2009, the budget is understandably populist.  Its highlights include a massive debt waiver scheme for small farmers (which is not considered in the actual budgetary figures), reductions in personal income tax and excise duty on manufactured goods, and massive public expenditure. Tax holidays have been offered for setting up hospitals in smaller cities and rural areas.  This could be of interest to foreign investors, with India gaining a reputation as a major destination for healthcare services and patients from developed countries making medical tourism visits to India.  The condition that such hospitals must be in smaller cities or rural areas would be actually helpful, because of lower population density and greater availability of land in such places.

India: Foreign investment in insurance and retail sector, new possibilities

February 29, 2008

Analysis of: Survey favours liberalising FDI in insurance, retail | www.thehindubusinessline.com

In an important policy document released yesterday, the government of India has sounded the possibility of increasing the limit of foreign investments in insurance and the entry of foreign investment into the retail sector.  Foreign investment in insurance has been permitted in India for a few years now but subject to limits, and the present move is to increase the limits. Due to political opposition, there has been very little foreign investment in the retail sector, and policy now seems to be moving towards permitting foreign investment in specific categories of retail businesses. The changes which have been mooted for insurance would permit majority holding for the foreign investors in specified types of insurance businesses.  The recommendation with respect to investment in the retail sector contemplates full foreign ownership and control, but only in specified retail business such as foreign brands, luxury brands, consumer durables and semi-durables.

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