The percentage of foreign holding in an activity was not a relevant issue provided the activity per se was considered good for the growth of the economy. However, the govt of the day has used it to increase its power of discretion by advancing convoluted arguments, from time to time and fixed varying percentages for different activities. For instance, what was the harm in allowing 100 percent FDI in defence production if it helped to stop import of those very items from their overseas factories? Likewise, if large malls/supermarkets were allowed to function in the country, how did it matter if few of them were wholly owned by foreign brands? One the one hand the govt woos FDI for investment in the country, while at the same time placing various restrictions on the percentage of ownership. If they were operating according to the laws of the land and paying due taxes where was the need to limit the percentage of holding? While the FDI was taxed on profits as well as on capital gains, on some specious reasoning, the FIIs paid no tax on long term capital gains. This was totally unjustified and helped to round-tripping of black money stashed away from the country. In the instant case the limit related to FII holding in the HDFC bank and not in FDI. The govt should put an end to futile debate on the percentage of holding. whether in FII or FDI, and tax all evenly.
Posted on: Sat, 15 Nov 2014 01:19:02 +0000
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