Jan 11, 2017 09:13 PM IST IST | Source: Moneycontrol.com

Budget 2017 may tweak AIF tax norms to attract inflows

Some of the proposals may draw upon the recommendations that a Securities and Exchange Board of India (Sebi) panel on Alternative Investment Funds(AIFs) headed by Infosys founder NR Narayana Murthy had made last year.

In Budget 2017, Finance Minister Arun Jaitley may propose to create a favourable environment for foreign direct investors (FDI), venture capitalists (VCs), private equity (PE) firms and angel investors as part of the broad strategy to ease fund flow to start-ups and small businesses.

Some of the proposals may draw upon the recommendations that a Securities and Exchange Board of India (Sebi) panel on Alternative Investment Funds(AIFs) headed by Infosys founder NR Narayana Murthy had made last year.

The committee had recommended several changes in taxation policy for AIFs including tweaking of safe harbour norms.

Venture capital and private equity funds pump in billions of dollars into India's fledgling e-commerce industry driven by an optimism of a fast-expanding mobile Internet universe.

Alternate investment funds (AIFs), which include venture capital funds, private equity funds, debt funds, infrastructure funds and social venture funds among others have invested more than USD 103 billion in Indian companies between 2001 and 2015. These investments were made in over 3,100 companies across 12 major sectors, the Narayana Murthy-panel noted in its report.

Budget 2017 may also contain proposals to allow limited sale of beauty and personal care products in global giants' food retail outlets, as part of plans to ease rules for multinationals to open stores in the country.

The move, once implemented, will effectively open up India's lucrative USD 10 billion home and personal care (HPC) market for foreign deep-discount retailers, bringing them in direct competition with consumer goods companies such as Godrej, Dabur, Colgate-Palmolive and yoga guru Baba Ramdev-promoted Patanjali group.
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