Prime Minister Narendra Modi said abolition of the retrospective taxation provision on indirect transfers will strengthen trust between the government and industry. He asserted that reforms were a “matter of conviction” and not compulsion for his government.
The economy has picked up pace again and the bills recently passed by parliament will give further impetus to reforms, he said at the annual session of the Confederation of Indian Industry held virtually on Wednesday.
He said the government is ready to take big risks in the interest of the nation. He urged industry to similarly enhance its risk-taking appetite, assuring it of all support.
The PM said India has 60 unicorns as opposed to about three-four seven-eight years ago and 21 of these emerged in the last few months. There’s been a record response to Indian startups from investors, he said.
“Record FDI (foreign direct investment) is also coming into India today and new records are being made in FPI (foreign portfolio investment) too,” he said.
He said the people support products made in India, urging industry to frame its policy and strategy accordingly.
“We undid a mistake of the past by removing retrospective tax. It will increase trust between the government and the industry,” Modi said at the event, adding that it will boost investor confidence.
The government last week scrapped the retrospective application of the controversial 2012 provision to tax indirect transfers of Indian assets. It offered to refund taxes paid if companies with pending litigation withdrew claims.
The legislation moved by finance minister Nirmala Sitharaman has been approved by parliament.
“Tax policies used to induce despondency among the investors, but the same India can boast of the world’s most competitive corporate tax and faceless tax system,” PM Modi said. “Red-tapism of the past has been replaced by a significant rise in the ease of doing business.”
The Prime Minister said the government was ready to take risks in the national interest.
“We have taken bold decisions. Reforms continued even during pandemic. The government is doing reforms not out of compulsion but out of conviction,” Modi said, while referring to initiatives taken during the parliamentary session, including the Factoring Regulation Amendment Bill and the Deposit Insurance and Credit Guarantee Corporation Amendment Bill.
Previous governments could not muster the courage to take political risks, he said, while citing the example of GST that has led to record collections.
“Red-tapism of the past has been replaced by a significant rise in the ease of doing business index. As a result, India is getting record foreign direct investment and foreign portfolio investments,” he said, adding that forex reserves were also at an all -time high level.
Highlighting the rationalisation of labour laws and agricultural reforms, PM Modi said the recent reforms undertaken to promote ease of doing business were brought to fruition with industry support.
“India, which was apprehensive of foreign investment at one point of time, is welcoming investments of all types today. Similarly, India can now boast of the world’s most competitive corporate tax and faceless tax system,” he said.