Budget 2019: What’s Looking Good For Investors?

Finance Minister Nirmala Sitharaman announced the Union Budget 2019 with considerable emphasis being laid on extending additional support to attract foreign investments. The budget proposed the idea of e-verification mechanism wherein the identity of an investor and the source of funds can be ascertained. The move will eliminate any scrutiny from the IT department. Let’s take a look into how the Budget 2019 looks for investors:

Encouraging Foreign Investments

The focus on investments in budget 2019 is sure to attract diverse investments from all quarters with the government relaxing existing norms and bringing in favourable initiatives to facilitate investors. Some of the key highlights include:
  • Government plans structural reforms to promote foreign and domestic investment.
  • FPIs to subscribe to listed debt papers of ReITs and InvITs.
  • Proposal to increase FPI investment in a company to sectoral foreign investment limit statutory limit to 24% for with an option of limiting the lower threshold by concerned corporates.
  • Allowing FPIs, FIIs to invest in debt papers of NBFCs.
  • Merging of non-resident portfolio schemes with foreign portfolio investment route.
  • 100% FDI will be allowed for insurance intermediaries.
  • Streamlining KYC norms for foreign portfolio investors.
  • Loosening restrictions for FDI in aviation, media, animation and insurance intermediaries
  • Hike in statutory limits for foreign investments in some companies
  • Favourable measures to boost International Financial Service Centres (IFSCs)

Favouring the NRIs 

The budget was instrumental in announcing beneficial policies for NRIs who can now make use of the opportunities to invest in India irrespective of the nationality. Some of the key highlights that stand out include:
  • Merging NRI portfolio route with FPI route to increase more NRI portfolio flows into the country.
  • Aadhaar card for NRIs with Indian passports to be issued post their arrival in India, without waiting for the mandatory 180 days.
  • NRI port for seamless access to Indian equities

Government holding in PSUs

Government stake in PSUs can dip below the current mandate of 51 per cent but will be reviewed on a case-to-case basis. To provide additional investment space, the Government would realign its holding in CPSEs, including Banks to permit greater availability of its shares and to improve the depth of its market. Apart from these, the budget proposal also included the prioritisation of continuation of disinvestment of public sector enterprises and monetisation of the land of public enterprises. Moving forward, trading in corporate bonds shall become user-friendly. Regarding the angel tax issue, the Finance Minister has made it clear that start-ups and investors who file requisite declarations will no more be subjected to any scrutiny in respect of valuation of share premium.