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FPI: Nomura, Morgan Stanley, Citi, Fidelity may meet FM

By IANS | Updated: August 9, 2019 12:40 IST

Leading foreign investors, including Morgan Stanley, Nomura, Templeton, Fidelity, GIC (Singapore), CPDQ are likely to meet Finance Minister Nirmala Sitaraman, Finance Secretary Rajeev Kumar and DEA Secretary Atanu Chakraborty on Friday afternoon as the government reaches out to know their concerns over the surcharge on FPIs who are operating as trusts or association of persons (AoP) without being registered as companies.

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The FPIs are likely to raise issues such as the recently-introduced tax surcharge and seek either full rollback or suitably tweaked to keep them out of the higher tax net.

Sources indicated that the discussions would throw up other issues like restricted access to foreign investors in corporate bond markets and tighter know your client (KYC) norms.

These issues have also dented institutional investors liking for the Indian market.

However, surcharge on tax for FPIs is the biggest concern that has impacted FPI inflows into the maker since the budget announcement in July 5.

It is learnt that meeting would also be attended by Citi, Deutsche, Fidelity and Capital Group JP Morgan, Goldman Sachs, BoAML, UBS.

"The government is keen to get suggestions from foreign investors about the outflows in the past few weeks before taking any policy intervention steps. It may be pointed that the Budget for FY 20 which contains the surcharge on FPIs has already been passed by Parliament," said an official source.

However, ordinance route may also be explored if government decides to remove tax liability on FPIs. This would be required as the tax proposal is part Finance Bill 2019 and it needs to be amended and approved by Parliament if changes are to be made.

The meeting comes amid growing concerns among FPIs triggering outflows of over Rs 22,000 crore since July.

The government had increased the tax surcharge on all the non-corporate entities which earn over Rs 2 crore of income annually. About 40 per cent of the FPIS would be impacted by this tax .

( With inputs from IANS )

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