Work cohesively to create India’s own equity capital: FM to India Inc
Govt exploring insurance bonds as alternative to bank guarantees
The government will extend all possible support to new-generation companies and start-ups to have them contribute to India’s future, Union Minister of Finance and Corporate Affairs Nirmala Sitharaman said on Tuesday. The Centre is also exploring the option of instituting insurance bonds as an alternative to bank guarantees to make it easier to do business in India.
Sitharaman, who is in the financial capital on a two-day tour, also emphasised the need for the government and the industry to work cohesively to ‘create India’s own equity capital’ and said the Centre was committed to working towards ensuring policy certainty.
Expressing the government’s keenness to facilitate trends and sectors that are the future of India’s economy, she acknowledged there were seminal changes happening in the financial sector, which the government policy should facilitate.
The economy, she said, is moving gradually from a bank-led lending model to a more market-driven one. Also once the Development Finance Institution is operational, it will perform the function of long-term lending, which traditionally was the preserve of banks, she said. Sitharaman added this would increase competition for banks and improve their efficiency.
Praising the risk-taking ability of start-ups, Sitharaman urged the industry to come forward and take risks and assured the industry captains of addressing issues related to competitiveness, including high power tariffs and ones related to cumbersome regulatory compliances.
Finance Secretary T V Somanathan said the Indian government trusts wealth creators.
On the issue of arbitration awards being typically appealed, Somanathan said a behavioural shift is required. On increasing the pace of vaccination, he said the government has been very aggressive in procurement, even relaxing the guidelines. The constraint was on the supply side, which is likely to be addressed once new vaccines become available.
Revenue Secretary Tarun Bajaj mentioned that the Department of Revenue was working on tax-related issues of start-ups and sought industry inputs on the same.
Earlier, T V Narendran, president, Confederation of Indian Industry, said for growth to strike root, sustained demand is critical, and the immediate source of demand has to be government expenditure. Welcoming the government’s push for capital expenditure (capex), Narendran recommended front-loading the committed capex, especially on infrastructure, and added that the revenue buoyancy seen in the first quarter has created fiscal room for this front-loading.
“It was a non-agenda meeting. They came to seek suggestions from industry leaders on the economy and how to take it forward,” said a chief executive officer of a top company.
“There were suggestions made on an array of topics, ranging from the ease of doing business, start-ups, special economic zones (SEZs), trade treaties, and infrastructure to creating a more robust private equity market,” he added.
The meeting was attended by top officials from various sectors.
“The minister also discussed how to help futurist industries, such as financial technology, and the kind of policies needed to help them,” he said.
Earlier in the day, the finance minister also held meetings with senior officers of the income-tax department and officers of Goods and Services Tax and Customs. Apart from the revenue secretary, Central Board of Direct Taxes Chairman J B Mohapatra and Central Board of Indirect Taxes and Customs chairman also attended the meetings.
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