Prime Minister Narendra Modi on Monday said that India understands the value of foreign direct investment (FDI), adding that his government will constantly work to improve the business environment in the country.
"We do believe that FDI is important and it will not come in the country without a globally competitive business environment. Therefore, in this year's budget we have rationalised a number of issues which were bothering you. In particular, we have removed lot of regressive taxation regimes. In our very first Budget, we said we will not resort to retrospective taxation. And if such issues do arise, they will have to be reviewed at the highest level," Prime Minister Modi said, at the joint inauguration of the Indo-German Business Summit in Hannover.
"We have taken bold steps of not dragging the litigation in a few cases where we felt that the steps of the previous government were not on right lines. In this budget, we allowed Tax pass through for AIFs, rationalization of capital gains of REITs, modification in PE norms and deferring the implementation of GAAR for two years. We are constantly working to improve the business environment further," he added.
Prime Minister Modi further spoke of the some of the measures that his government has brought into effect in order to improve the ease of conducting business in India.
"We are trying to introduce an element of transparency and predictability in taxation system.
We have fast tracked approvals in industry and infrastructure. This includes environmental clearances, extending the industrial licences, de-licensing of defence items, and simplification of cross-border trade. Within a very short time, we introduced GST Bill in Parliament," he said.
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"Such measures have helped in building up an enhanced investor confidence. The sentiments for private investment and inflow of foreign investments are positive. FDI inflows have gone up by 36 percent during April-2014 and January-2015 against the same period in previous year. Our growth rate is about seven percent-plus. Most of the international financial institutions including the World Bank, IMF, UNCTAD, OECD and others are predicting even faster growth and even better in the coming years. Moody's have recently upgraded the rating of India as "positive" on account of our concrete steps in various economic segments," he added.
The Prime Minister also said that his government wants to encourage innovation, pointing out that the recent budget for the financial year 2015-16 has set aside funds for the same.
"It is the effort of my government to encourage innovation, research and development and entrepreneurship in the country. In this year's budget, we have set up some innovative institutional mechanisms for that purpose," he said.
"Similarly, for infrastructure development, we have taken some far reaching steps. First of all we have made an all-time high allocation for Roads and railways sectors. In addition, we are setting up India Infrastructure Investment Fund. We have also allowed Tax free Bonds in the Infrastructure sector including roads and railways," he added.
Inviting German companies to invest in India, Prime Minister Modi said that he is confident that India will become a global manufacturing hub.
"I take this opportunity for inviting more and more German companies to India. I assure them all support from my side. Indo-German partnership should and will flourish. I expect very good outcome from this coming together. Let us work together in mutual interest and for welfare of the people of the two great countries. At the end, it is my advice to you to come and feel the change in India's regulatory environment," he said.
"Please do not go by old perceptions. The symbol of lion for make in India has been chosen very carefully. We know that our biggest need today is to create jobs for our 65 percent population which is young. Hence, 'Make in India' is the need. Hence, the lion because a lion cannot be stopped. We are confident that our journey to make India a global manufacturing hub cannot be stopped that too by our own rules and regulations. We must and we will make corrections wherever it is required," he added.
Prime Minister Modi, currently in Germany on the second leg of his three-nation tour, has vowed to remove unnecessary regulations and procedures to simplify the process of foreign investment in India, as well as to make it easier for other countries to initiate business deals.
He also attended a round table conference with German CEOs, with Voith CEO Dr.Hubert Lienhard and Bombardier Transportation CEO Lutz Bertling among those present at the meeting.
The Prime Minister arrived in Hannover after concluding his visit of France. He will depart for the final leg of his three-nation, nine-day tour on April 14, flying to Ottawa.