Rs 8K cr credit guarantee funds for MUDRA, Stand Up India

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The Union Cabinet on Wednesday approved the setting up of two credit guarantee funds to facilitate loans to micro and small entrepreneurs through MUDRA (Micro Units Development Refinance Agency) and the Stand Up India scheme. The corpus of credit guarantee fund for MUDRA will be Rs 3,000 crore and for Stand Up India Rs 5,000 crore. Finance minister Arun Jaitley said these schemes will improve funding to micro and small entrepreneurs and help boost economic activity.

 

Under MUDRA, the agency refinances loans up to Rs 10 lakh to micro and small units, and has so far disbursed loans worth Rs 72,000 crore to 1.73 crore beneficiaries. MUDRA was launched in April last year.

 

The Stand Up India scheme seeks to provide refinance window through Small Industries Development Bank of India (SIDBI) with an initial amount of Rs 10,000 crore.

 

The Stand Up India scheme is distinct as its objective is to help entrepreneurs from scheduled castes, scheduled tribes and women entrepreneurs.

 

Each branch of all banks, including private banks, will fund at least two entrepreneurs in the SC/ST category and one in women category, Jaitley said. The government aims to refinance loans of 2.5 lakh borrowers in 36 months under Stand Up India. The credit guarantee fee under both the funds will be paid by the banks and not passed on to the borrowers, banking secretary Anjuly Chib Duggal said.

 

She said the National Credit Guarantee Trustee Company Ltd (NCGTC) would be the trustee for both the credit guarantee funds of MUDRA as well as Stand Up India.

 

The Stand Up India scheme will handhold borrowers both at the pre-loan stage and during operations. “This would include increasing their familiarity with factoring services, registration with online platforms and e-market places as well as sessions on best practices and problem solving,” the government said in a statement. Under the scheme, the margin money would be up to 25 per cent, while remaining would be funded by the bank.

 

The credit guarantee fund for MUDRA is expected to guarantee more than Rs 1 lakh crore worth of loans to micro and small units in the first instance, the government said. It will help in reducing risk taken by banks and financial institutions in case of default under the scheme. The government will provide guarantee on portfolio basis to maximum extent of 50 per cent of the amount in default in portfolio.

 

The Cabinet also approved conversion of MUDRA Ltd, currently a non banking finance company, into a bank called MUDRA-SIDBI Bank, a wholly owned subsidiary of SIDBI.

Source: http://indianexpress.com/article/business/business-others/rs-8k-cr-credit-guarantee-funds-for-mudra-stand-up-india/

UAE earmarks key sectors like railways, housing, ports, roads for investments in India

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It is part of the $ 75 bn announced during Prime Minister’s August trip to the Gulf nation that marked a paradigm shift in bilateral strategic and economic partnership.

Oil-rich United Arab Emirates (UAE) has identified key sectors including railways, housing, ports, roads and renewable energy (mainly solar) for investments in India as part of the $75 billion announced during Prime Minister’s August trip to the Gulf nation that marked a paradigm shift in bilateral strategic and economic partnership.

UAE had announced to investment $75 billion for various sectors in India when Narendra Modi made a two-day trip to Abu Dhabi and Dubai last August — first by an Indian PM to the Gulf nation in three decades. Earlier this month, Finance Minister Arun Jaitley was in UAE to discuss this investment proposal among other issues and met senior officials of the Abu Dhabi Investment Authority (ADIA), one of the largest sovereign funds in the Gulf nation, officials from Abu Dhabi said.

ADIA would contribute to the $75-billion fund allotted for investments in India in sectors including railways, roads, housing, ports and renewable energy (solar initiatives) where the Modi government is seeking foreign direct investment to boost economy, officials from the Gulf state indicated. The Indian PM is likely to announce a solar mission at the Paris climate change summit.


However, UAE is pushing to begin the process of investments in near future by various ministries in keeping with Modi’s promise. “India is now a strategic partner for UAE and Abu Dhabi wants to invest in India’s growth and seeking expedition of the process on the ground,” a person familiar with the developments told ET.
With this goal in mind Jaitley met Sheikh Hamdan Bin Rashid Al Makhtoum, Minister of Finance, UAE, to discuss issues of mutual cooperation in the field of economic and trade development during his trip there. His visit follows that of UAE’s Foreign Minister to India within weeks of Modi’s trip to Abu Dhabi and this shows the seriousness of both nations which have now expanded their counter terror cooperation amid growing threat from IS and other terror groups in South Asia. Strengthening counter-terror cooperation also figured during Jaitley’s deliberations with UAE leadership.

The finance minister also invited large participation and investment in recently constituted National Investment and Infrastructure Fund (NIIF) by the Sovereign Wealth Funds and Pensions Funds of the UAE. He said the investment in NIIF will ensure good returns on investment as the government will invest these funds in infrastructure projects.

Source: http://economictimes.indiatimes.com/articleshow/49976782.cms

 

Income Tax dept lowers pitch on tax demands on multinationals

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The income tax department will withdraw from a few hundreds of tax cases with multinational corporations pending in tribunals by the end of this fiscal.

This marks a significant softening of approach given its high-pitched income reassessments for MNCs in recent years, mainly by contesting the pricing of their cross-border transactions.

Sources said the department, which has advance pricing arrangements (APAs) with 16 MNCs and aims to sign 150 such deals on the broad principles for future valuation of inter-country transactions for tax purposes, is willing to extend the conciliatory approach to transactions in the past four years too. Once the mutually agreed principles in an APA are applied to past transactions, the department would not pursue tax demands made earlier.

Wherever the department is the appellant in tribunals, it will withdraw the appeals. The move, part of the government’s efforts to reduce tax litigation and boost investor confidence, is set to benefit several large corporations including technology companies like Microsoft and IBM.

Tax tussles

* I-T department has resolved 45 double taxation disputes so far with the US bilaterally
* India and 16 MNCs have agreed on pricing of cross-border transactions under APA scheme, target 150 for the year
* APAs to allow agreements on pricing of transactions in the past years as well
* On this basis, tax department will withdraw from many disputes pending before tribunals

In the case of related-party cross-border transactions of MNCs alone, alleged tax dues has touched Rs 2.7 lakh crore. Earlier the government had decided not to appeal to the Supreme Court decisions of the Bombay High Court that held companies like Shell and Vodafone were not liable to tax on the alleged undervaluation of certain share transactions among group companies.

So far India has signed 16 APAs in the business of telecommunication, oil exploration, pharmaceuticals, finance, banking and software development and expects another 140 or so to be completed by the end of the fiscal. An APA is an agreement between the tax authority and companies on the principles of valuation of certain transactions, which will exempt the company from rigorous tax audits on cross-border deals.

Many of the tax demands raised on MNCs on cross-border transactions in the last few years have led to disputes. Scores of cases are pending with the Income Tax Appellate Tribunal. The government wants to stop these disputes from escalating to the higher judiciary. The number of cases in which the tax department has received favourable orders from tribunals are not very encouraging.

Finance minister Arun Jaitley has promised that all legacy tax disputes would soon be resolved through administrative or judicial means.

While an APA between a company and the tax department will resolve a dispute in India, the possibility of double taxation would be fully addressed only when the tax authority in the company’s home country too becomes party to such agreement. The US, which is home to many technology firms facing tax disputes in India, has recently started steps to implement such “bilateral APAs”.

Source: http://www.financialexpress.com/article/economy/income-tax-dept-lowers-pitch-on-tax-demands-on-multinationals/148358/