The Hindu Business Line : `FIIs must invest in listed entities, comply with entry, exit rules'

THE Union Finance Minister, Mr P. Chidambaram, said foreign institutional investors were regulated investors and perforce have to be registered with the Securities and Exchange Board of India and strictly comply with the regulations pertaining to entry and exit.

It is possible to regulate this efficiently only if FIIs invested in listed entities, said Mr Chidambaram, addressing industry captains and industrialists at an interactive session organised by the Indian Chamber of Commerce here on Saturday.

Responding to a query by Mr Sanjiv Goenka, Vice-Chairman of the RPG group, on why FIIs were not allowed to invest in unlisted entities, the Finance Minister said, just because FIIs are not allowed to invest in listed entities, it does not mean they cannot bring in investments at all.

Investments can come in the form of a venture capital or a fund to help start-ups, he said.

Mr Chidamabaram, however, said the Government will look into the matter in greater depth. He clarified that the principal source of revenues for the Government was through taxation. Highlighting the crucial role of tax revenues vis-à-vis non-tax revenues, he lamented that only 83,000 persons in the country, as per the records of the Income-tax Department, declared an annual income of over Rs 10 lakh.

He said moderate tax rates will help raise higher revenues. Stating that the average fringe benefit tax (FBT) burden on all assessees worked out to only 1.1-1.5 per cent, Mr Chidambaram said he was not averse to taking a second look at the provision, but only in the next fiscal.

Addressing the infrastructure concerns expressed by the captains of industry, the Minister said ports were now doing much better, with a much higher throughput and turnaround of ships. The problem of port congestion, he said, can be tackled effectively only by setting up more ports.

We are now encouraging State Governments to build more ports, through a public-private partnerships, said Mr Chidambaram, citing the Vallarpadam project in Tamil Nadu and the three private ports coming up in Gujarat.

Referring to the greenfield airport projects, the bids for which are expected to open on August 9, as a major breakthrough for attracting large scale investments in infrastructure projects, Mr Chidambaram said some 30 airports across the country have been identified for upgradation.

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`FIIs must invest in listed entities, comply with entry, exit rules'