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India should give tax breaks to all retail investors, especially smaller ones, to bring back vibrancy in the primary market, Prasada Rao, President, Association of National Exchange Members of India (ANMI), has said.
Giving tax breaks to only first-time equity investors — under the Rajiv Gandhi Equity Savings Scheme — will not suffice, Rao told Business Line here on Monday.
Tax breaks should also be available to all retail investors without any income limit.
A vibrant primary market is a must if we want to have a good secondary market for equities, he said.
Rao also suggested that the current norm of providing a specific quota for foreign institutional investors and high net worth individuals in all initial public offerings should be done away with.
“There should be no sub-limits for categories such as FIIs/ HNIs or small retail investors. This is one reason why more retail investors are not coming to the primary market. The entire issue should be available for all to apply for,” Rao said.
ANMI is an all-India body of trading members of the NSE, the BSE and other exchanges with national presence.
ANMI feels one reason for the inactive primary market in the country is the aggressive pricing of IPOs seen in recent years.
Aggressive pricing Most IPOs and follow-on-offerings were so aggressively priced that it left very little on the table for retail investors, ANMI top brass rued.
The best way to tackle the pricing problem in new public offerings is not to go back to the era of the Controller of Capital Issues (CCI).
“We are not saying regulate the pricing of issues. What we are suggesting is that ensure meaningful disclosures in IPOs so that retail investor can take a better decision. No point having crucial information tucked into the offer documents running into hundreds of pages.”
ANMI CONVENTION Focusing on the twin issues of domestic investors’ role and challenges for regulators, ANMI will hold its seventh annual international convention on January 10 and 11 in New Delhi with the theme ‘Sustaining investment growth in a turbulent economic scenario’.
srivats.kr@thehindu.co.in
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