India’s Finance Minister will be assessed by international investors on policy changes to increase foreign inflows, clarify tax laws and expand the country’s tax base, in his presentation of the Union Budget shortly after the latest gross domestic product (GDP) data is released today.

India's current-account deficit (CAD) has worsened since 2008 due to slowing exports and expensive oil and gold imports. It recorded a current account deficit of $22.3 billion in the third quarter of 2012, or 5.3% of GDP, the worst in a decade. That compares with less than 1% of GDP in the first half of the last decade.

"The Finance Minister has to steer the country away from the danger of being the first BRIC country to lose investment grade status via a credit downgrade,” said Bundeep Singh Rangar, Chairman of London-based advisory firm IndusView. "He has a challenging task of revving a growth engine, that sputtered under his predecessor, with the fuel of more foreign capital and wider tax collections.”

"India’s current tax base represents fewer than 35 million, or a dismal 3% of its population,” said Rangar. "That contrasts the size of its middle class estimated to be 250 million people that’s expected to reach 600 million by 2030.”

India’s CAD is being financed through stable capital flows, according to India’s Harvard-educated Finance Minister P. Chidambaram. In 2012, Foreign Institutional investments (FII) totaled $10 billion and the country attracted $27.3 billion worth of Foreign Direct investments (FDI). Both combined represent $37.3 billion, which isn’t enough to feed the growing CAD.

On the other hand, annual remittances into India that currently fuel the world’s largest remittance-corridor, surpassed $70 billion in 2012, as NRIs took advantage of a week rupee and high deposit interest rates at Indian banks.

"India’s secret weapon is its 25 million strong overseas diaspora who sent twice as much money into India in 2012 than FDI and FII combined and more than net earnings from exports of software, business, financial and communication services,” said Rangar. "$70 billion in annual remittances by Non-Resident Indians (NRIs) provides India with a distinct advantage over other BRIC economies.”

"Cutting subsidies and privatizing public sector companies will only go so far,” said Rangar. "The Budget should make it seamless for Non-Resident Indians (NRIs) to use their remittances to invest in Indian company securities, mutual funds and other investment products and foster an increase in annual remittances into India.”

"India needs to attract more inward investment and better collect tax to fund the $1 trillion requirement outlined by the Prime Minister to build the country’s infrastructure over the next five years,” said Rangar. "Better infrastructure is critical to increase India’s GDP as it will shear waste and inefficiencies in agricultural and industrial output.”

To attract foreign investments, the government should best amend its controversial tax law and not impose tax with retrospective effect on overseas deals involving local assets. India has also said it may soon finalize the rules for a proposed clampdown on tax avoidance as it considers delaying implementation of a plan that also spooked foreign investors.

India is currently aggressively pursuing tax claims against multinational firms and has targeted several companies for tax audits on transfer pricing.

"The Indian tax man’s potential treatment of low cost intellectual capital work allocated by India to multinationals, as being a higher value service and therefore, taxable at higher rates, will give reason to multinationals to seek other jurisdictions where taxation is simpler and the cost advantages are as good, if not better than India,” said Rangar. "The tax man should focus its efforts to widen the tax base and therefore, increase revenue.”

India, currently the world’s tenth-largest economy, is vying to be among the top five by 2022, according to the London-based Centre for Economics and Business Research (CEBR).

IndusView, Friday 22 February 2013 (London): UK Prime Minister David Cameron concluded his trip to India this week to meet his Indian counterpart, Manmohan Singh, as well as the Indian president, Pranab Mukherjee, asking them to open its trade doors wider to British business.

Mr. Cameron’s trip, his second visit to India as prime minister, comes days after a similar trade mission by President François Hollande of France, underlining how Europe’s debt-stricken states were competing to tap into India, which has one of the world’s fastest-growing economies.

"Cameron recognizes that India’s got what the British and Europeans want…perhaps even need,” said Bundeep Singh Rangar, Chairman of London-based advisory firm IndusView. "An economy that’s doubled in the past six years, which will double again in the next six years to approach $5 trillion. It’s also underpinned by a demographic advantage. A majority of Indians are still under 40 years of age with increasing discretionary spending.”

At a time when the British government is struggling to get its economy growing, officials see India as a key strategic partner. Mr. Cameron said it himself: he wants the relationship between Britain and India to be "one of the great partnerships of the 21st century". India and the UK have vibrant economic ties and the two-way trade rose to about £10.58 billion ($16.16 billion) in 2011-12 from £8.22 billion ($12.56 billion) in 2010-11. Mr. Cameron said the countries were "on track" to double overall trade to £23 billion ($35.14 billion) by 2015.

Mr. Cameron said the two countries enjoy a "special relationship,” a term usually reserved for Britain’s ties with the United States, but it is a relationship undergoing profound change. The Indian economy is forecast to overtake Britain’s in size in the decades ahead and to become the world's 5th largest economy by 2020. In a nod to how the relationship is evolving, Britain will stop giving India aid after 2015.

Investors have been clamoring for years for India to open up to more foreign investment, and Mr. Cameron complained Monday that India still had outdated rules and regulations - The government should take more steps to improve the ranking of India from 173rd position by simplifying processes for making it easier for entrepreneurs to start a business.

Another of the trip's aims is to address controversy over the recent toughening of UK visa rules. Mr. Cameron said there was no limit on the number of Indian students that could come to British universities, as long as they had an English language qualification and a place to study. The UK is a popular destination for Indian students, second only to the USA. According to the UK Border Agency, the number of student visas issued from India dropped to 32,000 in 2011 from 41,000 in 2010.

The prime minister also spoke of making Britain's visa system simpler for Indian businesses, by introducing a same-day visa service.

The Indian Prime Minister, Manmohan Singh, expressed his concerns about the AgustaWestland deal since there have been allegations of bribery, which are being investigated by the Italian authorities. AgustaWestland signed a contract to supply 12 AW101 helicopters to the Indian air force in 2010 and employs more than 3,000 people in Somerset, UK. In response, says Britain will cooperate fully in the investigations.

During their talks Mr. Cameron and Mr. Singh also agreed more co-operation between Britain and India in combating cyber attacks, including police training exchanges and research into online security.

The Prime minister visited site of 1919 Amritsar massacre in India, where hundreds of Indian civilians were shot dead by British forces. Past prime ministers have expressed their regret, but Mr. Cameron is the first to pay his respects at the site in person.

Mr. Cameron’s delegation, which includes representatives of more than 100 companies, is the biggest taken abroad by a British Prime Minister. It includes four ministers, nine members of Parliament and companies including BAE Systems, BP, De La Rue, Diageo, the British unit of EADS, HSBC, JCB, Lloyd’s, the London Stock Exchange, London Underground, Rolls Royce and Standard Chartered.

IndusView, Friday August 31 (London): New economic growth figures have been announced today in India showing the economy grew 5.5% in the quarter, driven by a rebound in construction and financial services, and slightly better than the 5.3% posted in the three-month period ending in March.

Other Asian economies, meanwhile, are posting lower growth rates this year. China, for instance, is projected to grow by slower 8.2% this year from 9.2% last year. Indonesia is expected to decelerate to 6.1% this year from 6.5% in 2011, while Malaysia is forecast to slow down to 4.2% from 5.1%. The forecast for South Korea is 3%, down from last year’s 3.6%.

"The GDP numbers were better than expected, which does alleviate some pressure from the Reserve Bank of India to cut interest rates at its next month’s meeting,” said Bundeep Singh Rangar, Chairman of London-based advisory firm IndusView. "Still, reviving growth is a top priority as global economic conditions remain weak and multinationals are wary of India due to policy flip flops in recent months.”

There is still a strong need for a stable policy, taxation and investment regime to attract foreign capital. The 2012-13 Budget introduced a controversial retrospective tax provision in the wake of Supreme Court judgment quashing the tax demand on Essar-Vodafone deal.

On January 2012, India's Department of Industrial Policy and Promotion, Ministry of Commerce and Industry (DIPP) revised its position on single brand retail trading. Multi-brand retailers are still prohibited from foreign direct investment into the market, even in partnership.

Amid uncertainty over global economy, Foreign Direct Investment (FDI) in India registered a growth of 34 per cent to $46.8 billion in 2011-12 against $34.8 billion in the previous fiscal. Inflation based on Wholesale Price Index (WPI) declined to 6.87% in July from 7.25% in June. It is still, however, above the RBI's 5%-6% target.

The central Reserve Bank of India has also warned the country's economic prospects are unlikely to improve in the near-term, due to high inflation, the lack of reform and the impact of poor monsoon rains on farm output.