India Approves 49% FDI in Insurance Sector

Foreign Direct Investment (FDI) cap in the insurance sector has been raised to 49 per cent from 26 per cent.

In a press note, The Commerce & Industry Ministry said this follows approval given by the Union Cabinet to promulgation of an Ordinance hiking the FDI limit in the insurance sector to 49 per cent in December last year, after the legislation to amend the insurance law could not be passed in the winter session of Parliament.

As per the press note (number 3 of 2015 series) issued by the Department of Industrial Policy & Promotion, FDI up to 26 per cent in the insurance sector will be through the automatic route, while levels above 26 per cent and up to 49 per cent will have to come through the Government route.

Copies of the press note have been forwarded to officials in the Department of Economic Affairs and the Reserve Bank of India for “suitably incorporating the policy changes in the Foreign Exchange Management Regulation 2,000.”

The Insurance Laws Amendment Bill, 2008 could not be taken up for discussion despite being approved by the Select Committee of the Upper House as Opposition parties had vehemently opposed it because of conversion and other issues.

India Factory Output Hits 5 Month Low in Feb

India’s Factory activity expanded at its slowest pace in five months in February as a slowdown in new orders dragged on overall output, according to HSBC Manufacturing Purchasing Managers’ Index (PMI) survey.

The manufacturing activity survey, HSBC Manufacturing Purchasing Managers’ Index, compiled by Markit, fell for the second consecutive month, to 51.2 in February from 52.9 in January.

A reading above 50 separates growth from contraction.

The new orders sub-index fell to 51.9, the lowest level in five months, from January’s 54.4. The drop underscored softer domestic demand, which also accounted for a slight cut in headcount at firms.

The seasonally-adjusted output index also fell to its lowest since September. Indeed, February marks the 16th straight month of factory activity expansion and if India can grow as strongly in the coming fiscal year as the government said in its newly-released budget – expanding by up to 8.5 percent – that should boost manufacturing.

Output prices, or the inflation on goods for consumers, rose at the weakest rate in five months as manufacturers offered discounts to secure new business, according to a press statement released by Markit.

India Budget Highlights

Following are the highlights of the Union Budget 2015-16 presented by Finance Minister Arun Jaitley in Parliament

* No change in personal Income Tax

* Health Insurance Premium deduction hiked from Rs 15,000 to Rs 25,000; for senior citizens to Rs 30,000

* Transport allowance exemption hiked to Rs 1,600, from Rs

800 per month

* Additional 2% surcharge on people earning over Rs 1 cr;

to fetch Rs 9,000 cr

* Wealth tax abolished

* Direct Taxes Code (DTC) dropped

* Rs 50,000 deduction for contribution to New Pension

Scheme

* To lower Corporate Tax to 25% over next four years

* GAAR implementation deferred by 2 years to April 2017

* Service Tax rate hiked to 14%, from 12.36%

* Tax free bonds for roads, railways, irrigation projects

* 2015-16 growth between 8-8.5%, double digit growth

feasible

* Retail inflation close to 5% by March, room for monetary

policy easing

* To achieve fiscal deficit of 3% of GDP by 2017-18

* Fiscal Deficit target 3.9% in 2015-16, 3.5% in 2016-17

* Revenue Deficit to be 2.8% in 2015-16

* Current Account Deficit for 2014-15 to be below 1.3% of

GDP

* To introduce comprehensive law to deal with black money

* Benami property transaction bill to tackle black money

transaction in real estate soon

* 100% deduction for contribution to Swachh Bharat, Clean

Ganga projects

* GST to be put in place by April 1, 2016

* Internationally competitive direct tax regime to be put

in place to incentivise saving

* Incentivise use of credit, debit cards; disincentivise

cash transaction to curb black money.

* 7 pc surcharge on firm earning Rs 1 crore to Rs 10 cr

* Disinvestment target pegged at Rs 69,500 cr

* Net borrowings pegged at Rs 4.56 lakh cr

* AIIMS to be set up in J&K, Punjab, Assam, Tamil Nadu and

Himachal Pradesh

* Indian Gold Coin with Ashok Chakra, Gold Bond, gold

monetisation scheme proposed to check gold import

* Forward Markets Commission to be merged with SEBI

* PPP model in infrastructure to be revised and revitalised

* MGNREGA allocation hiked by Rs 5,000 cr

* Nirbhaya Fund allocation hiked by Rs 1,000 crore

* 5 Ultra Mega power projects to be set up at Rs 1 lakh cr

* To create world class IT hub; Rs 150 cr

* States to be equal partners in economic growth:

* To bring a new bankruptcy code in 2015-16

* Committed to subsidy rationalisation by cutting leakages

* National Skill Mission to be launched, to develop

employability of youth

* Rural infra development fund to have Rs 25,000 cr corpus

* Visa on arrival scheme to be expanded to 150 countries

* PSU ports to be encouraged to become companies

* Non Plan expenditure at Rs 13.12 lakh cr, Plan

expenditure at Rs 4.65 lakh cr

* Gross tax mop up at Rs 14.49 lakh cr

* Direct tax proposals will lead to a loss of Rs 8,315 cr;

indirect tax proposal gain will be over Rs 23,000 cr

* Tax payers to get income tax benefit of Rs 4.44 lakh

* To introduce 2 pc Swachh Bharat cess on Service Tax

* Customs duty on OLED TV abolished

* Excise duty on leather shoes costing Rs 1,000 lowered to

6 pc from 12 pc

* New tax proposals to bring revenue gain of Rs 15,068 cr

* 50 lakh toilet built under Swachh Bharat Abhiyan, 6 crore

toilet targeted.