By Tereza Neuwirthova.
The Embassy of India to The Netherlands in cooperation with Ernst & Young and NICCT (The Netherlands India Chamber of Commerce and Trade), organized virtual event to discuss the recently presented India’s Union Budget 2021.
During the webinar, the main speakers of the programme gave an overview of the macro-economic landscape and presented the opportunities that the budget provides for foreign investors and domestic players alike. India is one of the fastest recovering economies during the pandemic, with its GDP contracted by 23.9% 2020, the IMF forecasts 11.5% GDP growth in 2021, while the World Bank predicts a 5,4% growth to India’s GDP. This makes its budget particularly important, and consequently it is necessary to understand the measures providing investment impetus, as well as India’s economic developments in the past 12 months that are beneficial for foreign investors.
After the welcoming words of the chairman of NICCT Ms. Edith Nordmann, the First Secretary for Economy and Commerce from the Embassy of India in the Netherlands, Ms. Mrinalini Kaur Sapra, gave an address about the prosperous bilateral trade relations of the two countries. The Netherlands is the fourth largest investor to India with more than 200 Dutch companies present in the country, as well as the third largest trade partner of the country after the UK and Germany. During her presentation, Ms. Sapra also pointed to several historical events that have contributed to growing the partnership between the two countries, most notably:
- The establishment in 1602 of the first Dutch company in India- the East India Company;
- In 1947, the establishment of diplomatic relations between the countries, the 70th anniversary of which was celebrated in 2017;
- In 2014, the partners’ signing of Memorandum of Understanding in Renewable Energy, Trade and Investment in Medicine and health.
Thereafter followed the presentation of the key policy sectors of the India 2021 Budget, which was led by Amit Jain (EY Leader Global Desk EMEIA & India Desk), Ronak Sethi (Senior Manager, EY India Desk London) and Erwin Sieders (EY Netherlands Tax Partner).
Main insights included the prospects about India’s fiscal policy, its (Goods and Services) tax collections strategy (GST), incentive schemes for 13 sectors, opening up FDI to 70%, move to a strategic disinvestment, and privatisation of one of the main insurance companies as well as other state-owned enterprises.
The key areas of the 2021 Budget are: healthcare, ports, shippings and waterways, agriculture and fisheries, as well as renewable green energy.
The key sectoral opportunities offered by the budget to foreign investors are:
Pharma and life sciences: India increased capital allocation to R&D, investment centres are an opportunity for the Netherlands, which has the technology for local medical infrastructure manufacturing retail and consumer products: increase in India’s Purchasing Power Parity leads to huge consumer base with increasing disposable income, above all textile investment, eliminating outdated exemptions in customs duty structures
Infrastructure projects: continued airport privatisation, as well as national monetisation pipeline for public infrastructure investment is particularly interesting for Dutch companies with experience with freight corridors and airports which could lead to opportunities to modernisations.
Financial services: infrastructure investments funds /InVIT, permanent investment infrastructure for bonds market, Asset Reconstruction Company.
After insightful presentations, participants had the opportunity to ask the experts relevant questions about the budget in a Q&A session. Among the topics discussed were the benefits that these incentives/investment schemes can provide for Dutch companies and start-ups, as well as the way Dutch pension funds may benefit from the introduced tax and dividend exemptions.
Lastly, the successful ongoing vaccination campaign in India, which is one of the most ambitious in the world and relies on the Covishield vaccine and COVAX initiative, was mentioned by Ms. Sapra from the Indian Embassy.