New Delhi: Emphasising the need to attract foreign investment to narrow down current account deficit, Finance Minister P Chidambaram Monday said he plans to visit Japan, USA and Canada next month to meet global investors.
In his post-Budget interaction with industry chambers, Chidambaram said while fiscal deficit has been contained, "CAD (current account deficit) is more worrying deficit".
He said increasing exports is the surest way to address CAD concerns but it cannot be increased overnight.
"...In the immediate term I have to ensure foreign inflow is adequate and robust otherwise CAD cannot be financed."
CAD-- which represents the difference between inflows and outflows of foreign currency-- had touched a record high of 5.4 percent of GDP in the July-September quarter.
"...I intend to continue to engage with investors. In intend to travel to Mumbai shortly and thereafter in a month or so in April or May I intend to (visit) Japan, Canada and the US to engage with the foreign investors," he said.
In January, the Finance Minister had visited Singapore, Hong Kong, Frankfurt and London to project India as investment destination.
"There was tremendous response on policy measures taken by the government before I went abroad and I believe there will be an equally warm response on measures we have announced in the Budget," he said.
The Minister said one of the objectives of the Budget was ensuring that there is enough inflows of foreign investment, both FDI and FII.
"We have to make and keep India an attractive destination for foreign investments. A number of steps have been announced in the Budget that will make easier for foreign investors to invest in rupee instruments," he said.
Among other steps, the government has simplified the KYC process, reduced withholding tax on infrastructure bonds and allowed foreign investors to hedge.
He further said in the coming days and week we will examine other concerns.
The Minister further informed that SEBI chairman will shortly convene a meeting of foreign investors from around the world to discuss their outstanding issues.
In order to encourage public and private sector companies sitting on piles of cash to invest, the Minister said he would interact with industrialists to allay their concerns.
He said a "difficult decision" was taken by reintroducing investment allowance to attract new investment and to quicken the implementation of projects.
A company investing Rs 100 crore or more in plant and machinery during the period April, 2013 to March, 2015 will be entitled to deduct an investment allowance of 15 percent of the investment, according to Budget 2013-14 proposals.
Replying to another question, Chidambram sought to allay concerns of investors saying India will not unilaterally make changes in the Double Taxation Avoidance Agreement (DTAA) with Mauritius.
"I want to be clear that there is no intention to do anything unilaterally, that affects any country or investors," he said.
Certain concerns were raised after the Budget proposed that Tax Residency Certificate (TRC) was not enough to claim benefits of double taxation avoidance treaties.
Mauritius accounts for a significant share of foreign inflows in the country.
On raising the rate of tax on payments by way of royalty and fees for technical services to non-residents, Chidambaram said the proposal would not affect about 98 percent of the companies because for them the applicable rate will be the rate of tax stipulated in the DTAA.
In his Budget speech, Chidambaram said the rate of tax on royalty in the Income Tax Act is lower than the rates provided in a number of DTAAs. To correct this anomaly, he proposed increasing the tax on such royalty to non-residents from 10 percent to 25 percent.
Industry chambers raised concerns over larger government borrowing.