Tuesday, February 21 2006 12:05 Hrs (IST) - World Time -

London: Non-Resident Indians have made a strong case for withdrawing the controversial Fringe Benefit Tax in the upcoming budget, besides liberalising insurance, pension and the FDI regime especially in the retail sector.

Asked by sources about their expectations from the coming budget, NRIs in several countries also demanded a single window system to attract investment from overseas.

"I expect the Finance Minister to heed to the industry plea and withdraw the Fringe Benefit Tax, which was the major irritant in an otherwise well received Budget a year ago," leading entrepreneur and Hinduja Group President G P Hinduja said here.

United States India Business Council President Ron Somers said in Washington that the council will continue to press for opening up partially closed sectors and make the case for initial openings in areas that have been completely closed like professional services.

"Already we have seen one announcement in the opening of the retail sector. It has been extremely encouraging and we are hopeful that in the next few days we will see announcements regarding the opening of the insurance sector to 49 per cent. That was promised a year ago and we are waiting patiently," Somers said.

Calling for a one-point contact or a single window for processing projects in infrastructure, construction and other major areas, Consortium of Indian Industries in Malaysia Chairman Umang Sharma said, "Let there be a friendly and efficient approach. No investor wants to run from pillar to post looking for information in a foreign country."

Indians living in China have urged the Finance Minister P Chidambaram to liberalise all policies for infrastructure building.

US-based venture capitalist Pramod Haque said there should be no restriction on the ownership held in Indian companies by foreign venture capitalists or overseas companies.

Haque, who is the managing partner in Norwest Venture Partners, expects the government to think about specific income tax incentives for NRIs willing to move back to India and enable expertise in research and engineering as that is bound to take the country to the next level.

"If these NRIs didn't have to pay income tax for the next five years, it would really help infuse more entrepreneurship in India," he said.

Haque said that on the pattern of a tax holiday for Indian IT outsourcing industry, government should consider creating incentives for startup technology companies in order to attract more foreign direct investment. "It would encourage top venture capital firms such as NVP to invest more heavily in India."

Hinduja said overseas Indian investment and taxation should be on par with the resident Indians in all aspects.

"Under the portfolio investment scheme for NRIs, TDS applicable on capital gains may be calculated and deducted only at the end of the financial year and not as and when due, according to the current guidelines," he said.

With more and more Indians emerging as global players, "Profits from Indian income of NRIs should only be taxed without reference to their global income," the Hinduja Group President said.

"I also expect some marginal reduction in the rate of income tax and a possible abolition of additional surcharge," Hinduja said.

Expecting that incentives such as concessions for investment in infrastructure under section 80 1 (A) will continue, Hinduja said it would be interesting to see how the Finance Minister tackles the unfinished task on funding the Special Purpose Vehicles for roads sector.

"The next Budget offers an opportunity to get close to ASEAN levels. Equally, we can expect some rationalisation in the excise duty rates given the buoyancy in service tax collections," Hinduja said.

He also said that it is likely that a few sectors outside the service tax net will get included, with railway fare a potential candidate.

Somers said hiking of FDI cap to 49 per cent ininsurance sector will enable capital inflows into the country to be utilised to develop the infrastructure sector.

China-based NRI Harpreet Singh Puri, who is Chief Executive of Business Links, said, "India must put huge emphasis on infrastructure. The country should invite FDI for infrastructrue and liberalise all government policies for building infrastructure."

Vivek Arora, founder and CEO of contract manufacturing and supply chain firm Kagari Pte Ltd, said if real estate development is now open to FDI, then India should also permit foreign property management companies to manage properties in India.

He hoped that the forthcoming budget would permit duty free imports of capital equipment which reduces pollution.