Over the years, the attractiveness of India as a preferred investment destination has been fortified with various reform initiatives undertaken by the Government. The global investment community envisions that the impetus of India’s growth story will continue to be encouraging, facilitating investment inflows into the country from FDIs and FIIs. The recent structural reforms undertaken by the Government viz., demonetisation, GST, recapitalisation of Public Sector Banks, Insolvency and Bankruptcy Code Ordinance and other various significant measures, have disseminated positive signals to the domestic and global markets which will foster the strong and sustainable growth.

The third quarter of the current financial year was extremely significant as the series of events occurred during this period will give a big boost to the Indian economy. This includes important announcements by Moody’s, upgrading India’s credit rating and Government’s initiative to carry out certain amendments in the existing policy reforms/ legislations to ease out its bottlenecks, and harnessing its efficiency so that the very objective of the reform is achieved in a cohesive manner.

The recent announcement by US-based credit rating agency Moody’s Investors Services (Moody’s) to upgrade India’s sovereign rating to Baa2 from Baa3 with a ‘stable’ outlook has been acknowledged as an encouraging and welcome development which will further enhance the confidence level of the global investors for investing in India. Moody’s action of enhancing India’s rating was on the backdrop of its global competitiveness and the assessment that India’s growth potential is higher than most of the other emerging economies, which will facilitate a gradual decline in its debt burden over the medium term. Undoubtedly, such global recognition is a constructive move which testifies that the successful implementation of the Government’s reforms agenda will put the Indian economy on a high growth trajectory.

Goods and Services Tax (GST) has been one of the key elements of the structural reform program of the Government which aims to promote productivity by removing the barriers to interstate trade, improving the ease of doing business and unifying the national market. After the GST implementation w.e.f 1st July, 2017, certain compliances and operational challenges were faced by the exporters as well as Small and Medium Enterprises (SME) which includes blockage of working capital and delayed refund of the tax input. The Government, after the thorough consideration of the representations received, directed the GST Council to adopt a logical approach which constructively resolves the loopholes without diluting the tax reform regime. In order to ease the GST impediments, the GST Council has allowed relaxations by slashing tax rates on total 27 items w.e.f. 15th November, 2017 so that the tax compliance burden on small and medium taxpayers is reduced.

The Government has passed an ordinance in November to amend the Insolvency and Bankruptcy Code, 2016 (IBC) with an objective to ban the promoters of defaulting companies to participate in bidding for their own companies, with an intention to reacquire it at discounts, undergoing insolvency proceedings. The said ordinance aims to safeguard the interest of the lenders, investors and or any other interested parties, by preventing unscrupulous persons to misuse or negate the provisions of the IBC. This will surely entail a fair, effective and holistic resolution process of the IBC Code.

On the political front, the BJP victory in the Assembly Elections 2017 in the State of Gujarat and Himachal Pradesh have set an assertive tone of accelerating the progress and development of the country. This shows the confidence and trust of the public in the Government to lead the agenda of making India a developed country.

Since, the economic and political environment (domestic as well as global) plays a substantial role in the turnaround of industries and its business; I strongly believe that the aforesaid recent developments / amendments will make the business climate more conducive. This will not only facilitate in tightening the governance framework, religious adherence to the business ethics and conducts but will also amplify the profitability and stability of the organisations, thus augmenting India’s structural strength and boosting confidence of the global investor community.

Let me also wish you and your family a very happy and prosperous New Year! Let’s welcome the New Year 2018 with new hopes, new aspirations and new resolutions!

 

 

Sincerely yours,
Ramesh C Bawa
Managing Director & CEO
IL&FS Financial Services Ltd (IFIN)









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