By Subhash Narayan

New Delhi, Aug 15 (IANS): The governments decision to nullify retrospective taxation provisions has brought fresh lease of life to its strategic disinvestment plan with growing overseas investor interest in picking up management control of public sector undertakings put on the block for privatisation.

Government sources said that they have received enquiries from foreign multinational corporations about participation on its strategic disinvestment plan and the pace has increased post the Centre's decision to amend retrospective taxation provisions in the Income tax Act, bringing about certainty on taxation regulations and improving country's ranking several notches on ease of doing business index.

Accordingly, the strategic disinvestment proposals of companies Ferro Scrap Nigam Limited (FSNL), Rashtriya Ispat Nigam Ltd, Container Corporation, IDBI Bank Ltd., Neelanchal ispat Nigam ltd may get extensions if more time is required to bring larger number of overseas investor participation. Also, government is seeing increased interest of foreign investors in the proposed initial public offer of Life Insurance Corporation (LIC) that is like later this year.

"The government's move (on scrapping retrospective taxation proposals) would also build confidence of foreign investors to attract new investments that are crucial for reviving economic growth," said Vipul Jhaveri, Managing Partner-Tax, Deloitte India.

"This amendment (retrospective taxation) tainted India's image as an investment destination. The new changes will not only end prolonged litigation in numerous cases but will also uplift India's image internationally as a fair and equitable taxing nation, said Mukul Bagla, Chair, Direct Tax Committee, PHDCCI.

While the government has not yet made its stand clear on the pending cases of disinvestment where the process has reached financial bidding stage, sources said that a second thought on re-inviting investors even in these cases may be considered. This could help increase the participation of MNCs in disinvestment of containers such as Bharat Petroleum Corporation Ltd (BPCL), Air India, BEML, Shipping Corporation, Pawan Hans.

Disinvestment department Dipam's views on this could not be ascertained but recently it's secretary Tuhin Kanta Pandey has said that in all these enterprises, government has got sufficient interest from bidders, who are now at the second stage of due diligence.

Both portfolio investors and direct foreign investors have shown increased interest in running and investing in Indian companies up for privatisation.

The government had budgeted Rs 1.75 lakh crore from stake sale in public sector companies and financial institutions, including 2 PSU banks and one insurance company, in 2021-22. It is hoping that larger overseas participation would help in completing strategic disinvestment of larger PSUs quickly.

So far, government has mobilised only Rs 8,368.56 crore as disinvestment proceed from minority equity sale in PSUs under the offer for sale route (OFS).