저자: VijayKedia,MohandasPai · 외국인
요약 보기
인도 시장의 최대 문제는 외국인 자금 유출(최근 2.5년간 약 9 lakh crore)이며, 이를 해결하기 위해 Vijay Kedia는 장기 자본이득세 폐지, 배당 이중과세 해소, 증권거래세(STT) 폐지를 제안한다. Mohandas Pai는 루피 압력 완화를 위해 실물 금 매도 1년 양도세 면제, 금 수입관세(6%→15%) 재검토, 5년간 신규 외국인 투자 자본이득세 면제, 외국인 투자 절차 간소화를 제안한다. 두 사람 모두 인도에 인내자본이 더 필요하다는 입장이다.
다듬은 글
Today, the biggest problem with Indian market is FI outflow. In last 2 and 1/2 years, FIs have sold investment worth 9 lakh crore. In fact, on Friday, FIs sold nearly 20,000 crore worth of Indian equity due to MSCI rebalancing. Now, we have already discussed in the previous video why FIs have been selling Indian equities.
And recently, finance minister said that government is open to hear investors concern on long-term capital gain and short-term capital gain. So, recently, two highly respected people, Mr. Vijay Kedia and Mohandas Pai, have proposed a few reforms that they believe could strengthen India's capital market, improve foreign capital inflow, and reduce pressure on rupee.
Some of these suggestions are quite bold. In fact, if implemented, they could fundamentally change how Indians invest, how FIs look at India, and how capital flows into our economy. So, in this video, let's discuss these suggestions one by one and see whether they actually make sense or not. Let's first discuss Mr.
Vijay Kedia's suggestion. He's actually given three suggestions. First is government should abolish long-term capital gain tax. His argument is a long-term shareholder is not a speculator. When someone invest in a business and remains invested for years, that capital helps companies expand, build factories, hire employees, innovate, and contribute to India's economic growth.
In other words, long-term investors are providers of patient capital. According to him, India needs enormous amount of long-term capital if it wants to build world-class businesses, infrastructure, and global champions. Therefore, tax policy should encourage household to move money away from passive assets like gold and towards productive assets like equities.
He says that during a company's growth journey, the government already collect taxes at multiple levels. Companies pay corporate tax, employees pay income tax, businesses pay GST and various indirect tax. So, when an investor finally benefit from the growth of that company, taking capital gain again can be viewed as another layer of taxation on wealth that has already contributed significantly to government's revenue.
But perhaps his strongest point is that tax policy should distinguish between investing and speculation. Someone buying a stock and selling it after a few days is very different from someone owning a business through the stock market for a few years. So, according to Mr. Kedia, long-term ownership should be encouraged because it promotes capital formation, entrepreneurship, and wealth creation.
His second suggestion is dividend income on listed equities should not be subjected to double taxation. Now, imagine a company earns 100 rupee in profit. Before anything else, company pay corporate tax to the government. So, let's assume roughly 25 rupees goes away as tax. Now, company is left with 75 rupee profit.
Suppose the company decide to distribute the 75 profit to shareholder as dividend. That sounds fair, right? But here is the catch. The shareholder who receive this dividend also have to pay income tax on it depending on his tax lab. So, from an investor's perspective, the same stream of profit has already been taxed once at the company level and then again taxed where it reaches the shareholder.
This is why Mr. Kedia argues that dividend income effectively faces double taxation. His point is that shareholders are the actual owner of the business. They are the one taking the risk. If the company perform badly, shareholders suffer losses. If the company goes bankrupt, shareholders are usually the last people to receive anything.
Yet, when the company performs well and decides to share profit through dividend, that income gets taxed again. His third suggestion is to abolish the securities transaction tax. Now, this is something every one of us experienced. Every time we buy or sell share, we pay STT irrespective of whether we make money or lose money.
Now, why was STT introduced in the first place? So, back in 2004, government wanted a simpler way to track and collect taxes from stock market transaction. Instead of depending entirely on investors to report everyday trade and every gain correctly, a small tax was imposed directly on every transaction executed through stock exchanges.
Since the tax gets collected automatically, compliance became easier and tax evasion becomes much more difficult. That time, the government removed the long-term capital gain tax. So, the original objective of security transaction tax was simplification and efficient tax collection. But then, in 2018, government again introduced 10% tax on long-term capital gain and further increased it to 12.5% recently.
At the same time, government not only kept STT, but in recent year, government has significantly increased STT, specially on F&O trading. So, Mr. Vijay Kedia argues that India's capital market have matured significantly since 2004. Today, investors already pay brokerage, GST, exchange charges, SEBI fee, and stamp duty.
On top of that comes STT. Therefore, he believes it is time to revisit whether STT is still serving its original purpose or whether it has simply become another layer of taxation on market participant. Now, let's move on to Mr. Mohandas Pai's suggestion that a broader and focus on Indian rupee and foreign exchange flow.
So, according to Mr. Pai, the current pressure on rupee is largely due to three factors. First, oil prices have risen significantly. Second, gold import continue to consume a large amount of foreign exchange. And third, foreign capital inflow have weakened significantly. So, Mr. Pai's first proposal relates to gold.
He says that Indians own one of the largest private gold reserves in the world. It's more than 30,000 ton. Yet, every year, India continue to import hundreds of tons of additional gold. And that result in tens of billions of dollars leaving the country. So his suggestion is quite unique. He proposes a temporary one-year exemption from capital gain tax on the sale of physical gold.
The objective is simple. If people sitting on old gold holding are encouraged to sell, more gold enters the domestic market and increased domestic supply reduces the need for imports. And if imports reduce, fewer dollars leave the country. Mr. Pai also argues that excessively high import duties can have wrong consequences.
So recently government has increased import duty on gold from 6% to 15% and that's where Mr. Pai argument is, higher duties increase the incentive for gold smuggling, informal channels, and hawala transaction. Let's take a simple example. Suppose gold is trading at 1 lakh rupee per 10 g in the international market.
Now if India impose 15% import duty, the landed cost immediately becomes 1.15 lakh before other taxes. Now if someone can bring the same gold into India illegally without paying duty, the person instantly gain a price of 15,000 rupee per 10 g. On 1 kg, that's 15 lakh rupee. And whenever there's such a large price difference between legal and illegal market, smuggling becomes attractive.
A passenger returning from Dubai may be tempted to carry undeclared gold. Organized network may try to bring gold through illegal channels. The government loses custom revenue and the gold still enters the country. Therefore, instead of focusing only on restricting import, policy makers should also think about increasing domestic supply.
His second major proposal is related to foreign investors. He believes that India should become significantly more attractive for global capital. According to him, foreign investors already face currency risk because the rupee tends to depreciate over time. On top of that, tax uncertainty creates additional concern.
He therefore suggests that for the next 5 years, fresh FBI FII money coming into India should receive capital gains tax exemption. An existing FII holding that are sold and reinvested into Indian market could receive similar tax rebate. The idea is not about reducing taxes permanently, but about creating a temporary incentive to attract long-term capital during a period when foreign exchange flows have become a concern.
The objective is to reduce the outflow and encourage more long-term capital inflow at a time when India needs foreign exchange stability and investment. Apart from these, Mr. Pai also spoke about simplifying foreign investment processes. He believes that India still imposes excessive documentation, compliance requirement, and approval processes.
Whether it is foreign investor, sovereign wealth fund, venture capitalist fund, or NRIs, India should make the investment process significantly easier. So, his broader message is that if India wants more capital inflow, it must improve ease of doing business not only for entrepreneur, but also for investors.
Capital naturally flows where the process is simple, predictable, and efficient. So, if you step back and look at both Mr. Vijay Kedia's and Mohandas Pai's suggestion, a common theme emerges. Both are essentially arguing that India needs more patient long-term capital. Mr. Kedia approaches the issue from perspective of capital market and investor taxation, and Mr.
Pai approaches it from perspective of foreign exchange stability, capital inflow, and economic competitiveness. Now, whether all these suggestions are politically feasible is a different question. Every tax reduction impacts government revenue. Every incentive has trade-off, and policy maker have to balance growth objective with fiscal reality.
But the larger question is worth discussing. If India want to become a $10 trillion economy over the next decade, how should it attract more long-term capital? Should long-term investor receive better tax treatment? Should Should be abolished? Should dividend taxation be reconsidered? Should India create stronger incentive for foreign investors and sovereign wealth fund?
These are important debates because ultimately economic growth depends on capital formation. And the countries that attract the most patient long-term capital often end up creating most wealth over long time. But let me not stretch this video further. I would love to know your suggestion, which one you find the most interesting one.
If you find this video useful, do share with your circle. I'll see you next video. Till then, take care.
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