Jaitley to push for GST roll out

New Delhi: In a bid to push the ambitious tax reform Goods and Services Tax (GST), Finance minister Arun Jaitley is likely to meet the state finance ministers next month to sort out the contentious issues which are holding up GST.

Government is also proposing to raise Foreign Direct Investment (FDI) in defence sector to 100 per cent through the approval route.
This even as finance ministry said that more banking licences will be issued in coming months. Finance minister Arun Jaitley on Thursday  reviewed the progress on rollout of GST in a meeting with revenue secretary Rajiv Takru.

Mr Jaitley called for resolving the contentious issues which are  blocking the rollout of GST. GST would help to stabilise revenues, while potentially improving the country’s growth prospects, by promoting inter-state transactions, and general efficiency of the economy.

Meanwhile, financial services secretary G. S. Sandhu who also made a presentation to Mr Jaitley, said that  in next few months RBI will start inviting applications for new banking licences. “RBI will take 4-5 months for preparing the new set of guidelines for on-tap and for differentiated banks,” said Mr Sandhu.

During the meeting capital requirement of the PSU banks over the next five years to meet Basel II norms was also discussed.
“We have given various options, government would provide some (capital) but they have to raise the remaining funds from capital market, holding companies structure...We will prepare a roadmap for this,” said Mr Sandhu.
No decision was taken on hiking Foreign Direct Investment cap in the insurance sector.
In April, the Reserve Bank of India (RBI) had issued bank licences to IDFC and Bandhan Financial Services, out 25 applications.

Meanwhile sources said that Commerce and Industry ministry had circulated a note for inter-ministerial consultation to raise FDI cap in defence from 26 per cent to 100 per cent. This is expected to give a boost to the manufacturing activities.

In UPA regime while commerce ministry was in favour of hiking FDI in defence, then defence minister was against any such move.  This is the first major initiative by the new commerce and industry minister Nirmala Sitharaman.

According to sources, portfolio investors, inclu-ding FIIs, would be permitted to invest only up to 49 per cent. It is proposed that  foreign firms can take over a domestic entity provided it brings in state-of-the art technology. The ministry believes that opening up defence sector further will help in reducing import bill for defence equipment, which will help in boosting manufacturing sector and creating jobs.

In the past defence and security agencies have haf some concerns on hiking FDI in defence. However, as Mr Jaitley is holding the charge of  fin-ance and defence ministries the proposal may not meet a stiff resistance like in the past.