Union Budget 2016: Ashish Agarwal, Director, Equirus Capital

"Encourage financial buyers of infrastructure assets like pension funds etc which are an important source of capital for infra developers to unlock equity blocked"

Written by: India.com Business Desk

Updated: February 25, 2016, 5:49 PM IST

Share

Share Article

• Facebook
• WhatsApp
• X
• Email
• Telegram
• Linkedin

https://www.india.com/business/union-budget-2016-ashish-agarwal-director-equirus-capital-980368/ Copy

Ashish Agarwal, Director – Infrastructure, Equirus Capital shares his expectation from Union Budget 2016

· DDT exemption for infrastructure SPVs on approval basis. Mechanism to allow infrastructure companies to use excess cash flows generated from operational projects to fund under-execution/stuck infrastructure projects without having to pay DDTs

· MAT exemption for infrastructure SPVs. The entire purpose of giving 10 year tax holidays to infrastructure projects gets defeated to a large extent since MAT of 20% is applicable today. It will be a major boost if the tax holiday can be a 100% tax holiday and even MAT is exempted

· Actions to deepen the bonds markets for infra SPVs. Investments can be made from the proposed National Infrastructure fund (proposed to be managed by IIFCL) into long term bonds of under-execution/operational SPVs. If bonds are being placed by operational SPVs, the developers should be allowed to use the ‘top-up’ amounts for development of other under execution infra projects without having to pay any tax (DDT, etc) (Also Read-Union Budget 2016: Here’s what Arun Jailey should do to boost power sector)

· Encourage financial buyers of infrastructure assets like pension funds etc which are an important source of capital for infra developers to unlock equity blocked

1. Introduce natural currency hedge mechanisms in infrastructure projects, for eg; tariffs for road (toll), power (long term PPAs), ports, etc can be partially linked to INR/USD depreciation. (Also Read- Union Budget 2016: Here’s what technology sector seeks from Arun Jaitley)

2. Remove all shareholding restrictions to sell infrastructure assets. Currently, each infra asset has shareholding restriction clauses in their respective concession agreement, etc. Make the approval process more automatic.

3. Refinancing of debt, which happens simultaneously with change in majority, could be exempted from pre-payment penalties, etc.

· Increased budgetary allocations especially towards roads, railways and Power T&D sectors.