Masterstroke by Modi govt, India makes big move for this country, Pakistan, China in tension due to…
New Delhi: India has given Saudi Arabia’s Public Investment Fund (PIF) a special exemption from some foreign investment rules. The decision has been taken by the Indian government with an aim to attract more capital and boost financial ties between the two countries. This will also strengthen relations between New Delhi and Riyadh. The move will also enable the Middle East country to invest more in India. A lot of money from Saudi Arabian companies is invested in Mukesh Ambani’s companies.
According to the current rule, if a foreign company of any country invests in India, then its investment coming from different parts will be considered as one, with an investment limit of 10 percent. Because of this rule, companies of Saudi Arabia’s Public Investment Fund (PIF) were not able to invest much in India. This move by India will give tensions to China and Pakistan as both the countries also want to improve their economic relations with Saudi Arabia.
What Will Happen Now?
The Indian government has exempted Saudi Arabia’s PIF from the current rule. It simply means that different companies of PIF will now be able to make separate investments in the country. This will make it easier for them to invest money in the Indian stock market.
India wants Saudi Arabia to invest more in the country. Saudi Arabia has a lot of money to invest and India needs that money for development work.
The middle east country also wants to invest in fast-growing countries such as India. Under ‘Vision 2030’, Saudi wants to remove its economy from dependence on oil.
Discussion Between The Two Countries?
During Prime Minister Modi’s April visit to Saudi Arabia, both nations committed to boosting investment collaborations in energy, infrastructure, and healthcare. Simultaneously, negotiations are underway for a bilateral investment treaty. However, a Reuters source indicates that restrictions on combining investments from various sovereign entities may hinder the Saudi fund and its affiliates from investing autonomously.
What Is PIF?
The Public Investment Fund (PIF), a major global sovereign wealth fund with approximately USD925 billion in assets, has invested USD1.5 billion in Jio Platforms and USD1.3 billion in Reliance Retail, both Indian companies. This investment aligns with India’s aim to attract long-term capital from Gulf nations, particularly given India’s significant oil imports, and Saudi Arabia’s “Vision 2030” plan to boost investment in rapidly expanding economies.
To achieve these goals, both the countries have formed a high-level task force last year. It aims to expedite Saudi’s plan to invest USD 100 billion in India.
Tax exemption can be available
As per reports, the Indian government is also mulling about giving tax exemption to PIFs. The fund coming from the investments will be used in infrastructure and energy sector.
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