India zoekt meer buitenlandse investeringen

India will cut a levy on foreign investment in rupee-denominated government and corporate bonds to attract overseas capital and narrow the nation’s current- account deficit. In a speech in parliament today, Finance Minister Palaniappan Chidambaram proposed the so-called withholding tax, charged on interest income, be reduced to 5 percent from 20 percent for foreign and qualified institutional investors. The change will be applicable for two years starting June, he said.

The rupee surged the most in two weeks after Chidambaram’s decision to ease the tax rules. The measures may lure foreign investors, who are restricted to $75 billion of Indian debt, and help finance the current account gap, said Jayesh Mehta, managing director at the Indian unit of Bank of America Corp. The shortfall in the widest measure of trade touched a record $32.6 billion in the quarter ended Dec. 31.