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NEW DELHI: Aiming to attract investment from foreign retail investors in equity and bond markets, the Finance Ministry will organise roadshows in five Gulf nations, including Kuwait and the UAE next month.

"We will organise roadshows from June 10-15 in five Gulf countries -- Bahrain, Oman, Kuwait, the UAE and Saudi Arabia, to attract Qualified Foreign Investors (QFI) in the securities market," a senior Finance Ministry official said.

A QFI is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs do not include FIIs/sub-accounts.

"We are discussing many things to encourage more capital flows. We are looking at various things as to how to implement budget announcements for QFIs, FIIs," the official added.

The official further said that the ministry is working on measures for attracting foreign investment into corporate bonds. Also the FII limits set for investment into these instruments were almost exhausted in the last fiscal.

The Foreign Institutional Investors (FIIs) can invest up to $20 billion in corporate bonds and $15 billion in government securities (G-secs).

It is expected that over the next two years QFIs would invest $50-75 billion in the country's equity and bond markets.

In Budget 2012-13, Finance Minister Pranab Mukherjee had announced opening up of corporate bond market for QFIs.

Earlier on January 1, 2012, the government had allowed QFIs to directly invest in the Indian equity market.

Allowing QFIs to directly invest in the Indian equity and bond markets would widen the non-resident investor base in stock markets and expand the set of non-resident portfolio investors, experts said.

The move comes against the backdrop of significant foreign capital outflows from the domestic equity market and lack of investors interest in corporate bond market.

In August last year, the government had allowed foreign investors to directly invest up to $13 billion in equity and debt schemes of mutual funds.

NEW DELHI: Wary of raising the price of diesel for fear of stoking inflation, the finance ministry is taking a fresh look at a proposal to hike excise duty on cars running on the subsidized fuel.

The oil ministry's proposal has been pending with the finance ministry for a while now. After the Inter-Ministerial Group (IMG) on inflation met here on Monday, oil minister Jaipal Reddy renewed his demand and said that he has asked the government to raise taxes on such vehicles.
A senior official of Central Board of Excise and Customs said a proposal was pending but no decision was taken yet. He, however, indicated that the government was now inclined to consider the proposal given the huge gap between the retail prices of the two motor fuels.
Before this year's budget, Reddy had demanded an additional excise duty of Rs 80,000 on diesel vehicles. The proposal was, however, opposed by the automotive industry and the department of heavy industries.
The idea of an additional excise levy has been tossed around in the oil ministry since 2008-09 as a way of raising funds to at least partially meet the Centre's burden on subsidizing diesel. But the idea never made it to the formal discussion table since it was felt that the funds garnered would not be significant in view of the massive size of the fuel subsidy burden.

On Monday, after the IMG meeting on inflation, the oil minister said, "We are not considering hikes in diesel, LPG and kerosene prices. It is out of question right now." Reddy was called to the IMG meeting to discuss the impact of diesel price hike on inflation. Chief economic adviser Kaushik Basu was also present in the meeting.
The recent hike in petrol prices by Rs 7.50 has created a big gap between retail prices of petrol and diesel. While diesel is selling for Rs 41 a litre in Delhi, petrol is above Rs 73 a litre. The current subsidy on diesel is more than Rs 15 a litre that the government partly subsidizes to oil marketing companies.
The gap has also affected fuel consumption patterns and diesel demand has outstripped petrol for the first time in 15 years.
Meanwhile, the finance minister is likely to write to all chief ministers to consider cutting value added tax on petrol. On its part, the Centre may lower its duties to give some relief to the common man in view of the steep hike in petrol price. Already, Delhi, Uttarakhand and Kerala have announced cut in VAT on petrol.
In the budget for 2012-13, the finance minister had hiked the excise duty for both petrol and diesel cars with engines under 1,200 cc (petrol) and 1500 cc for diesel cars with length exceeding four metres to 24% from 22% and a fixed duty of Rs 15,000. Cars with engines exceeding the above capacity were charged an ad valorem duty of 27%.
The finance minister had, however, avoided raising additional duty separately on diesel cars.