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McKinsey Report on Impact Investing in India
Claudius Gutemann, McKinsey Report on Impact Investing in India 14 Sep 2017
insights from impact advisors & consultants 2017
Deborah Keller, insights from impact advisors & consultants 2017 04 Jul 2017
Other

Review of Foreign Direct Investment (FDI) policy on various sectors

1. Relaxation of rules for application of higher withholding tax rate in the absence of a PAN

The Indian Income Tax Act provides for a payer to apply a higher withholding tax rate if the recipient of income does not furnish its Permanent Account Number (PAN). This was also applicable where payments were effected to non-residents and the latter had to obtain a PAN to that effect.

However, the Indian tax authorities have recently issued a notification whereby the requirement for non-residents to have a PAN has been made less stringent. Pursuant to the notification, the higher withholding tax rate would not apply to a non-resident for the following payments, even though it does not have a PAN:

(i) Interest;
(ii) Royalty;
(iii) Fees for technical services; and
(iv) Payments on transfer of any capital assets.

Nonetheless, the non-residents which would be receiving the income should furnish the following details:

• name, email, contact number;
• address in country of residence;
• Tax Residency Certificate (TRC); and
• Tax Identification Number (TIN) in country of residence.

Most of the above details are already being provided by non-resident recipients of income by way of a TRC and/or Form 10F which are prerequisites in India to avail of benefits under a Double Taxation Avoidance Agreement (DTAA). The new amendment will, therefore, reduce the administrative and compliance burden for non-residents which are receiving income from India.

2. Amendment to the retrospective applicability of the General Anti-Avoidance Rules (GAAR)

The Income tax department in India has, via a notification issued on 22 June 2016, provided clarifications on the retrospective applicability of the General Anti-Avoidance Rule (GAAR) as follows:

(i) GAAR will not apply to income derived by a person from transfer of investments made before 1 April 2017. The earlier version of the GAAR provided for this date to be 30 August 2010.
(ii) GAAR will apply to any arrangement irrespective of the date it has been entered into if a tax benefit is obtained on or after 1 April 2017. Previously, this date was 1 April 2015. 2
 
3. Liberalisation of foreign direct investment policy in India

Further to a meeting chaired by Prime Minister Narendra Modi on 20 June 2016, the Government of India has taken steps to further liberalise the foreign direct investment (FDI) regime and on 24 June 2016, the Department of Industrial Policy and Promotion (DIPP) issued Press Note 5 of 2016 Series (Press Note). Now, most sectors would fall under the automatic approval route, except for a small negative list. As per the Press Note, changes introduced in the policy include increasing sectorial caps, bringing more activities under the automatic route and easing of conditionality for foreign investment.

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Other

Venture Philanthropists & Impact Investors encouraged to collaborate

As impact investing matures as a movement, more investment models are being deployed, especially in sectors and regions where various forms of capital are needed to support solutions to some of the world’s chronic social and environmental issues.

In this report by the Toniic Institute with support from the Shell Foundation a number of examples are shown of how venture philanthropists and impact investors are working together to fund early-stage impact enterprises around the world.

The report  is also a “call to action” for all venture philanthropists, impact investors, and other players within the early-stage social impactfunding ecosystem to continue to test, scope and roll out collaborative efforts in order to catalyze impact investment capital. The reward for greater collaboration according to the report can be a higher volume and quality of investment activity, which will attract greater, smarter impact capital into the marketplace, ultimately enhancing the viability of impactful solutions for the world’s toughest problems.

For more details please read the full report attached.

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Energy and Power

India in the Top 5 for Green Energy Investments

India is now among the top five countries in the world in terms of investment in renewable energy, solar photovoltaic (PV), solar water heating capacity, wind and hydropower capacity, according to a global renewables report released at the beginning of the month. 

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Other

India to see the Largest Inflow of Emerging Market Private Equity Investment

The survey conducted by EMPEA, a global industry association for private capital, featured the views of 107 Limited Partners (LP's) on emerging markets private equity asset class.

The report said, “India has ridden an impressive wave of upward momentum over the past three years, experiencing the largest positive shifts in the LP attractiveness rankings in both 2015 and 2016.”

“Increasingly bullish LP sentiment toward India coincides with rising fund commitments: in 2015, fund managers raised US$4.5 billion for India—the most raised for the market since 2008.”

The survey showed that 30% of respondents plan to either begin or expand investment in India over the next two years, rather than other emerging markets.

Red Ribbon Asset Management Plc provides a managed route into India for investors who seek responsible wealth generation through the principles of Impact Investment. They are investing in excess of £400 million over the next decade in greenfield projects that are scalable and topical to the Indian economy. Get in touch with them to find out more. 

 

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Other

Real Assets and Impact Investing: A Primer for Families

The ImPact Asset Class Primers series explores the many ways families make impact investments today, and the potential to create diverse and balanced portfolios of impact investments.

This month's report focuses on to real assets. Families investing in sustainable real estate, farmland, timberland, and fisheries can create measurable progress in addressing the local and global challenges of climate change, food security, affordable housing, and community revitalization. This primer explores real asset investment strategies families use today, as well as trends that may affect the market in the future.

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Other

Private Capital for Sustainable Development Concepts, Issues and Options for Engagement in Impact Investing and Innovative Finance

Private Capital for Sustainable Development: Concepts, Issues and Options for Engagement in Impact Investing and Innovative Finance is the result of supported by the Danish Government (Danida) in cooperation with ET Jackson & Associates on strategies and tools available to donors (and other social funders) to mobilize private capital for sustainable development.

 

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Other

What's Working in Acceleration

Despite the emergence of hundreds of accelerator programs around the world, we know little about their effectiveness or how differences across programs influence venture performance. To address this gap, Social Enterprise @ Goizueta at Emory University and the Aspen Network of Development Entrepreneurs (ANDE) launched the Global Accelerator Learning Initiative (GALI) in collaboration with a consortium of public and private funders. GALI builds on the Entrepreneurship Database Program at Emory University, which works with accelerator programs around the world to collect and analyze data describing the entrepreneurs that they attract and support.

 

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Other

Gray Ghost Ventures 2015 Annual Report

This year Gray Ghost Ventures celebrate the 10th year of investing in early-stage social impact enterprises. In early 2006, their work began as a pilot with the intention of bringing a 'venture capital' approach to impact investing. 

 

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Other

YSB 2015 Impact Report

 

The 2015 Impact Report is all about the hard-working individuals who drive large-scale social change in the countries we work in. Thanks to the tremendous effort of YSB entrepreneurs, over 800.000 people now have access to vital services like safe drinking water, access to health care, education or clean energy. 

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Energy and Power

Could off-grid electricity systems accelerate energy access?

Small off-grid electricity systems are growing rapidly in South Asia. A new study, The Effects of Small Scale Electricity Systems on Rural Communities in South Asia, provides the first assessment of how these systems are impacting communities in the region.

Previous research has shown multiple benefits of electricity access for education, livelihoods, and health. However, small-scale systems—which are often set up in an ad-hoc way in remote areas outside the purview of regulators—have not previously been systematically studied. Off-grid systems can include a wide variety of energy sources, from a simple diesel generator, a solar-powered home system sold by entrepreneurs, or a biomass-based micro grid.

 

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