J Mark Mobius, Executive Chairman of the Templeton Emerging Markets group.
Calls for lifting of cap on foreign holdings in listed stocks, GST rollout
If India can push GST (Goods and Services Tax) through and open the doors wider to foreign portfolio investors, there could be a flood of capital flowing in, said J Mark Mobius, Executive Chairman of the Templeton Emerging Markets group, in an exclusive interaction with BusinessLineduring a recent visit to India.
“One of the most significant reforms in India, I believe, will be the unified value-added tax (GST). That alone should save businesses billions of dollars over the long term in the form of taxes, time and inefficiencies.
“Today, doing business in India is like doing business across 29 countries, with each State having its own rules, taxes, and so on. The faster it gets done, the better,” he said, adding that this government was clear about its intent on reforms and growth.
Mobius said he is also impressed by the quality of managers here.
“Quality of management is very important when you assess companies. This is a strength that India has. It has some terrific managers.
“If we are able to free up regulations, you could have more world-class companies. Already, many global companies are run by Indians. After all, Pepsi is run by an Indian woman,” he said.
He said that given the size of India’s population, the market capitalisation in the country should be $20 trillion and not the $2 trillion it is today.
Even though the Indian stock market features over 6,000 listed stocks and fairly large trading volumes, “foreign investors cannot buy the quantities they want”. “When foreigners come in with long-term investments, they want to know that the government won’t change its mind on taxes,” he added.
In his view, if the cap on foreign holdings in listed stocks is removed and the confusion on taxes resolved, “money would flow in like crazy”.