India's top equity bourse NSE's head Vikram Limaye on Tuesday said a multitude of taxes is making domestic markets uncompetitive, and appealed the Government to reduce the same to help investment flows.
He said the securities transaction tax, capital gains tax, stamp duty and goods and services tax on capital market transactions are hurting India as compared to peer markets.
He made the comments amid a deepening slowdown in economic growth which has plummeted to six-year lows and a slew of measures being taken by the Government to revive the same. In recent days, there have been conflicting media reports over whether the government is abolishing dividend distribution tax, securities transaction tax and long-term capital gains tax on shares.
"A streamlined tax structure would significantly enhance the attractiveness of our markets and wider participation would enhance liquidity across securities," Limaye said at an event to commemorate NSE's 25 years, in presence of Finance Minister Nirmala Sitharaman.
He said India is full of aspirational small businesses who will be requiring growth capital and the presence of a large pool of investors is a necessary precondition for meeting their aspirations.
"I request the finance minister and chairman SEBI to examine the overall transaction costs including taxes, margins and compliance costs to improve the competitiveness of Indian markets. This would also facilitate an increase in our weightage in global indices which would attract more foreign capital," Limaye said.
He said it is important to enhance institutional participation in markets by giving them seamless access to a variety of products to earn higher returns or manage risks more efficiently.
"A comprehensive review of institutional participation in equities, equity derivatives and corporate bond markets should be undertaken to better align regulation and risk parameters to facilitate greater involvement of pension funds, insurance companies, banks and mutual funds in markets," Limaye said.
He also pitched for a Pradhan Mantri Jan Dhan Yojana (PMJDY) like scheme to open demat accounts to trade in shares, where investors will be able to open accounts just using a bank account and Aadhar number.
