Accessing foreign funds might become relatively easier for highway developers with the Budget proposing to allow FII investments in bonds of unlisted special purpose vehicles of infrastructure companies. As most of the infrastructure companies are organised in the form of special purpose vehicle (SPVs), FIIs would be permitted to invest in unlisted bonds with a minimum lock-in period of three years. However, the FIIs will be allowed to trade among themselves during the lock-in period.
The proposal to increase MAT might marginally hit their profitability, though it is likely to be mitigated to some extent through the reduction in tax surcharge from 7.5 per cent currently to 5 per cent.
Two more proposals with regards to highways machinery could ease cost of building highways. “Full exemption from basic customs duty is being extended to bio-asphalt and specified machinery for its application in the construction of national highways. But bio-based asphalt machinery is not used significantly in national highways construction.
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