India and Hong Kong have initiated talks on a free trade agreement and plan to enter into a double taxation avoidance agreement (DTAA) to promote bilateral trade and investment.
"We have discussed with Indian leaders to have an investment promotion and protection agreement besides a double taxation avoidance agreement (DTAA). Both the issues were discussed with Finance Minister P Chidambaram, who assured his full support on the issues," Hong Kong Financial Secretary John C Tsang said on the sidelines of a business conference in New Delhi.
Pointing out that 1,500 Indian companies, including seven banks, had their presence in this autonomous province of China, he said Hong Kong was also ready to offer its expertise in building Mumbai as an international financial centre.
"We have expertise in mass financial transactions and an infrastructure company has also approached to assist in building Mumbai as a financial centre," Tsang said.
There are over 40,000 persons of Indian origin in Hong Kong.
The province, he said, has sought more direct flights from Indian cities like Chennai, Mumbai and New Delhi.
Both countries would hold talks on this issue on 17th -18th December in New Delhi and a decision may be taken in this regard, Tsang said.
"I hope to see increased number of direct flights between Hong Kong and Delhi as well as Hong Kong and Mumbai and Chennai," said the Hong Kong Financial Secretary.
Pointing out that Hong Kong provided a level-playing field to all investors, Tsang said, there is no VAT or capital gains tax there and income tax would also be reduced by one percent to 15 percent and corporate tax to 16.5 percent next year.
Indian companies could raise funds through Hong Kong stock market as a source of capital and diversification for their fund raising activities, he said, adding that they could also invest to reach mainland China, he added.
The bilateral trade between the two countries touched 7 billion dollars last fiscal.
Trade observers point out that increase in direct flights would give further boost to economic ties between the two countries.
Hong Kong remains a separate member of the World Trade Organisation.
Tsang highlighted that Hong Kong had a nationality neutral policy and that foreign services firms incorporated in Hong Kong can leverage its Closure Economic Participation Agreement (CEPA) with China.
Under CEPA, currently 27 service sectors enjoy enhanced access. Another 11 services sector would be added to the list from 1st January next year. DDNEWS
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