The Hindu Business Line : Banks urged to fund projects with hidden social benefits

THE Managing Director of Shantha Biotechnics Ltd, Mr K.I. Varaprasada Reddy, has urged the banks and financial institutions to look into the `hidden societal benefits' of project proposals and accordingly finance innovative ones.

Addressing delegates at the daylong `International Tax Conference' organised by the Hyderabad Sub Chapter of International Fiscal Association (IFA) here on Friday, Mr Reddy narrated difficulties faced while setting up his company.

Stating that no banker or financial institution was ready to fund his project for the first indigenously developed Hepatitis-B vaccine, Mr Reddy said the lending bodies found the project unviable.

It was the Oman Government that came forward to fund the project along with loan from Oman International Bank.

According to Mr Reddy, his company incurred an R&D expenditure of Rs 85 crore for the first five years without generating commensurate revenues. But the company gave the society four products at highly affordable prices, he said.

Mr Reddy advised the banks and financial institutions to evaluate the `societal benefits' such projects could offer and fund them at least in the form of venture capital.

The IFA Hyderabad Sub Chapter Chairman, Mr P.V.S.S. Prasad, said capital and human resources were flowing across the borders in search of worthy investment destinations. As a result, tax has turned an important consideration for structuring inbound and outbound investments.

Avoidance of double taxation on the basis of double tax avoidance agreement and critical appreciation of the taxation rules of the source country were paramount to the investor.

In this backdrop, industry needs focussed deliberations on subjects of current value in international taxation, he said.

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