"There is a need to extend the long-term capital gains of 10 per cent to unlisted securities so as to encourage these companies to come out with public offerings. This is particularly important if India is to attract venture capital and private equity funds," Mr Nimesh Kampani, chairman of CII financial services committee and chairman JM Morgan Stanley, has said.

He was addressing a press gathering organised by the CII to discuss its pre-budget recommendations on the financial sector.

Mr Kampani said that while the tax on dividend amounts to double taxation, it also encourages corporates to undertake alternative means of rewarding on the one hand and loss to the government in terms of revenue on the other.

Emphasising the need to carry forward the reforms process in the capital markets, Mr Kampani said the foreign institutional investor ceiling should be hiked to 49 per cent from 40, allowing banks to invest in ADRs issued by Indian issuers without prior RBI approval and allowing Qualified Institutional Buyers (QIB) in India to invest in foreign companies promoted by persons of Indian origin, among others. Mr Kampani suggested that the limit for tax-saving investments under Sec. 88 should be increased from Rs 80,000 to Rs 1,20,000, tax exemption for investments in mutual funds from Rs 10,000 to Rs 20,000 and one-time approval for infrastructure companies instead of yearly renewals under Sec. 10 (23G).