Investment Opportunities in India

May 16, 2013

Attractive investment opportunities for NRIs in India

“India is clearly becoming a more and more important player on the world stage in G20 context, in terms of its role in the global economy. It is very useful for us to exchange ideas and build the basis for future collaboration,” according to Mr Ben Bernanke, Chairman, US Federal Reserve.

India is the fifth best country in the world for dynamic growing businesses, according to the Grant Thornton Global Dynamism Index. The index gives a reflection of how suitable an environment it offers for dynamic businesses.

In addition, India’s economic confidence registered an increase of 8 points, to reach 68 per cent in August 2012 as compared to the previous month, according to the ‘Ipsos Economic Pulse of the World’ survey. This makes India the fourth most economically confident country in the world.

India is also expected to be the second largest manufacturing country in the next five years, followed by Brazil as the third ranked country, as per Deloitte Touche Tohmatsu Ltd (Deloitte).

The Government of India has relaxed foreign direct investment (FDI) regime in sectors including multi-brand retail, single-brand retail, commodity exchanges, power exchanges, broadcasting, non-banking financial institutions (NBFCs) and asset reconstruction companies (ARCs) in 2012 to attract more and more direct investments.

Business Opportunities in India

Mr Mahmood Al Hashemi, Director General of Ajman Free Zone Authority (AFZA), UAE will tour India and address a series of seminars and press conferences in Mumbai, Delhi and Ahmedabad this month. This high profile visit to the Indian sub-continent will be to initiate and build a long and lucrative means of economic cooperation between the two countries.

This will provide huge opportunity to young entrepreneurs doing business in India.

Here’s a list of 5 good opportunities non-resident Indians (NRIs) can look at:

  • Software: India’s software and services exports are likely to rise with export revenue growth projected at 13 to 15 per cent. With one of the largest pool of software engineers, NRIs can set higher targets in hardware and software development
  • Tourism: Tourism is a booming industry in India. With the number of domestic and international tourists rising every year, this is one hot sector NRIs must focus on. India with its diverse culture and rich heritage has a lot to offer to foreign tourists. Beaches, hill stations, heritage sites, wildlife and rural life, India has everything tourists are looking for
  • Automobile: India is now a hot spot for automobiles and auto-components. A cost-effective hub for auto components sourcing for global auto makers, the automotive sector is potential business in India for foreign investors
  • Textiles: India is famous for its textiles. Each state has its unique style in terms of apparels. India can grow as a preferred location for manufacturing textiles taking into account the huge demand for garments. Places like Tirupur and Ludhiana are now export hubs for textiles. A better understanding of the markets and customers’ needs can boost growth in this sector and attract direct investments
  • Education and Training: There is a good demand for education and online tutorial services. With good facilities at competitive rates, India can attract more students from abroad. Unique teaching methods, educational portals and tools can be used effectively to make the sector useful and interesting
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March 28, 2013

Growing prospects in Indian electronics industry

The growing sales figure for the consumer electronic goods, a flourishing telecom/networking market and noteworthy growth in the use of portable/wireless products are some of the significant trends observed in India at present and they are providing stimulus to the growth of the electronics design industry to a greater scale.

India has a well-developed electronics design industry, with 120 design units and is ranked the second among the US, the UK, Germany, Sweden, China, Taiwan and Israel in terms of design revenues.

Electronics is essential for setting up technology infrastructure, and semiconductors are the main component of electronics products. Electronics sales in India, which totalled US$ 40.7 billion in 2009, will touch US$ 400 billion by 2020. At present, local manufacturing accounts for about 40 per cent of consumption and it could increase to 80 per cent by 2020.

The key drivers for the electronics market in India include telecom infrastructure equipment, wireless handsets, notebooks and other IT and office automation products, set-top boxes and smart cards. Growth sectors including health care equipment, automotive, consumer goods and industrial goods—all of which increasingly use electronics—are also expected to boost electronics consumption in India and open up more investments opportunities for non-resident Indians (NRI).

Investment options in electronics industry of India

In India, after Bangalore, Noida has become a hub for electronics design industry with many major players setting up their offices and research and development (R&D) centres in the city. Global MNCs such as Freescale, Mentor Graphics and Interra Systems are some of the major companies in Noida.

The Government of India is continuously making efforts to boost Indian electronics industry and is attracting foreign and local players to invest in electronics sector of the country. For the purpose, the Government has set up an Empowered Committee that would invite a preliminary Expression of Interest (EoI) from potential technology providers and investors.

100 per cent FDI in India under the automatic route is allowed in semiconductor fabrication to promote electronics manufacturing in India.

The Union Cabinet has approved a proposal to offer financial assistance for the development of electronics manufacturing clusters (EMCs), to aid the growth of the Electronic System Design and Manufacturing (ESDM) sector in India. The scheme is expected to help flow of investment for development of the ESDM sector.

The Government is also formulating a special incentive package to encourage local manufacturing of electronic goods. The package includes reimbursement of indirect taxes, and a subsidy of 20 per cent on capital expenditure made by high-tech manufacturers in special economic zone (SEZ) units.

Future of Indian electronics sector

The growing tablet market; increasing notebook penetration coupled with widespread demand for flash memory and desktops from e-Governance programmes will drive the growth of the Indian semiconductor market.

“Semiconductors and electronics are at the heart of technology driven products that will drive the US$ 400 billion Indian electronics market by 2020. ISA is committed to working with all the stake-holders from industry, academia and government to enable the eco-system that will convert this opportunity into reality,” as per Dr Pradip K Dutta, Chairman ISA and Corporate Vice-President & Managing Director, Synopsys India.

FDI in India in the electronics sector is very crucial for the development of the IT and the ITES sector in India.

The robust growth in the Indian semiconductor design industry has opened up a lot of opportunities to invest in electronics sector of India.

Booming Education Industry of India providing huge business opportunities

In India, education is the key to the task of nation-building. It is also a well-accepted fact that providing the right knowledge and skills to the youth can ensure the overall national progress and economic growth. The Indian education system recognises the role of education in instilling the values of secularism, egalitarianism, respect for democratic traditions and civil liberties and quest for justice.

The ongoing demand to strengthen the Indian education sector has opened up many avenues for people of India as well as non-residents of India (NRI) to invest in education sector.

Market Size

The education sector in India is evolving, led by the emergence of new niche sectors like vocational training, finishing schools, child-skill enhancement and e-learning.

According to a report ‘Education in India: Securing the demographic dividend,’ published by Grant Thorton, the primary and secondary education, or K-12 sector is expected to reach US$ 50 billion in 2015 from US$ 24.5 billion in 2008, growing at an estimated compound annual growth rate (CAGR) of 14 per cent.

Government Initiatives to boost Investments

The education sector in India is also considered as one of the major areas for investments as the entire education system is going through a process of overhaul, according to a report ‘Emerging Opportunities for Private and Foreign Participants in Higher Education’ by PricewaterhouseCoopers (PwC).

Ever since, the Government of India has allowed foreign direct Investment (FDI) up to 100 per cent through the automatic route, many people find it convenient and profitable to invest in education sector.

Some of the initiatives taken by the Government for the infrastructural development of the sector and to increase the business opportunity in education are:

  • For the year 2012-13, Rs 25,555 crore (US$ 4.63 billion) have been allotted for RTE-SSA (Right to Education – Sarva Shiksha Abhiyan) which represents an increase of 21.7 per cent over the previous year allotment in 2011-12
  • 6,000 schools have been proposed to be set up at block level as model schools in the Twelfth Five Year Plan (2012-17)
  • Rs 3,124 crore (US$ 566.69 million) have been provided for the RMSA (Rashtriya Madhyamik Shiksha Abhiyan), which is an increase of 29 per cent over 2011-12
  • India and Republic of Korea have signed a memorandum of understanding (MoU) for cooperation in the field of education
  • Prime Minister’s fellowship scheme for doctoral research has been launched in New Delhi by Mr S Jaipal Reddy, Union Minister for Science and Technology, according to Confederation of Indian Industry (CII)
  • The Ministry of Human Resource Development (MHRD) plans to set up ten community colleges in collaboration with the Government of Canada in 2012. The Government of India has decided to set up hundred community colleges this year
  • The Government of India plans to set up an Indian Institute of Agricultural Biotechnology at Ranchi with an investment of Rs 287.50 crore (US$ 52.15 million). The Institute will be a deemed university and will have different schools to import knowledge in genomics, bioinformatics, genetic engineering, nano biotechnology, diagnostics and prophylactics and basic and social sciences and commercialization

January 28, 2013

Flourishing Investment Opportunities in India for NRIs

The Indian economy continues to grow at a good pace and holds a strong position on the global map. The country’s gross domestic product (GDP) has been growing at an average rate of 8.5 per cent for the last five years.

India’s economy is amongst the largest in the world on the basis of purchasing power parity (PPP). It is today one of the most attractive destinations for business opportunities with the available large manpower base, diversified natural resources and strong macroeconomic fundamentals. In FY 2011-12, the country attracted foreign direct investment (FDI) of around US$ 46.8 billion in various sectors.

According to UNCTAD’s World Investment Prospects Survey 2012–2014, India is the third-most attractive destination for FDI in the world. Indian markets have significant potential and offer prospects of high profitability and a favorable regulatory regime for investors.

“We are keen to see FDI investment to surge in India and to that end, a favourable business climate will be helpful in going forward. We are encouraged to see there is a continued path towards fiscal consolidation. That there is a determination to improve the tax code. There is a determination to cap the subsidies at two per cent. All of those measures are good measures,” according to Ms Christine Lagarde, Chief, International Monetary Fund (IMF).

Key Sectors

India has grown to become a trillion dollar economy with a largely self-sufficient agricultural sector, a diversified industrial base and a stable financial and services sector. There are numerous sectors that offer lucrative business investment opportunities in India. Some of the key sectors are:

  • Aerospace & Defence
  • Automotive
  • Banking
  • Capital markets
  • Life Sciences
  • Information Technology
  • Insurance
  • Media & Entertainment
  • Mining & Metals
  • Oil and Gas
  • Ports
  • Power and Utilities
  • Real Estate
  • Retail and consumer products
  • Roads and highways
  • Telecommunications

Government Initiatives in supporting business investments opportunities in India

In order to enable individuals to have the complete benefit of available business opportunities in India, the Government of India has taken following initiatives:

  • The Government has signed memoranda of understanding (MoU) with 47 investors, attracting investments worth Rs 243.67 crore (US$ 43.83 million), according to S G Hegde, Joint Director, District Industries Centre, Mangalore
  • The Small Industries Development Bank of India (SIDBI) plans to utilise the Rs 5,000 crore (US$ 899.28 million) venture fund allocated to it for investments in micro, small and medium enterprises (MSME) over the next four years. 100 MSME clusters have already been identified for the establishment of credit facilitation centres, added Mr Sushil Muhnot, Managing Director, SIDBI
  • The Government of Maharashtra has decided to set up a manufacturing zone spread over 5,000 hectares under the National Manufacturing Policy. The policy seeks to give a boost to the manufacturing sector so that by 2022, it can contribute at least 25 per cent to the National GDP and add 100 million new jobs to the market. It has recognised large integrated areas called National Investment and Manufacturing Zones (NIMZ), which will be the growth drivers for the sector

October 30, 2012

FDI in retail sector to create 10 million jobs in India

India has emerged as the fifth most favourable destination for international retailers, outpacing UAE, Russia, Indonesia and Saudi Arabia, according to A T Kearney’s Global Retail Development Index (GRDI) 2012. “India remains a high potential market with accelerated retail growth of 15-20 per cent expected over the next five years,” highlighted the report.

The foreign direct investment (FDI) inflows in single-brand retail trading during April 2000 to June 2012 stood at US$ 42.70 million, according to the latest data released by the Department of Industrial Policy and Promotion (DIPP). Cash and carry represents an opportunity worth around Rs 8,250 billion (US$ 154.45 billion) of the Rs 27,500 billion (US$ 514.84 billion) annual retail business in India. Online retail business is another format which has high potential for growth in the near future. India’s e-retail industry is likely to touch Rs 70 billion (US$ 1.31 billion) by 2015, up from Rs 20 billion (US$ 374.43 million) currently, as per an industry body report.

The recently announced FDI guidelines in the Indian retail sector are likely to create 10 million jobs over the next 10 years, according to Indian Staffing Federation (ISF). The report also mentioned that the new job opportunities in the sector will make it the largest sector in organised employment.

The federation has welcomed the new FDI in retail announced by the Government of India. For the record, the Government has announced its decision to allow 51 per cent FDI in multi-brand retail and 100 per cent FDI in single-brand retail. In addition, the Government has also opened up the aviation sector and put up four PSUs for disinvestment.

The ISF said that FDI in retail sector will have a much wider impact on organised employment as compared to what happened in the IT sector over a decade ago. The federation also said that these measures will open doors for the low-skilled people.

It is believed that logistics and supply chain companies are also expected to make rapid progress considering the fact that they will be the link between small manufacturers, farmers and the organised retail chains.

The close integration within the organised retail chains will support the small producers in gaining access to the latest processes, systems and technologies available in the market.

With increasing disposable incomes, expansion of stores and supporting economic factors, retail sector in India is expected to grow to about US$ 900 billion by 2014, according to a report by global consultancy and research firm, PricewaterhouseCoopers (PwC).

The next generation of India’s retail environment is favourable for the rise of luxury goods. Consumer markets in emerging market economies like India are growing rapidly owing to robust economic growth. The retail sector in India is highly competitive because of ever changing consumer preferences and the need for marketing differentiation. The retail enterprises need to focus on costs throughout the consumer value chain because of proliferation of new products and categories and ever increasing demands to optimise value chains.

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