Investment Opportunities in India

July 2, 2013

Investment options in Indian energy sector

Energy plays a key factor in determining the economic development of all countries. The Indian energy sector has witnessed a rapid growth in order to meet the demands of a developing nation. Areas like resource exploration and exploitation, capacity additions, and energy sector reforms have been revolutionized.

Energy sector in India comprises of both non-renewable (coal, lignite, petroleum and natural gas) and renewable energy sources (wind, solar, small hydro, biomass, cogeneration bagasse etc.).

India has retained its position in top five world wind energy markets in 2012. The country remained the third largest market for new turbines in 2012 with capacity addition of 2,441 megawatt (MW), according to World Wind Energy Report 2012. World’s wind turbine capacity addition grew at 19 per cent to 44,609 MW.

Major investments in Indian energy sector

The investment climate is very positive for investors in India. The power sector has witnessed a surge of higher investment flows than envisaged. The Ministry of Power has set a target for adding 76,000 MW of electricity capacity in the 12th Plan (2012-17) and 93,000 MW in the 13th Plan (2017-22).

Some of the major investments in the Indian energy sector:

  • National Aluminium Company Ltd (Nalco) has set up its second wind power plant in Jaisalmer district of Rajasthan with a capacity of 47.6 MW. The Rs 283 crore wind power project is being executed through Gamesa Wind Turbines Private Ltd
  • Coal India Ltd (CIL) plans to invest Rs 340 crore to embark on the second round of exploration at Mozambique coal blocks
  • Jakson Power Solutions has won two new orders for installing solar rooftop systems in Bengaluru and Pune. The first order is to set up the 80 kilowatt peak (KWp) solar rooftop unit with a facility of battery back-up at Karnataka State Disaster Management Centre, Bengaluru, said Mr Sundeep Gupta, Joint Managing Director, Jakson Power Solutions
  • Vikram Solar plans to put up a 10 MW power plant at Tamil Nadu (TN) under the second phase of the state’s solar policy
  • Mytrah Energy Ltd plans to acquire 59.75 MW of existing operational wind power assets in Tamil Nadu (TN) and Maharashtra. The company expects to have a capacity of 370 MW against previously anticipated 334 MW by 2013 wind season

Government Initiatives to promote investments in the energy sector

The Government has initiated several policies to attract investors in India to invest in the Indian energy sector. To accelerate capacity addition, several policy initiatives have been undertaken by the Ministry of Power. The National Electricity Policy (NEP) in fact, stipulates power for all and annual per capita consumption of electricity to rise to 1,000 units by 2012.

Some of the major investments taken by the Government of India to garner investments in the energy sector are as follows:

  • Foreign direct investments (FDI) up to 100 per cent is permitted under automatic route for projects of electricity generation (except atomic energy), transmission, distribution and power trading
  • Under the Union Budget 2013-14, the Government of India has approved a scheme for the financial restructuring of DISCOMS to restore the health of the energy sector in India
  • In a boost to power firms with plans to set up units in Special Economic Zones (SEZ), the Government has exempted them from the positive net foreign exchange (NFE) obligation applicable to regular units in such enclaves
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Investment options in India, one of the most attractive economies in the world

The Indian economy continues to grow at a good pace and holds a strong position. Indiaís 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 investment opportunities with the available large manpower base, diversified natural resources and strong macroeconomic fundamentals. During April-January 2012-13, India received foreign direct investments (FDI) worth US$ 30.82 billion while FDI equity inflows during January 2013 stood at US$ 2.16 billion, according to latest data released by the Department of Industrial Policy and Promotion (DIPP).

India is the third-most attractive destination for FDI in the world. Indian markets have significant potential and a favorable regulatory regime for foreign investors, according to a survey titled World Investment Prospects Survey 2012ñ2014 by UNCTAD.

“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,” according to Ms Christine Lagarde, Chief, International Monetary Fund (IMF).

Changes made by the Mr P Chidambaram, Union Minister for Finance, Government of India, in the Union Budget 2013-14 can greatly benefit high net worth individuals looking to invest in India, where returns on investments are higher than in any other market.

Key sectors in India where foreign investors can invest

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

  • Aerospace & Defence
  • Automotive
  • Banking
  • Biotechnology
  • Information Technology
  • Insurance
  • Power
  • Real Estate
  • Retail
  • Telecommunications

Government Initiatives in supporting business investments opportunities in India

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

  • The Government of India has relaxed in expense ratios for mutual funds and the prospects of higher FDI limits in insurance sectors could unlock huge opportunities in these investment sectors.
  • The Government has allowed Qualified Foreign Investors (QFIs) ó individuals, groups or associations ó to invest directly in Indian equities and bond markets.
  • To encourage the micro, small and medium enterprises (MSMEs), the Government of Tamil Nadu (TN) has announced a special component package, which includes creation of an additional land bank for setting up new industrial estates in the state, increase in subsidy for machinery purchases and creation of a single window clearance committee to facilitate speedy approvals for industrial estates, said Ms J Jayalalithaa, Chief Minister of Tamil Nadu (TN).

Investment facilitation in India

The Ministry of Overseas Indian Affairs in partnership with Confederation of Indian Industry (CII) has set up an Overseas Indian Facilitation Centre (OIFC) as a not-for-profit-trust, to facilitate non-resident Indians (NRIs), overseas corporate bodies of overseas Indians and non-resident Indians who want to invest in India.

In order to ease the process for foreign investors to invest in India, OIFC has developed an online toolkit – Investment Guide to India. The toolkit serves as a simple, practical and stage-wise investment guide for the non-resident Indians wanting to invest in India.

March 28, 2013

Booming infrastructure industry of India

Infrastructure development in India has contributed majorly in the country’s economic transformation and growth during the last decade. Roads, ports, railways and power are key segments of the infrastructure sector. Some of the key facts related to the same are:

  • Indian Shipping segment, with 187 minor ports and 13 major ports, is spread across nine maritime states
  • The Indian Railways network is spread over some 64, 000 km, with 12, 000 passenger and 7, 000 freight trains plying each day from 7, 083 stations carrying around 23 million travellers and 2.65 million tonnes (MT) of goods daily
  • Indian road network is the second largest in the world with a total length of 4.1 million kilometres (km)

The total investment for the road sector is projected at Rs 9.20 lakh crore (US$ 167.55 billion) during the Twelfth Plan (2012-17), of which the Central and States would contribute Rs 3.58 lakh crore (US$ 65.19 billion) and Rs 2.66 lakh crore (US$ 48.44 billion), respectively, representing about 68 per cent of the total investments in infrastructure sector. Meanwhile, the private sector is anticipated to account for 32 per cent or Rs 2.94 lakh crore (US$ 55.6 billion) of the total investment.

Foreign investors are looking for high return on investments and are going to target Indian infrastructure companies in the coming years.

Investments options for NRIs in Indian infrastructure industry

The Cabinet has given its nod to private investment in state-run Indian Railways for building new rail lines and plants and enhance capacity. The move would allow foreign investors to connect railways with the ports, mines and industrial plants by providing last-mile connectivity and thereby reduce transportation costs

The Indian Government has also envisaged The Indian Railways Vision 2020 which aims to tackle infrastructure obstacles and deliver best services while building capacity, opening up huge investment opportunities for NRIs.

Further, the Government has recently approved nine road projects worth around Rs 11, 600 crore (US$ 2.11 billion), to be executed by State Governments under public private partnership (PPP) model. These projects, totalling up to 1, 226 km, are being bid in Andhra Pradesh, Uttar Pradesh and Bihar.

The finance ministry would provide 20 per cent of the financial requirement while another 20 per cent would come from the highways ministry in order to make these projects financially viable in the form of viability gap funding (VGF). The Government of India (GoI) has earmarked Rs 2, 295 crore (US$ 417.88 million) under VGF, wherein Rs 500 crore (US$ 91.06 million) would be released in 2012-13.

Future of infrastructure sector of India

India is betting high on private investments in infrastructure sector as the Government hopes that the private sector, through PPPs, will invest US$ 350-400 billion in infrastructure sectors (like roads, ports, railways and airports) between 2012 and 2017. This is about half the total investment in infrastructure according to the 12th Five Year Plan.

Moreover, seeking about US$ 1 trillion of investments in highways, harbours and power plants from 2012-2017 for infrastructure development in India, the Prime Minister, Manmohan Singh would lead a panel focussed at speeding up approvals of infrastructure projects. The Cabinet Committee on Investment would aim at easing bottlenecks that subdue growth and development of the country.

March 20, 2013

Investments options for NRIs in Indian infrastructure sector

Infrastructure development in India has contributed majorly in the country’s economic transformation and growth during the last decade. Roads, ports, railways and power are key segments of the infrastructure sector. Some of the key facts related to the same are –

  • Indian Shipping segment, with 187 minor ports and 13 major ports, is spread across nine maritime states
  • The Indian Railways network is spread over some 64, 000 km, with 12, 000 passenger and 7, 000 freight trains plying each day from 7, 083 stations carrying around 23 million travellers and 2.65 million tonnes (MT) of goods daily
  • Indian road network is the second largest in the world with a total length of 4.1 million kilometres (km)

Investment Opportunities for NRIs

Overseas investors looking for high return on investments are going to target Indian infrastructure companies in the coming years, says a report by research agency Preqin. As per the study, India is attracting the highest number of unlisted, closed-end funds that focus on a single country, making it the most preferred choice among the business investors. India is expected to require around US$ 1 trillion worth of infrastructure investment over the next five years

Non-resident Indians (NRIs) investing in India can choose from sub-sectors such as power, telecom, roads and ports. The Preqin report says 74 per cent of India-focused funds will invest in greenfield projects, 84 per cent in brownfield assets, and 42 per cent will buy out the stakes of other PE funds.

Investments Policy Updates

  • FDI up to 100 per cent under the automatic route is permitted in exploration activities of oil and natural gas fields, infrastructure related to marketing of petroleum products, actual trading and marketing of petroleum products, petroleum product pipelines, natural gas/LNG pipelines, market study and formulation and Petroleum refining in the private sector. This will be subject to the existing sectoral policy and regulatory framework in the oil marketing sector and the policy of the Government on private participation in exploration of oil and the discovered fields of national oil companies
  • FDI up to 49 per cent is permitted under the Government route in petroleum refining by the Public Sector Undertakings (PSU)
  • FDI up to 100 per cent under the automatic route is allowed both in setting up new and in established industrial parks from overseas investors

Recent Investments in Indian Infrastructure Industry

  • IVRCL Ltd has entered into an MoU with the Haryana Government for the development of Rai Malikapur-Kharak road corridor which would cover a stretch of 151 km of Rai Malikapur close to the Rajasthan border up to Kharak corridor and enhance the north-south connectivity. The Rs 1, 605 crore (US$ 292.23 million) project will take about 30 months to execute
  • Indian Railways has recently launched an application namely RailRadar which envisages an interactive map to allow users to track train movements on real-time basis. Such an application has been launched for the first time in India, wherein any of the public transport system can be tracked on the internet and mobile

Future of Indian Infrastructure

India is betting high on business investors in infrastructure as the Government hopes that the private sector, through public-private partnerships (PPP), will invest US$ 350-400 billion in infrastructure sectors (like roads, ports, railways and airports) between 2012 and 2017.

January 28, 2013

Investments Opportunities in Indian Shipping Industry for NRIs

The Indian Shipping segment, with 187 minor ports and 13 major ports spread across nine maritime states, is poised to mark exponential growth in the years to come. The Government of India is geared to attract foreign investors in India by embarking on public-private partnership (PPP) route for modernisation and expansion of the Indian ports.

The total capacity of the port sector is envisaged to be 2,301.63 million tonnes (MT), to meet the overall projected traffic of 1,758.26 MT by 2016-17, as per the 12th Five Year Plan (2012-17) document. “The traffic forecast by the end of the 12th Plan would be 943.06 MT and 815.20 MT for the major and non-major ports respectively, with corresponding port capacities of 1,241.83 MT and 1,059.80 MT respectively,” it added.

According to the Planning Commission, the capacity of Indian ports will have to nearly double to 2,302 MT over the next five years to be able to handle the fast growing cargo traffic.

The shipping industry of India has witnessed various deals and developments pertaining to foreign direct investment in India.

Indian Shipping Industry Goes Global

As the Government of India is determined to get Indian shipping industry at par with the global standards, it is in continuous discussions with foreign investors in India and across the world to achieve the growth targets.

The Ministry of Shipping expects that the bi-lateral co-operation would enable Indian organisations to acquire appropriate know-how, scientific knowledge and research and development (R&D) capabilities from the European country.

Moreover, India has recently shown interest to adopt new technology regarding decongestion of ports; information technology for the movement of container traffic and maritime training from Germany.

Investment Opportunities in Indian Shipping Industry

At the beginning of the financial year (2010-11), the Ministry of Shipping fixed a target of 21 projects under PPP for the major ports out of which two projects have been awarded so far at Tuticorin Port and Ennore Port.

The Government of India is focusing on port infrastructure development in the country and is promoting private participation and foreign direct investment in India. The Government has allowed 100 per cent foreign direct investments under the automatic route for:

  • Leasing of existing assets of ports
  • Construction/ creation and maintenance of assets such as-container terminals bulk/ break bulk/ multi-purpose and specialised cargo berths, warehousing, container freight stations, storage facilities and tank farms, cranage/ handling equipment, setting up of captive power plants, dry docking and ship repair facilities
  • Leasing of equipment for port handling and leasing of floating crafts
  • Captive facilities for port based industries

Investment Policy Updates

According to a Ministry of Shipping’s press communication a new programme – Perspective 2020 – will replace the existing NMDP plan. The Maritime Agenda 2010-2020 is a perspective plan of the Shipping Ministry for the present decade which has set the goals as follows:

  • To create a port capacity of around 3,200 MT to handle the expected traffic of about 2,500 MT by 2020
  • To bring ports at par with the best international ports in terms of performance and capacity
  • To increase the tonnage under the Indian flag and Indian control and also the share of Indian ships in our EXIM trade
  • To promote coastal shipping as it will help in decongesting our roads and is environment friendly

November 23, 2012

Scope of Investment Environment in India

India is in the middle of fast economic and social conversion and it provides a constant, flourishing platform for businesses to grow. It also provides rich investment opportunities to non-resident Indians (NRIs). It is one of the quickest, easiest and successful cost-effective commitment locations to set up a company. In fact, India is the second-most successful location, according to UNCTAD’s World Investment Leads Study 2010-2012.

Foreign Investments in India

Indian equities have attracted maximum investments by Foreign Institutional Investors (FIIs) as compared to any other Asian market on the back of policy reforms undertaken by the Government of India to promote economic growth. Foreign investors in India remain substantially strong and have invested over US$ 13 billion into Indian stocks till September 2012. Some of the key investments and developments are:

  • Overseas investors infused about US$ 645 million from October 1, 2012 to October 5, 2012 itself, while they invested more than US$ 3.5 billion in the month of September 2012, according to data released by capital market regulator, the Securities and Exchange Board of India (SEBI)
  • FIIs also infused Rs 1,382 crore (US$ 260.47 million) in the debt market in the first week of October 2012
  • As on October 5, 2012, the number of registered FIIs in the country stood at 1,753 while, the total number of sub-accounts were 6,329
  • Another statement issued by the Reserve Bank of India (RBI) revealed that foreign exchange reserves stood at US$ 294.81 billion for the week ended September 28, 2012 wherein the value of gold reserves was recorded at US$ 28.133 billion and that of foreign currency assets (FCAs) was at US$ 259.96 billion

The Center for Monitoring Indian Economy (CMIE) projects that FII inflows would strengthen in the second half of FY13 at US$ 11.2 billion as India is looked upon as a viable long-term investment destination on the global canvas. Major FIIs like JP Morgan, Morgan Stanley and Deutsche Bank are believed to drive the positive wave of foreign investments.

Government Initiatives

The Government of India is playing a vital role in attracting and providing an investment friendly climate to foreign investors in India. The policies have been liberalised to entice more and more cost-effective commitment methods. Some of them are as follows:

  • The Government has created many policies and schemes to maximize investment opportunities for NRIs in the real estate sector of India
  • RBI has allowed, both people residing outside India holding Indian passports and also person of Indian origin (PIO) to invest in residential as well as commercial properties in India
  • RBI has granted general permission to NRIs/PIOs, for undertaking direct investments in Indian companies, under the automatic route purchase of shares
  • NRIs/PIOs are permitted to invest in the foreign direct investment (FDI) scheme on a repatriation basis in equity shares/ Compulsorily Convertible Preference Shares (CCPS)/ Compulsorily Convertible Debentures (CCDs) of an Indian company

Government’s involvement on policies, especially, tax rules and foreign direct investment (FDI) in areas like retail, aviation etc. will play an important part in driving large deals. India’s development tale continues to be unchanged and NRIs/PIOs can look ahead to see better financial commitment options in second half of 2012.

August 6, 2012

Investment Prospects for NRI’s in India

India is considered to be the second favourite destination for investors from other countries. India’s unique and vast geography, endowed with diverse topography, has made it one of the most attractive investment destinations in the world.

The healthy growth of the Indian economy also becomes evident from the inflow of the foreign direct investment (FDI). Investment opportunities in India are plentiful. It becomes evident with the numerous MNC’s not only trailing their products and services into the Indian markets but also coming forward to set up their manufacturing units in India.

The vast investment opportunities available and the positive investment climate in India have become a part of every business entrepreneur’s life. The Ministry of Overseas Indian Affairs has set up an Overseas Indian Facilitation Centre (OIFC) as a not-for-profit-trust, in partnership with Confederation of Indian Industry (CII) to promote investment opportunities amongst the overseas Indians.

Some of the fruitful investment options in India are:

Fixed deposits: It is the most common among the investment opportunities in India. These are safe investments and provide decent return.

Insurance sector: There are a lot of insurance companies emerging these days as the health is becoming less secured because of the unhealthy life style of present generation. Some of the common insurance policies are life insurance, health insurance, home insurance and the car insurance policies.

Investment in Stock: The investment in stock market in India is one of the fastest means of earning. As the stock prices are always fluctuating, the chances of risk are also high along with high profits.

Mutual Funds: It is a collective investment scheme that pools money from many investors or foreign investors in India to purchase securities such as stocks, bonds, money market instruments and similar assets. It is an easy and safe investment with periodic withdrawals.

Real Estate: The population in India is increasing and therefore land is always in demand. Besides the need to reside, the establishment of industries also requires land. The projection of real estate includes sectors such as hospitality, manufacturing, housing, retail, commercial etc. Thus it is obvious that the cost of real estate is not going to fall down. Thus the investment opportunities in India are high and by investing in a land and selling it on demand by others is an easy source to earn money.

Also, there are many other exciting business investment opportunities in India, especially, for industrialists dealing in outsourcing technology, internet ventures, software development, e-commerce, etc.

The Government of India is trying to accommodate and utilise the conducive investment climate of the country by relaxing and even introducing new policies. The change in government policy, availability of cheap resources, strong operational units, etc. are the important reasons for FDI in India. It is important for foreign investors in India to have some trend analysis of investment scope before they plan to start or set up a business in India, thus the role of investment advisors to prepare extensive investment guides to help and direct the trade investments and the scope of foraying into a particular business in India becomes crucial.

July 23, 2012

Growing Healthcare Market in India

India is one of the most profitable healthcare markets globally. The sector is one of the largest and rapidly-growing sectors in India, in terms of revenue and employment. The Indian healthcare sector comprises the sub-sectors of hospitals, medical infrastructure, medical devices, clinical trials, outsourcing, telemedicine, health insurance and medical equipment.

The main challenge is to deliver affordable health care services to India’s billion-plus population. This signifies enormous opportunities for the medical community and other service providers in India. The leading factors supporting the growth of the industry are- prevalence of various diseases, rising urbanization, untapped market, increasing life expectancy, and active private sector participation. The healthcare in India is controlled mostly by major foreign companies. The foreign companies have subsidiaries in the country, mainly because of the availability of cheap and skilled labor.

The Indian healthcare sector is a rapidly-growing sector with high potential for future growth, both in urban and rural India. In the year 2011, the sector was sized at US$ 50 billion as it employs a total of 4.5 million people directly and indirectly within India. The sector is poised to grow to US$ 100 billion by the year 2015 and further to US$ 275.6 billion by 2020, according to the estimates by ratings agency Fitch.

FDI in Hospitals and Manufacture of Medical and Surgical Appliances

The economic reforms launched by the government from 1991 onwards have resulted in significant economic growth and the integration of India into the global economy. With the opening up of the Indian capital markets to Foreign Institutional Investors, the foreign direct investment regime too has been increasingly liberalised.

The health care industry in India has been witnessing a potential upsurge for the past few years especially in the hospitals and manufacturing of medical and surgical appliances.

The total inflow of FDI in India in the hospitals and diagnostics sector was US$ 1 billion from April 2000–April 2011, according to Department for Industrial Policy and Promotion (DIPP), which is responsible for formulating the FDI policy in the country.

FDI inflows to medical and surgical appliances are estimated to be around US$ 20.5 million. Medical and Surgical Appliances is Rs 981.7 million industry with a share of 10.59 percent in the global market.

Some of the government initiatives boosting Indian healthcare sector are:

There have been a number of initiatives taken up by the Government of India for the enhancement of healthcare sector in the country. Some of them are:

100 per cent foreign direct investment is permitted for health and medical services under the automatic route.

The National Rural Health Mission had allocated US$ 10.15 billion for the up gradation and capacity enhancement of healthcare facilities. The aim of NRHM is to provide facilities of quality healthcare in India.

In March 2010, the government allocated an additional US$ 1.2 billion for six upcoming AIIMS-like institutes and upgradation of 13 existing government medical colleges in order to meet revised cost of construction.

June 27, 2012

India: Hotspot Investment Destination for Foreign Investors

India is the largest democracy in the world. It ranks second in terms of population. The policy of liberalization has transformed the prospects for the Indian economy. Today India is one of the favorite destinations for global investments. The major investors in India are Mauritius, Singapore, the US, the UK, the Netherlands, Japan, Germany, etc. Foreign direct investment (FDI) in India went up by 31 per cent to US$ 27.5 billion last year. The sectors that attracted maximum FDI last year include services (financial and non financial), telecom, housing and real estate, and construction and power.

The government has come up with several incentives like import of capital goods at concessional customs duty, liberalisation of external commercial borrowing norms, tax holiday to encourage investments, etc. “The government should allow 100 per cent FDI in sectors like domestic airlines and insurance sector to boost inflows and generate employment, “as per Rajiv Kumar, Secretary General, FICCI. Sectors like automobiles, chemicals, food processing, oil and natural gas, petrochemicals, power, services and telecommunications have witnessed tremendous investments.

Investment options in India

There are number of options available for foreign investment in India for both short term and long term. The major options are real estate, bonds, mutual funds, money markets, gold, and financial assets (non-marketable, LIC policies & equity shares). Today, there are businesses and industries that are even 100% open for such investment. Some of the sectors that are still not open for foreign investment include, rail transport, lottery business, tobacco business, certain agricultural activities, atomic energy, mineral oils, etc.

Who can invest in India?

There are following categories of non-Indian resident who may invest in the capital of Indian Company:

  • A non-resident entity (other than citizen of Pakistan)
  • A citizen or entity of Bangladesh under Government route.
  • NRI resident as well as citizen of Nepal and Bhutan on repatriation basis.
  • Sebi registered NRIs through a registered broker on recognised India stock exchange.
  • Foreign venture capital investor registered by Sebi.
  • An FII (foreign institutional investor) may invest in the capital of an Indian company under the portfolio investment scheme.

Business Opportunities in India

There are various factors that create favorable business opportunities in India are:

  • There are huge business opportunities in Indian retail sector as people have become more conscious about branded products. Improvement in purchasing power and huge middle class population results in the growth of the economy.
  • India’s competitive advantage in information technology can be used to enhance productivity in industries.
  • Availability of large number of technical manpower has led to the expansion of manufacturing base across different industries.
  • India’s rich natural resources, availability of better infrastructure, well established banking system, better agriculture, etc. have created more investment opportunities.
  • The capital markets in India are one of the fastest growing markets in the world, attracting huge investments from foreign institutional investors.
  • The economic reforms have brought in policy changes in terms of freedom of entry, investment, location, usage of technology, import and export. These changes have created an investment friendly environment.

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