Investment Opportunities in India

July 2, 2013

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.

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June 3, 2013

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

April 26, 2013

Scenario of real estate sector in India

The Indian real estate sector has witnessed significant growth in the past few years and is expected to grow at the rate of 30 per cent in the coming years. The sector has emerged as one of the most appealing investment sectors for domestic as well as foreign investors.

The major factors responsible for growth in the sector are increasing purchasing power, favourable demographics, existence of customer friendly banks & housing finance companies, professionalism in real estate and favorable reforms initiated by the government to attract real estate investments.

Growth prospects

The Indian real estate market size is expected to touch US$ 180 billion by 2020. In fact, the demand is expected to grow at a compound annual growth rate (CAGR) of 19 per cent between 2010 and 2014, with tier I metropolitan cities projected to account for about 40 per cent of this.

Investment opportunities

At present, investment trends in India are showing a huge number of NRIs investing in Indian real estate sector.

India needs to invest US$ 1.2 trillion over the next 20 years to modernise urban infrastructure and keep pace with the growing urbanisation, as per a report released by McKinsey Global Institute (MGI)-India’s urban awakening.

Growing infrastructure requirements from sectors such as education, healthcare and tourism are providing numerous opportunities in the sector. Further, India is going to produce an estimated two million new graduates from various Indian universities during the year, creating demand for 100 million square feet of office and industrial space. In addition, presence of a large number of Fortune 500 and other reputed companies will attract more companies to initiate their operational base in India, thus creating more demand for corporate space.

FDI in Indian real estate

Construction development sector (including townships, housing, built-up infrastructure & construction-development projects) has attracted a cumulative foreign direct investment (FDI) worth US$ 22,007.67 million from April 2000 to February 2013, according to the Department of Industrial Policy and Promotion (DIPP).

In addition, the sector is set for robust inflows of US$ 4-5 billion from overseas investors in the next couple of years, with Bangalore, Delhi and Mumbai emerging as the favourites, as per Jones Lang LaSalle, a global real estate consultancy giant.

Government initiatives in the sector

The Government of India (GOI) has allowed FDI up to 100 per cent under the automatic route in townships, housing, built-up infrastructure and construction development projects to increase real estate investment, generate economic activity, create new employment opportunities and add to the available housing stock and built-up infrastructure.

The Reserve Bank of India (RBI) has granted permission to foreign citizens of Indian origin to purchase property in India for residential or commercial purposes. Further, the government is also committed to introducing FDI in multi brand retail, introduce changes in the existing SEZ policy to resurrect developer interest and expand the role of the private sector in infrastructure development.

Tax Advantages

People can avail huge tax benefits on investing in real estate:

  • Tax exemption is available on re-investment of sale proceeds of property in eligible possibilities
  • Tax benefit is available on interest on housing loan raised in India

Investment opportunities for foreign investors in India

The Indian economy has continuously recorded high growth rates and become an attractive destination for investment. According to recent trends, India is only second to China in the league of favorite investment destinations. As the Indian economy is developing very fast, it has opened new avenues for people to start businesses.

Doing business in India is a profitable option as the majority of the industries and sectors are almost untapped and hence the fear of facing stiff competition is less. “Our economic and commercial relations are expanding. But there is still a lot of untapped potential that needs to be exploited, especially in sectors like agro-processing, manufacturing, pharmaceutical, medical equipment, seafood, automobile parts, tourism and hospitality, IT and IT-enabled services,” according to Anand Sharma, Minister of Commerce and Industry.

Investment sectors in India for NRIs

The sectors in which the non-resident Indian (NRI) can invest through the automatic route include agriculture, mining, alcohol brewing, power, industrial explosives, hazardous chemicals, drugs and pharmaceuticals, transport, insurance, industrial parks, non-banking financial institutions, etc. In some cases, the approval of the Foreign Investment Promotion Board (FIPB) may be required. These include sectors like tea, infrastructural companies except telecom, publication of newspaper and periodicals, courier service and single brand product retailing.

The various sectors where NRI investments in India are prohibited include retail, atomic energy, lottery and gambling establishments, tobacco products, etc.

Investment environment in India

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, tax holidays, liberalisation of external commercial borrowing norms, etc. are the important reasons for increasing NRI investments in India.

NRIs are permitted to open bank accounts in India with funds remitted from abroad, foreign exchange brought in from abroad or with funds legitimately due to them in India, with authorised dealer.

Ways of investing in India

The foreign investors can invest in India in two ways:

  • Incorporation of an Indian company: The foreign investor can set up a separate legal entity in India under the provisions of the Companies Act, 1956. The foreign investors can invest in such Indian company up to 100 per cent of capital based on sectoral guidelines specified by the Government of India.
  • Unincorporated entity: A foreign company can operate in India, by establishing a Branch Office of the other place of business (foreign entity), subject to conditions and activities permitted under the Foreign Exchange Management Regulations.

Investment Facilitation

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 facilitate NRIs and overseas corporate bodies of overseas Indians which want to invest in India.

Further, in order to ease the process of investment 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.

January 4, 2013

Policies for foreign investors to do business 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 with dynamic growing businesses opportunities for non-resident Indians (NRIs). The Grant Thornton Global Dynamism Index gives a reflection of how suitable an environment it offers for dynamic businesses.

Scenario of Indian Economy

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. It is today one of the most attractive destinations for business and investment opportunities for NRIs and foreign investors 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.

The economy of India also boasts a robust financial system and deep capital markets. India’s demographic are very attractive with approximately 65 per cent of the total population falling in the age group of 15 to 64 years.

Foreign investment framework of India

The foreign direct investment (FDI) regime has been progressively liberalised during the course of the 1990s and continues to do so in the 2000s, with most restrictions on foreign investment being removed and procedures simplified. Foreign investors can invest directly and do business in India, either on their own or as a joint venture.

Some of the features of the consolidated FDI Policy of India and incentives offered by it:

  • Indian companies are permitted to issue equity shares, fully, compulsorily and mandatorily convertible debentures (FCD’s) and compulsorily and mandatorily convertible preference shares (CCPS) to the non-residents subject to pricing guidelines/valuation norms prescribed under FEMA
  • Foreign investment is calculated on the basis of ownership and control of the Indian company.
  • Use of foreign brand names/trademarks is permitted for the sale of goods in India
  • “Single window” clearance facilities and “investor escort services” are available in various states to simplify the approval process for new ventures

Sole proprietorship in India

Sole proprietorship is the oldest and most common form of business. It is a one-man organisation where a single individual owns, manages and controls the whole business. An NRI or a person of Indian origin (PIO) residing outside India is allowed to do business in India through a sole proprietorship concern. The investment should be made on non–repatriation basis subject to satisfying certain other conditions.

Tax Incentives in India

The Government of India, for the purpose of accelerated growth of the Indian economy, has extended incentives in the form of tax holiday, deductions, rebates etc under the direct/indirect taxes. Primarily, such incentive relates to export promotion, new industrial undertaking, infrastructure facilities, software industry, research, promotion of backward areas etc.

November 28, 2012

Wealth Management Investment Guide for NRIs

What would you prefer: Rs 1, 00,000 right now or Rs 1, 00,000 five years from now?

It will be better if we should take Rs 1, 00,000 today because we know that there is a certain time value of money. The Rs 1, 00,000 received now will provide us with an opportunity to put it to work instantly and earn a certain return on it.

A single rupee today is worth more than a single rupee a few years down the line. Because of this, people who have surplus funds in the form of savings want to invest so that the value of the funds over the years does not go down.

It is also very important to determine your financial goals. You need to decide which type of investment strategies works for you. Your strategy will determine the extent of your success in the investment world whether you invest in India or overseas markets.

The strategies can differ greatly from a rapid growth strategy where an investor focuses on capital appreciation to a safety strategy where the focus is on wealth protection. The most important part of investment strategies is that it aligns with the individual’s goals and is closely followed by the investor.

Investment options in India

There are various forms of investments options at the disposal of individuals in India. These include real assets like a house, a car, a television, or financial assets like stocks in companies, bonds, units of funds, etc.

Traditionally, term deposits in banks, post office savings schemes, bonds and common stocks are the most accessible forms of investments available to the investors. Term deposits, post office savings schemes and bonds give a fixed return over a period of time.

Several national priority level and state-specific projects are being implemented across the country by the Government of India. These offer huge potential for investors willing to invest in India. The Government is in fact, promoting Public Private Partnerships (PPPs) in many projects opening up new vistas in sectors such as infrastructure, education, healthcare etc.

Wealth management services in India

There are individual investment avenues in India that help you enhance your individual wealth. These are offered by eminent banks in India, which have rich experience in servicing overseas Indians. Not only will you get to choose from a wide bouquet of investment products, but these can also be customised as per your individual needs.

Investment Toolkit

In an effort to ease the process of investing into the country, Overseas Indian Facilitation Centre (OIFC) has developed an online ‘NRI Investment Guide‘.

The toolkit provides an entire range of investment guidelines, policies and procedures, suggests the range of compliance requirements and clearances, as desired, in synergy with the investor’s investment preferences. In other words, it is a simple, practical, and realistic online investment guide customised to the needs of overseas Indian investors.

Investment Facilitation Platform of OIFC helps NRI through the complete process of investing, right from choosing the correct investment opportunities and applying right investment strategies to actually making the investment.

October 4, 2012

Business Opportunities for NRIs in Indian Market

India is the largest democracy in the world. The country ranks second in the world in terms of total population. The liberalization and globalization of the Indian economy has led to more foreign direct investment (FDI) inflows in Indian markets. As a result, the scope for business in India has increased.

There are plenty of business opportunities in India for Foreign Investors, Non-Resident Indians (NRIs), Persons of Indian Origin (PIO) and Overseas Corporate Bodies (OCBs). The country offers liberal policy regime, along with easy availability of loans, funds and various other initiatives, which makes India a lucrative investment destination for NRIs and PIOs.

Some of the promising sectors where NRIs may invest include power, pharmaceuticals, mining, hotel & tourism, coal & ignites and other infrastructural projects. NRIs can also invest directly in Indian real estate except buying agricultural lands or plantations. They can look at huge number of central and state sponsored projects in key infrastructural sectors like education, healthcare and construction for higher returns.

Business Opportunities in India

Some of the major factors that help businesses in India to flourish include:

  • High number of people with disposable income, emerging middle class, low cost competitive workforce, and investment friendly policies
  • Availability of rich natural resources
  • Availability of a considerable section of population proficient in English
  • A well-established banking system consisting of public and private banks and other financial institutions
  • Competitive advantage in Information Technology, which can be used to enhance productivity in Industries
  • Improved infrastructure for business ventures

Steps for NRIs /PIOs to start business in India

  • Applying and getting PIO card (Person of Indian origin) – to make investments in properties, etc
  • Getting permanent account number (PAN card) from the Indian tax department, making it smoother to undertake all business and investment transactions above Rs. 50,000
  • Selecting a right and highly profitable business in India among various available options
  • Selecting an experienced person/ business professional to plan business and investments
  • Selecting a business partner in India and start a business

Investors can also take the help of business incubators and facilitators to become established and sustainable during their start-up phase. Business incubators are programs designed to nurture the development of entrepreneurial companies. They provide the companies with business support services, business advice, assistance with business planning, market and international networks, and also help in obtaining finance. Incubators usually offer companies rental space with flexible leases, basic office services and access to equipments all under one-roof. Successful completion of a business incubation program increases the chances of a start-up company to stay in business in India for long term.

Government Initiatives

To attract foreign investment into India, the Government is offering several facilities to NRIs, PIOs and OCBs. The economic reforms have brought policy changes in terms of ease of entry, investment, location, usage of technology, import and export. These changes have created an investment-friendly environment, which results in more business opportunities in India.

NRIs are permitted to open bank accounts in India with funds remitted from abroad, foreign exchange brought in from abroad or with funds legitimately due to them in India, with authorized dealer.

Further, the Reserve Bank of India (RBI) has granted general permission to NRIs/PIOs, for undertaking direct investments in Indian companies under the automatic route.

August 29, 2012

Investment Trends in India

India has grown as one of the significant economies in the world having immense potential for long-term growth. Indian economy is developing at a faster pace and is brimming with investment opportunities. As per McKinsey Global Institute, the average Indian’s income will triple by 2025. This will result in more investment in the coming years.

India: Investment Potential

According to UNCTAD’s World Investment Prospects Survey 2010-2012, India is the second-most profitable destination for foreign direct investment (FDI) in the world. Indian markets have significant potential offering prospects of high profitability and a favorable regulatory regime for investors.

Investment for saving purpose in future is certainly a good idea. There are large numbers of companies that offer plenty of opportunities for different individuals. India with a matured capital market, backed by liberal policies and strong banking system has turned to a profitable business ambience both for domestic and international businessmen.

Entry strategies for global investors in India

The various entry strategies for foreign investors in India have helped to bring in huge amounts of FDI into India. Some of the investment strategiesinitiated by Indian government are:

  • A foreign company can start its operations in the country by setting up a new company according to the Companies Act 1956. The foreign direct investment of 100 per cent has been allowed by the Government of India in such companies.
  • An international company can start its operations in India by forming joint collaboration with an Indian company.
  • An international company can start its operations in India by setting up their branch office, representative office, and project office.
  • A foreign company can start its operations in India by establishing a wholly owned subsidiary in the sectors, where foreign direct investment up to 100 per cent is permitted under the FDI policy.

Areas of Investment

The scope for business in India is enormous and has led to more investment options in India. Some key areas like infrastructure, petrochemicals, power, automobile, electronic hardware, etc. are receiving attention not only for foreign but for domestic ventures also.

Further, there are various exciting opportunities for conducting business in India, especially, for entrepreneurs dealing in outsourcing technology, internet ventures, software development, e-commerce, etc. People can also find a niche market in India where they can sell various products like health care products.

Major initiatives in India

There are various initiatives taken in India that provide a liberal and investor friendly environment:

  • Simplified investment procedures
  • Liberalised trade policy and exchange regulations
  • Intellectual property rights
  • Enactment of competition law
  • Financial sector reforms

There is no dearth of investment options in India after the investment under the automatic route has been allowed by the Government. The Government has also revised its policy regarding FDI in Indian companies engaged in retail trade. Foreign investors will now be permitted, subject to certain conditions, to own up to 100 per cent of single-brand retail trading companies in India.

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