Investment Opportunities in India

July 2, 2013

March 28, 2013

Booming Indian Economy offering huge investment options for NRIs

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 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 country’s strong fundamentals such as a growing middle class population, cost competitiveness and strong domestic consumption have made it a preferred destination for MNCs from across the world.

Being the world’s largest democracy with over 1.2 billion people means a plethora of business opportunities for its people. The country also offers innumerable investment opportunities for NRIs. Combined with young skilled manpower along with a well established judicial and stable government conducive to business, are all positive points towards India’s business potential.

Additionally, strong growth across diverse parameters like being the 2nd most attractive FDI destination, steady Infrastructure & GDP growth and being one of the largest economies of the world reinforce the strength of India’s economy. All this translates to the availability of new investment opportunities for NRIs in India spanning all sectors of the Indian economy.

Key Sectors

The various key investment sectors in India offering lucrative business opportunities 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, and Telecommunications.

Growth Potential in key sectors

Indian tax climate is considered to be reasonably favourable and India has continued to be an attractive investment destination, according to a survey conducted by Deloitte Touche Tohmatsu Ltd (Deloitte). The investment sectors in India are witnessing new heights in terms of contribution both from the domestic front as well as from the foreign land.

  • The pharmaceutical market of India is expected to grow at a compound annual growth rate (CAGR) of 14-17 per cent over 2012-16 and is now ranked among the top five pharmaceutical emerging markets globally
  • India’s IT and business process outsourcing (BPO) sector exports are expected to increase by 12-14 per cent in FY14 to touch US$ 84 billion – US$ 87 billion, as per National Association of Software and Services Companies (Nasscom)
  • Indian manufacturing and natural resources industry plans to spend Rs 40,800 crore (US$ 7.53 billion) on IT products and services in 2013, a growth of 9.1 per cent over 2012, according to Gartner. The telecommunications category remains the biggest spending category and it is forecast to reach Rs 13,200 crore (US$ 2.43 billion) in 2013
  • The electronic system design and manufacturing (ESDM) sector of India is projected to reach US$ 94.2 billion by 2015 from US$ 64.6 billion in 2011, according to a report by the India Semiconductor Association (ISA) and Frost & Sullivan
  • The luxury car market of India is set for growth over the medium and long term, according to Mr Philipp Von Sahr, President, BMW Group India. The market is about 30,000 cars a year and is rising steadily, Mr Sahr added

March 20, 2013

Indian retail market opened more doors for NRIs

The recent wave of reforms by the Government to incentivise foreign direct investment (FDI) in various sectors is bringing a new zeal to the investment options in India. One of the most debated reforms is the policy for allowing 51 per cent FDI in multi brand retail.

Retail Market in India

The Indian retail industry has experienced growth of 10.6 per cent between 2010 and 2012 and is expected to increase to US$ 750-850 billion by 2015. Food and Grocery is the largest category within the retail sector with 60 per cent share followed by Apparel and Mobile segment.

Within the organised retail sector, Apparel is the largest segment. “Food and Grocery” and “Mobile and telecom” are the other major contributors to this segment.

Evolution of the FDI policy in multi brand retail

The Government of India had been considering opening up the multi brand retail sector to FDI for some time. They had released a discussion paper in 2010 on the topic and had extensively gathered public, academic and industry views on the issue. In November 2011, the Government came out with its proposal for the new FDI policy. However, unable to achieve political consensus on the issue, they had to shelve their plans for the enactment of the policy. Finally, the Government decided to pass the new FDI policy on multi brand retail in September 2012 to increase investment options in India.

The FEMA notification issued by the Reserve Bank of India permitting FDI in the retail sector was laid before the Houses of Parliament and the same has been cleared without any modification.

The changes in some of the policy conditions indicates government intention to attract more NRIs to invest in retail sector of India and provide a window to foreign retailers to cultivate/ grow the SME segment.

Policy Implications

The FDI policy conditions will have a different impact on the various sub-segments of the retail industry in India. A policy condition might have a low impact in one segment but could be a major stumbling block for another segment. Implications of each FDI policy condition in Mass Grocery, Apparel and specialty stores such as Beauty & Wellness and Consumer Electronics are:

  • Minimum FDI of US$ 100 million: Minimum FDI of USD 100 million and a constraint of maximum 51 per cent stake of the foreign entity imply that the minimum investment required by both, the foreign and the Indian partner together, is more than Rs 1000 crore
  • 50 per cent of FDI in backend infrastructure in three years: Minimum investment of Rs 220 crore-Rs 250 crore is to be invested in backend infrastructure in the first three years to invest in retail sector of India. However, different retail segments have dynamic requirements of backend infrastructure
  • 30 per cent of sourcing from “small” industries: This policy constraint implies that retailers should have at least 30 per cent sales from private label brands or unbranded products sourced from small industries

Policy conditions of 50 per cent investment in backend and 30 per cent sourcing from small industries are the two most difficult conditions to be met for FDI in multi brand specialty retail such as Consumer Electronics, Beauty & Wellness etc.

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 23, 2012

Doing Business in India – A profitable opportunity 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. It is today one of the most attractive destinations for business and investment 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.

Advantage India

  • World’s largest democracy with 1.2 billion people
  • Stable political environment and responsive administrative set up
  • Well established judiciary to enforce rule of law
  • Land of abundant natural resources and diverse climatic conditions
  • India’s growth will start to outpace China’s within three to five years and hence, India will become the fastest large economy with 9-10 per cent growth over the next 20-25 years, according to a report by Morgan Stanley
  • Investor friendly policies and incentive-based schemes
  • India’s economy will grow five-fold in the next 20 years, as per a study by McKinsey
  • Cost competitiveness; low labour costs
  • Total labour force of nearly 530 million

Investment Options for NRIs in India

India offers a stable, prosperous foundation to grow one’s business. It offers rich business opportunities and markets to non-resident Indians (NRIs) for new products and services. It is one of the fastest, easiest and lucrative investment destinations in the world to set up business. India is the second-most profitable destination, according to UNCTAD’s World Investment Prospects Survey 2010-2012.

India is in the midst of rapid economic and social transition and is giving a feel good factor to the NRIs, especially the real estate sector. Returns from real estate investments have consistently performed well and have even outperformed other businesses in India.

The health care sector has also opened new business opportunities in India for NRIs to invest in the country because of the rise in disposable income, penetration of health insurance and change in lifestyle of present generation.

There are many other exciting business opportunities in India, especially, for entrepreneurs dealing in outsourcing technology, internet ventures, software development, e-commerce, etc.

Government’s intervention on policy issues, especially, tax regulations and FDI in sectors like retail, aviation etc. will play an important role in driving large transactions, especially, inbound deals. India’s growth story remains intact and NRIs can look forward to see better investment options in the second half of 2012.

Success Stories

India has witnessed a number of success stories – both Indian and multinational firms have registered higher profits, increased turnover and higher sales over the years. This has prompted them to reinvest profits and inject fresh capital into their processes in order to reap the benefits of the India growth story.

Investments have been made by Corporate across the board and almost all the sectors have seen inflow of funds. Global players such as Daimler Chrysler, General Motors, Ford, LG Electronics, Samsung, Sony, Amway, Tupperware, Pepsico, McDonald’s, IBM, Oracle, Microsoft, Aviva, Nortel, and Nokia among others have benefited from their business in India and have made expansion plans for the country. The companies plan to expand by way of product diversification, setting up manufacturing base in India, increasing the existing production capacity, establishing research centres in India, etc.

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.

October 4, 2012

Foreign direct investments opportunities for NRIs in India

India is fast gaining importance world-wide as the country has become an investment hub over the last decade. Global investors have retained their faith in the investment opportunities in India even during the toughest of the times of the Indian Economy. Non-resident Indians (NRIs) keep looking for the investment opportunities in India. As a result, India enjoyed high foreign inflows and investments when rest of the world was struggling to even survive.

India is projected to scale higher growth in the years to come. According to Mr Brad Wall, Premier of Saskatchewan, Canada, ‘India is one of world’s fastest growing significant economies’.

According to a UN report, India is the third most favored destination for investment after China and the US for major global companies. The report further expects that foreign investments in India could increase by more than 20 per cent in 2012-13.

Consolidated Foreign Direct Investment Policy of India

The Indian government is continuously working towards increasing investment opportunities for NRIs and foreign direct investment (FDI) flows into the country. The country enjoyed the second highest growth in FDI inflows in the world during 2011, which eventually generated over two lakh jobs. According to the Ernst & Young’s (E&Y) 2012 India Attractiveness Survey, investors view India as an attractive investment destination. India stands as the fourth most attractive destination for FDI in the survey’s global ranking.

India received FDI worth US$ 2.21 billion in February 2012, registering an annual growth of 74 per cent. Cumulative inflows for April-February 2011-12 stood at US$ 28.40 billion.

India has already emerged as one of the most preferred destinations for foreign investment and this eminent position will need to be sustained, according to a report by Department of Industrial Policy and Promotion (DIPP). The Indian government is therefore, doing every bit to ensure this. The Government of India has put in place a policy framework on FDI, which is transparent, predictable and easily comprehensible. This framework is embodied in the Circular on Consolidated FDI Policy, which may be updated every year, to capture and keep pace with the regulatory changes effected in the interregnum. The DIPP and Ministry of Commerce & Industry make policy pronouncements on FDI through Press Notes/ Press Releases which are notified by the Reserve Bank of India (RBI) as amendments to the Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No. FEMA 20/2000-RB dated May 3, 2000).

Key Foreign Direct Investments in India

  • The Government of India has approved 21 FDI proposals worth Rs 2,410 crore (US$ 436.01 million) including that of Pfizer Inc and Sterlite Networks on September 11, 2012.
  • The Government of India has approved 14 FDI proposals worth Rs 1,584.11 crore (US$ 280.91 million), including that of Abhijeet Power Ltd to bring in FDI worth Rs 674 crore (US$ 119.51 million) and CLSA Singapore’s proposal to invest Rs 225 crore (US$ 39.89 million) on July 23, 2012
  • FDI inflows worth US$ 341.49 million were recorded in the drugs and pharmaceuticals sector between April 2009 to February 2012. At present, the Government of India allows 100 per cent FDI for both greenfield and existing projects in the sector, according to Mr Jyotiraditya Scindia, Minister of State for Commerce and Industry.

The foreign direct investments policy of the India helped in generating huge investment opportunities in India for NRIs.

Why should NRIs and PIOs invest in Indian Aviation sector?

Infrastructure sector, not only is the backbone of an economy, but also plays a vital role in India’s social and cultural segments. It contributes significantly to the growth of gross domestic product (GDP), while creating opportunities for employment and investment.

Infrastructure in India will require US$ 1.7 trillion investment in the next 10-years, according to investment banking company Goldman Sachs. With a view to streamlining and simplifying the appraisal and approval process for public private partnership (PPP) projects, a Public Private Partnership Appraisal Committee (PPPAC) has been constituted under the chairmanship of Secretary, Department of Economic Affairs and Secretaries of Planning Commission, Department of Expenditure, Department of Legal Affairs and the concerned Administrative Department as its members.

Global private equity (PE) funds looking for high return on investments are going to target Indian infrastructure companies in the coming years, says a report by research agency Preqin. 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.

Major sections pertaining to infrastructure in India include roads, ports, aviation, energy and railways.

Aviation in India

The aviation industry in India is one of the major economic drivers for prosperity, development and employment in the country. The rapidly expanding aviation sector in India handles about 2.5 billion passengers across the world in a year; moves 45 million tonnes (MT) of cargo through 920 airlines, using 4,200 airports and deploys 27,000 aircraft. Today, 87 foreign airlines fly to and from India and five Indian carriers fly to and fro from 40 countries.

India is the 9th largest aviation market in the world as per a report, Indian Aerospace Industry Analysis, published by research firm RNCOS. The Indian Aviation sector grew around 13.6 per cent year-on-year in FY 2010, which was amongst the highest globally.

India is expected to be amongst the top five nations in the world in the next 10 years in the aviation sector. On the sidelines of the International Civil Aviation Negotiation (ICAN) Conference, Ms Pratibha Patel, former President of India, highlighted that currently, India is the ninth largest civil aviation market in the world.

Latest Developments in Indian Aviation Sector

  • The Bengaluru International Airport, along with Chatrapati Shivaji International Airport, Mumbai, has been presented with certificates in recognition of their achievements under the various levels of Airport Carbon Accreditation by Airports Council International (ACI). Bengaluru airport, which is the busiest in South India, has been given a certificate for carbon reduction. Mumbai airport on the other hand has been awarded the certificate for mapping carbon emissions
  • The first ‘Made in India’ helicopter cabin is ready to take off in global skies. The cabin has been manufactured by the Tata Group in Hyderabad and has been fitted in the helicopters by the US-based firm Sikorsky. In India, Sikorsky has so far supplied six ‘executive transport’ category helicopters to some of the commercial establishments in Mumbai
  • The Government of India has allowed 100 per cent foreign direct investment (FDI) for green field airports, via the automatic route. Moreover, foreign investment up to 74 per cent is permissible through direct approvals while special permissions are required for 100 per cent investment

The aviation industry in India is exploring opportunities to improve connectivity and is also looking at enhancing the number of Indian carriers to various countries. Massive investments in airport infrastructure have led to world class airports which have become the symbol of India’s growth story.

September 12, 2012

NRIs Investment Options in India

India offers a stable, prosperous foundation to grow one’s business. It offers rich business opportunities and markets to non-resident Indians (NRIs) for new products and services. It is one of the fastest, easiest and lucrative investment destinations in the world to set up business. India is the second-most profitable destination, according to UNCTAD’s World Investment Prospects Survey 2010-2012.

India is in the midst of rapid economic and social transition and is giving a feel good factor to the NRIs, especially the real estate sector. Returns from real estate investments in India have consistently performed well and have even outperformed other investment options. The Government of India has created many policies and schemes to maximize opportunities for NRIs looking to invest in Indian real estate sector. The rules have been liberalised to attract more and more investments. The Reserve Bank 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. The purchase can be done out of funds remitted to India through normal banking channels or funds held in certain types of accounts in India. NRI can freely invest in any partnership or proprietorship firm (not engaged in agriculture/plantation/real estate) on a non-repatriable basis. The sale or transfer of shares and debentures to Indian residents is permissible.

The Government also offers huge investment opportunities in government securities, Unit Trust of India (UTI), National Saving Certificates, shares and mutual funds. 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. They are also permitted to make portfolio investments. The RBI has granted general permission to NRIs/PIOs, for undertaking direct investments in Indian companies, under the automatic route purchase of shares. The ‘24% Scheme’ permits Indian companies, apart from those operating in the agricultural sector, to issue 24% of their debentures and shares to NRIs with repatriation benefits.

The health care sector has also opened new business opportunities for NRIs/PIOs to invest in India because of the rise in disposable income, penetration of health insurance and unhealthy lifestyle of present generation.

With a huge agriculture sector, abundant livestock, and cost competitiveness; India is fast emerging as a sourcing hub of processed food. The food services sector in India is expected to witness a 50 per cent increase in investments in 2012 to about US$ 750 million, as food suppliers and retail companies plan to scale up business and stay competitive by tapping the large potential of the domestic market.

There are many other exciting business opportunities in India, especially, for entrepreneurs dealing in outsourcing technology, internet ventures, software development, e-commerce, etc.

Government’s intervention on policy issues, especially, tax regulations and FDI in sectors like retail, aviation etc. will play an important role in driving large transactions, especially, inbound deals. India’s growth story remains intact and NRIs/PIOs can look forward to see better investment options in 2nd half of 2012.

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.

Next Page »

Blog at WordPress.com.