Investment Opportunities in India

January 28, 2013

India as an Investor-Friendly Country

The attractiveness of the Indian market is regularly substantiated through the investments made by various multinational corporations in the country, which demonstrate their belief in the strong fundamentals of the Indian economy. The Government of India policies backed with positive business environment, availability of talented workforce and stable outlook for the macro-economy has made India a global hub for international players to park their funds in various investment sectors.

There is a parallel process of business and industry with various countries taking note of the opportunities that recent economic developments in India have created for them.

Projections

As per the Government projections, Indian infrastructure landscape would attract investments worth Rs 49,000 billion (US$ 881.29 billion) during the 12th Five Year Plan period (2012-17), with at least 50 per cent funding from the private sector.

Sectors

For overseas Indians, India offers a tremendous opportunity for investment and wealth building as India is slated to grow at the rate of 8%-10% for the next few decades. There are various investment sectors where non-residents of Indians (NRIs) can explore money-spinning deals and do profitable business.

Investment Options

Most of the Indians who have migrated to foreign countries for professional and personal reasons, still feel the desire to be associated with their mother land in some way or the other. They try to make investments in India through different avenues. There are numerous investment options for NRIs in India that can yield them lucrative benefits and profitability both in short run as well as long run. A few of them are as follows:

  • For the NRI who is looking for high returns, attention should be concentrated on the huge number of central and state sponsored projects in key infrastructural sectors like education, healthcare and construction
  • In general NRI investment is made through three major sectors. These include bank accounts, investment in immovable properties and investment in securities and debts
  • There are many types of bank accounts. The regulations vary according to the repatriation of the interest income
  • The securities in which the 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. You do not need the approval of the Reserve Bank of India (RBI) to invest in these securities. 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
  • If you are looking for investment opportunities with repatriation benefits, you will have to invest in mutual funds, term deposits and bonds for at least three years
  • A NRI can invest in proprietary and partnership firms in India, but the income will not be repatriated outside the country
  • NRI can directly invest in real estate in India except if you are buying agricultural lands or plantations. Investments in housing schemes and commercial properties are free
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December 27, 2012

Opportunities for foreign investors in India

Indian markets, across all industries, are considered as viable long-term investment options as the country stands strong amid global financial turmoil. India is considered to be the third most favoured destination for investment after China and the US for major global companies, according to UNCTAD’s World Investment Report 2012. The report anticipates that foreign investments in India could increase by over 20 per cent in 2012-13.

Foreign Direct Investments in India

In recent years, bulk of the foreign direct investments in Indian business sectors of infrastructure, telecommunication, information technology, computer hardware and software, and hospitality services, have been made by investors of countries like US, UK, Mauritius, Singapore, and many others.

The foreign direct investment in India can easily be made in a variety of ways, through the Governmental and automatic routes. However, the joint ventures (JV) are the most popular and preferred forms of making investment in Indian industry.

The Government has recently cleared 14 foreign direct investment proposals worth Rs 113.35 crore based on the recommendations of Foreign Investment Promotion Board (FIPB). Major proposals include an equity increase of Rs 68.22 crore by the UK-based Dashtag to conduct business of pharmaceuticals specialising in dermatology, anti-histamines, antibiotics and oncology products.

Some of the major foreign direct investments in India are:

  • Japanese auto major Nissan intends to introduce 10 new passenger car models by the end of March 2016 in a bid to boost its volumes in India. The company also aims to double its vehicle sales in 2012-13
  • United Nations Industrial Development Organisation (UNIDO), Austria has appointed Ramky Enviro Engineers Limited (REEL) as its strategic partner to work on a project for the Bhilai Steel plant
  • Mahindra Finance’s subsidiary Mahindra Insurance Brokers (MIBL) has formed a venture with LeapFrog Investments wherein the latter’s subsidiary, Inclusion Resources Singapore, would infuse Rs 80.41 crore for a 15 per cent stake in MIBL

Major reforms in foreign direct investments in India

The Government of India has given its nod to 51 per cent foreign direct investment in multi-brand retail. The decision will pave way for retail giants like Walmart, Tesco and IKEA to enter into Indian market and make footprints in the US$ 450 billion retail industry. Moreover, the Government has relaxed sourcing norms for single-brand retailers and has permitted them to buy at least 30 per cent of the goods from Indian industry, rather than particularly from Indian small and medium enterprises (SMEs) as per earlier stipulation.

In case of civil aviation, the Government has allowed foreign carriers to buy up to 49 per cent stake in their Indian counterparts.

Further, to sustain the momentum of the above stated reforms, the Government would take more decisions to create investment options for overseas investors. The measures being considered include raising the ceiling for foreign borrowings, easing curbs on portfolio investors, and liberalising norms for overseas borrowings.

Future of foreign investment in India

With the Government of India laying intense focus on increasing the country’s share in the global FDI space from 1.3 per cent in 2007 to 5 per cent by 2017 by relaxing and un-complicating the FDI norms, it is expected that foreign majors would invest aggressively in the flourishing Indian markets.

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.

July 23, 2012

Investment Scenario in Indian Market

The process of reforms as part of liberalization has resulted in greater investment in Indian market. In today’s economy of less income growth and highly increasing cost of living, one has to know how to use his/her savings to generate higher returns. Availability of too many options and no clear idea about these choices is creating a hostile situation for the investor to choose the best among the available alternatives.

An investor has several investment alternatives (such as stocks, bonds, precious metals, etc.) to choose from, depending on his risk profile and expectation of returns. Different investment substitutes represent a different risk-reward trade off. Low risk investments are those that offer assured, but lower returns, while high risk investments provide the potential to earn greater returns. Hence, an investor can choose the most suitable investment on the basis of his/her risk tolerance.

Best investment options in India

Some of the investment alternatives available in the Indian investment market are:

  • Investment in Fixed Deposits- FD is one of the safe investment options with the current annual rate of interest of 10 per cent.
  • Investments in Insurance- Insurance-cum-investment options like unit linked insurance plan (ULIPs) are beneficial for the investors. Insurance offer quality services to cover life, money and assets along with low-risk profits.
  • Investment in Mutual Funds- People may select mutual funds as an investment alternative on the basis of long term performance, short term performance, consistent returns, etc.
  • Investment in Equity- Private equity as an investment substitute is growing fast in India. With a business of US$ 20 billion in 2010-11, the share of equity investments is expected to increase in coming years.
  • Investment in Public Provident Funds- PPF is a government guaranteed fixed income security with a minimum amount of Rs 500 and maximum of Rs 1, 00,000 in a financial year; PPFs are now a popular choice of investment in long run.

Points to be considered before taking investment decision

Risk – It is important for the investor to choose the investment option on the basis of his/her risk profile. For e.g. – A low risk investor should not invest into equities. He should look for the safe option for investment. Risky asset class causes a loss of principal.

Liquidity – Liquidity is also an important criterion for the selection of Investment Avenue. For e.g. – An investor should not invest into public provident fund (PPF), if he needs money in 3- 4 years time frame. PPF has minimum lock in period of five years.

Time horizon – Investment should be done by considering the specific time horizons. For e.g. – For short term investment, mutual fund or fix deposit could be a good option, where as for long term, real estate and regular investment into equities could be a good option.

Taxation – Taxation affects the real returns of investment, investor should always look at the tax aspect of any investment before investing into it.

The scope for business in India is vast. Indian economy has grown as one of the significant economies in the world having immense potential towards long-term growth. The growth has been backed by the various industrial sectors to a great extent. The sectors mainly include technology, manufacturing and service industry.

February 28, 2012

Go for the Best Investment Opportunities Suitable for you

Currently, with the increasing need to save more, there are plenty of investment opportunities available for the interested investors. In fact, it is true that there had been opportunities of investment since a long time, but currently, these opportunities have been enhanced and the options have also been made easy for common people. Therefore, if you are looking ahead to any form of investment, irrespective of the nature, you can select your option and go it. However, prior to the selection of these options, it is very essential that you know the details associated with these forms of investments, and accordingly, you can start with the deal. Now with the availability of opportunities of foreign investment in India, things have further become easy and smooth for people.

There are plenty of companies that offer investment opportunities. However, prior to any form of investment, the most important thing that you would have to determine is the amount of money that you want to invest in a particular place. At the same time, another important thing that you would have to consider is the time period for which you want to continue your investment. However, in any case, you can be assured that the amount of money that you ultimately gain at the end of the day from your investment would largely depend on the condition of the market.

Therefore, knowing the condition of the market also becomes crucial. Based on the level of fall and rise in the prices, the amount that you gain would depend. Thus, another important thing that you must consider is the condition of the market at the time of your investment. There might be plenty of investment opportunities, but all the options for investment might not be equal. The rates might largely vary on the conditions of the existing market. Therefore, you should not only consider these factors, but at the same time, if possible, you should also consult with an expert in this case. You would definitely get the right solution.

In the recent days, the popularity of foreign investment in India has increased to a tremendous extent. In fact, this form of investment largely proves to be beneficial not only for the national economy, but also for the global economy, as a whole. In fact, statistical reports have given evidence to the fact that this form of investment can benefit not only the investor, but also the country to a great extent. In today’s date, economists also consider it wise to invest in foreign direct investment, instead of any local businesses, because the rate of profits in this case is more.

Apart from that, through foreign investment in India, the investor can also know the ups and downs of the company and can have some controls over the company in which he has invested his money. Accordingly, the stocks and shares of the company also remain under control. Therefore, if you invest in any foreign company, you would definitely get more returns. To know more about it, you can take the help of professional experts because they would offer you guidance, and at the same time would also ease the investment process.

Investments by the Indians in Overseas can also be Profitable

Are you an Indian residing overseas? Well, you are not an exception, because there are plenty of Indians in overseas today. If you want to enhance the level of your investment, there is again nothing to be worried because since ages, these people have invested in different places. In the recent days, the opportunities that are available for Indians like you have been increased because there are larger numbers of Indians that reside in the overseas today. Irrespective of the place to which you belong, you can check out the availability of different options in which you can invest. At the same time, based on the amount that you invest, the gains that you can expect to get might also vary.

With the economy getting globalized, there have been important ties along different levels. India has also been lucky enough to carry out business and other international ties with many other nations of the world. Therefore, being one of the Indians in overseas, if you want, you can not only make an investment in the country you are residing, but at the same time, you would also be able to carry out investment in India. There are many Indians who irrespective of residing overseas have set up their individual business. It has been seen that setting up businesses can be one of the most profitable means of making investment. Thus, if you want, you can also go for it.

Now that you want to make an investment in India, by setting up a company, you can set up the operations either as a foreign company or as an Indian company. There are of course several factors that are considered in this context through which you can make way for a good form of investment. However, prior to that, you must ensure that you are well aware of all the rules and regulations that can help you to make your investment in the most flexible and smooth procedure.

In the recent days, it has been seen that investment in India gives plenty of returns not only to an Indian investor within the country, but also to someone abroad. Moreover, there are so many companies operating here that can offer you investment opportunities, you would be spoil for choices. However, in any case, before finalizing your deal, one of the most important things that you need to remember in this context is that follow the procedures carefully, so that once invested, you have to repent for any kind of losses. If necessary, you can talk to the professional experts, so that they can offer you appropriate guidance regarding the steps that you should take in this context.

In some cases, being one of the Indians in overseas, when you are wondering about the best forms of investment, one of the best things that you can do is to make a prediction about the future returns. Though it is true that your predictions might change in the future based on the condition of the economy, but you never know your prediction might make you invest in a good place from where you can make a good return.

February 20, 2012

Judge Carefully and Find the Right Investment Options in India for You

When you earn money, it is natural that you would have to invest in the right means, so that you can be prepared. Being a resident of India, you would not have dearth of investment options in India, because there are plenty of companies that offer you wonderful opportunities of investment. You would just have to find out the right option that can not only offer you flexibility, but at the same time, can also give you good returns in the future years to come. Therefore, conducting a thorough research on the different options, and the plans offered by different investing companies can be a good idea in this context. This would not only help in the determination of the best investment opportunities India, but at the same time, you can also be assured that you would get good returns in the future.

When you find the best investment opportunities India, it might become easy for you to reach your goal of financial success. In fact, until and unless, you find the best options, it would not be possible for you to carry out effective planning of your finance. In today’s date, since understanding the concept of different options might be difficult, you can gather tips about planning to reach success. There are experts in this field that can not only help in the recognition of the best option, but at the same time, they would also show you the right way through which you can approach for a better and secured future.

Well, the exact way through which financial planning is carried out can vary from one to another. This is mainly because of the potentiality of income. It is very natural that based on your income, you would invest. There is absolutely nothing to be worried, because there are different kinds of investment options in India. Based on the amount that you can invest, you would find the option for you.

The earlier you start planning for your finance through better investment, the better it is for you. This is mainly because of the fact that as you grow older, you would require money. Uless, you think of investment options in India now, it would not be possible for you to cater to your financial requirements at different stages of your life. There are some investment plans that are offered by the government of India, while at the same time, there are some plans that are offered by some private organization. Based on the nature of the plans, you should think of investment.

You might often take the help of experts when you are unable to judge the right investment opportunities India, but truly, it is a waste of money to take the help of any expert. This is because, if you have a look at the plans on your own, you would be able to understand on your own the different options that are covered in the plan. Consequently, it would be easy for you to identify the options that best cater to your requirements. Accordingly, you can carry out the planning.

October 4, 2011

Investment: Destination India

India is a country with huge manpower that is equipped with enormous skills and this is one reason for investing in India and evident in the growing number of foreign companies and overseas investors. Despite this and the fact that Indian economy belongs to one of the most conspicuous economies around the world, there has been a sharp fall in economic growth that was earlier projected to grow rapidly at least in the long run. The performance or behavior of the Indian economy has particularly fallen in the short to medium term.

During the period of last five years that refers to the time exactly before the recession and the global financial crisis the economic growth was around seven percent on a yearly basis. Due to this strong and impressive growth, investing in India seemed to be a favorable prospect for the overseas companies and we have witnessed the arrival of several foreign companies in this country. The IT and service sector industries have provided an impetus to the economic growth and according to the financial analysts, within a very short time India will join the frontrunner and powerful economies of the world.

During the passage of time, foreign direct investment has emerged as one of the most significant and inalienable aspect of the Indian residents who are settled in foreign countries or NRI’s. On the basis of a survey called World Investment Prospects Survey conducted for 2010 to 2012, India is also one of the most preferred destinations of foreign direct investment. This survey was conducted by United Nations Conference on Trade and Development. In addition to this, another survey conducted by one of the big four firms Ernst and Young, the country has ranked fourth as far as foreign investing is concerned and it is referred to as European Attractiveness Survey.

The growth of foreign investment in India has increased three folds with a variety of business prospects and potential that is available in this country. However, at the same time, there is an increased need for a guideline on strategic investments so that the foreign investors keep pouring in. In other words, to have a better orientation of foreign investments and to maintain the flow of foreign investors, it is possible to get the expert’s guidance in the Government website that is referred to as OIFC.

According to the opinion of several people, the success of India with foreign investments and economic growth has been showing all along though the journey was not always pleasant as there has been an equal amount of delay during this process. Whether the high growth forecasts for the economy helps to provide a boost to the Indian economy or otherwise cannot be predicted immediately. With the country has opening doors to the foreign and domestic investors, the risks of investing in a developing economy should be reduced to a large extent.

Know more about Foreign Direct Investment in India

In layman’s words, foreign direct investment refers to the situation when a particular company or an individual belonging to one country invests in another country. The investment which is done could be a physical one like construction of a factory, land purchase, mining activities, etc.

Apart from the above mentioned types of foreign direct investment, joint-ventures as well as reciprocal-trade agreements are the other investment options to which one can resort to. In a joint venture, there are basically two or more than two organizations which handle the financial and the management of the investment made in foreign country whereas in the reciprocal- trade agreement, the two companies which make the same type of products reach on an agreement to proceed further as the distributor of each other at their own home country. Licensing a company to produce products in some other foreign county is also a form of investment falling under the category of FDI.

When any company makes a foreign direct investment for its expansions in another country, then it is termed as the horizontal foreign direct investment. On the other hand, when the companies make investments for increasing its sales and for the growth in business, then it is termed as vertical foreign direct investment. Vertical FDI occurs usually when any company assumes the role of a distributor or a supplier for any type of finished goods. This again can be divided into forward and backward vertical FDI.

When the company takes the role of a supplier then it is referred to as the backward vertical FDI and when the company acts as a distributor of the products is any other country is referred to as forward FDI.

The company is always benefited by the FDI’s as it enhances the reputation of the company by creating more job opportunities. Moreover the costs of the final goods which are produced are also less as the cost of import is not there. Foreign direct investment aids in increasing the levels of production and also in lowering the cost of production.

When a company thinks of investment options, especially that of FDI, then it needs to contemplate of various factors for accessing the foreign markets. It needs to make a stock of the domestic resources so that it has sufficient human resource as well as the financial stability for carrying on with the new undertaking. Apart from this, it also needs to check whether the potentiality of the market for the product it is going to launch. A thorough market study is essential before making a FDI decision. The competition that exists in the market and the consumer behavior are the other factors which need consideration if one is thinking of foreign direct investment.

Both the developed countries as well as the developing countries are able to attract foreign investment in various ways today. For e.g. it has been seen that few countries provide loans at a very low interest rates which makes most of the individuals living outside, in other countries avail the loan options in those countries.

September 21, 2011

FDI: The current trend of investments

When we discuss on FDI, it is very essential that one is able to make a clear demarcation between the FDI flow as well as the FDI stock. The former refers to the amount of the foreign direct investment which has been undertaken across the period (which normally is taken as one year) whereas the stock of FDI implies the total built up value of the foreign assets which are owned for a given period of time.

It has been seen that there has been a significant increase in the investment opportunities in the FDI domain during the years 1990 to 2000s. This increased growth rate is due to the political stability as well as the other economic factors present within the developing countries. Further it has also been seen that with the advent of globalization, the economy of the world has made organizations invest across the globe to have the presence felt in almost all the regions of the world. The increase in the inflows which the county of US has been seeing is another shocking but a significant trend where the inflows have increased but on the other hand its counterpart, the US –FDI –abroad has not gone that high. Once can conclude the growth if the US inflows to be high due to the lucrative US markets and also due to the falling dollar value which has been seen in the recent past.

FDI also have several benefits like rapid approvals for the investments, concessions in taxes, better liberalized environment for operating, subsidies on loans, grants, etc are few of them. The country (i.e. the host) also gains benefits due to the FDI’s in the increased job opportunities, better living standards, enhanced economic growth, etc. Hence FDI’s are always beneficial for both the host country as well as for the foreign investor.

Governments have also devised many policies for attracting the FDI’s as these funds can be used for national development projects and strategies. Governments also provide various types of tax benefits to the investors so that higher amounts of investments are made by the foreigners. The basic strategy of the government is to make the FDI investment all the more lucrative for the investors to increase investment opportunities. The common ones which are implemented by the government is to provide tax benefits as well as reduced interest rates on loans which have till date run successfully.

The developing countries have now become hot attractive spots for the FDI’s due to the better political stability and economic factors. Countries like India have accumulated a lot in the form of FDI from the other foreign countries as the economic and political stability of the country of India gives an ease to the investor to invest without much contemplation. We have seen how the FDI amount varies and increases in the Indian market when the stock market face jolts and jerks.

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