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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Investment opportunities in Indian states

India is one of the oldest civilisations in the world with diverse cultural heritage. It is divided into twenty eight States and seven Union Territories (UT). Each and every Indian states and UTs has a unique demography, history, language etc. which provides various investment opportunities. These states/UTs are blessed with large number of tourist places – beautiful landscapes, wildlife and forests, hills, plateaus, valleys, monuments, forts, palaces, temples, etc. Tourism is the major source for investments in Kerala.

States and UTs of India are also gifted with distinct inherent strengths – from abundant supply of mineral resources and large forest reserves to the availability of good fertile lands, which are suitable for growing variety of agricultural and horticultural crops.

Several global majors are present in these States which brings large investments into the country. These companies/ industries are confined to iron and steel, cement, textiles, agro-processing, mineral-based industries, drugs and pharmaceuticals, chemicals, electronics, automobiles, etc. Pharmaceuticals and automobiles are the major source of investments in Gujarat.

Information technology (IT) is now being recognized as an essential part of the economy by the various State Governments, thereby attracting new players into the market. IT revolution is committed to provide good governance that ensures transparency, reduction in transaction costs, efficiency and citizen centric delivery of public services. Therefore, the Government is making all efforts to facilitate the growth of such industries and promote overall development of the economy.

Major investment states of India

Haryana: Due to its strategic location, Haryana has been recognised as a business-friendly State. Panipat, Rohtak, Gurgaon, Faridabad and Sonepat have a special potential for accelerated socio-economic development. Land and water are the important resources of the State, making it an agriculturally rich State. Large number of food grains and horticultural crops are produced, by using available irrigation facilities.

Kerala: The State of Kerala constitutes one of the most advanced society of the country. Its literacy rate is the highest among the Indian States. The State has several advantageous features – pro-active administrative set up, simple and transparent procedures for investment, rich natural resource base, educated and hardworking manpower, including the highest density of science and technology personnel, etc. The Government has taken several policy measures and incentives for attracting investments in Kerala.

Punjab: Punjab is a land of numerous opportunities which are embedded in its advantageous position. These include:

  • Simple and responsive administrative set-up
  • Educated and professional work force with abundance of skilled workers
  • Strong agricultural and industrial base
  • Efficient infrastructural set up including transportation, telecommunication, stable and cheap power

Gujarat: Gujarat is the leading industrialized State of India. It houses a number of multinational corporations, private sector companies, public sector enterprises and a large number of medium and small scale units. It is a manufacturing powerhouse with world-class production capabilities. Textiles, petrochemicals, pharmaceuticals are some of the few sectors which attracts investment in Gujarat. The State is also known for its entrepreneurial spirit as well as robust social and physical infrastructure.

Andhra Pradesh: Andhra Pradesh is the resourceful land of minerals which includes coal, oil and natural gas, bauxite, limestone, gold, diamonds and much more. It is an agriculturally-prosperous State, endowed with fertile land, water and conducive agro-climatic conditions. It is among the largest producers of food grains, fruits, vegetables, cotton, maize, dairy and poultry products in the country.

May 16, 2013

Business Incubation in India

Indian market today is reshaping the world’s economy. India’s gross domestic product (GDP) has crossed the trillion dollar mark in 2007 and is currently in 4th position (PPP) after US, China and Japan. Investment in almost every sector (Education, Food, Energy, Health Care and Retail) of the Indian economy has a promise of high returns that has caught the attention of investors and businesses across the world.

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.

Business Incubation in India

Business incubation is a dynamic process of business development. Business incubators are programs designed to accelerate the successful development of entrepreneurial companies through an array of business support resources and services, developed and orchestrated by incubator management and offered both in the incubator and through its network of contacts. Successful completion of a business incubation program increases the likelihood that a start-up company will stay in business for the long term.

Incubators usually also offer companies rental space with flexible leases, shared basic office services and access to equipment all under one roof.

Overseas Indians who wish to enter a business incubation program must apply for admission. Acceptance criteria vary from program to program, but in general only those with feasible business ideas and a workable business plan are admitted.

Startup Incubation Centers in India

Startup Incubation holds significant importance in a country like India where entrepreneurs by the score are launching new setups and changing the game of business by minutes. For the uninitiated, business incubation programs or centers provide support functions, mentorship and resources to individual entrepreneurs or entrepreneurial setups. This enables them to get all the expert advice and technical guidance that they need to survive for a longer time, unlike most other entrepreneurial ventures that fizzle out within a few months of their launch.

Almost every other prestigious B-school today houses an incubation center so that business opportunities can be nurtured from their very source. Currently there are about 100 incubation centers supported by the Indian STEP and Business Incubator Association (ISBA) which is the apex Indian professional body supporting business incubators. Private incubators are a handful, but gradually growing. These numbers are expected to double within the next two years. Some of the good business incubation centers in India:

  • Centre for Innovation, Incubation and Entrepreneurship (CIIE), IIM Ahmedabad
  • AngelPrime
  • Indian Angel Network (IAN)
  • Technopark Technology Business Incubator (T-TBI)

Long term projects are projects of national importance that will help in India’s development. These platform showcase investment opportunities in projects that require funding and will also help you to contact relevant institutions undertaking the projects. This information will be updated regularly to generate fresh investment opportunities for the overseas Indians.

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

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.

Booming Education Industry of India providing huge business opportunities

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

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

Market Size

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

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

Government Initiatives to boost Investments

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

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

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

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

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.

March 4, 2013

Booming healthcare sector of India: A great opportunity for NRIs to invest

The Indian healthcare industry was US$ 65 billion during 2011-12 and is expected to reach US$ 280 billion by 2020. Large investments by private sector players are likely to contribute significantly to the development of India’s hospital industry, which comprises around 80% of the total market, according to the report ‘Indian Hospital Services Market Outlook’ by consultancy RNCOS. As per estimates by ratings agency Fitch, the sector is poised to grow to USD 100 billion by the year 2015.

Growth drivers of Indian healthcare sector

  • Increase in patients population, increasing lifestyle related health issues
  • Faster diagnosis leading to early treatment, awareness on preventive healthcare disorders
  • Affordable treatment costs
  • Thrust on medical tourism
  • Improving health insurance penetration
  • Increasing disposable income
  • Medical insurance and mandatory wellness checks by corporate houses
  • Government initiatives and focus on Public Private Partnership (PPP) models

Opportunities in healthcare industry of India

The Indian healthcare sector is ripe for the expansion and significant growth due to the reasons mentioned above. One of the main factors is increase in the space of medical tourism in India. Medical tourism in India is growing at a compounded annual growth rate of over 27 per cent during 2009-2012. Medical tourism market is valued to be worth USD 310 million and is expected to generate USD 2.4 billion by 2013 and is growing at 30 per cent a year.

It has created excellent investments opportunities for the non-resident Indians (NRIs) to provide much needed managerial and financial support. The following sectors have significant opportunities for the investors:

  • Hospitals and Infrastructure: There is tremendous demand for tertiary care hospitals and specialty hospitals in India. There is a gap between the availability of the beds and required beds in the hospital in India which has made NRIs to invest in healthcare.
  • Health Insurance: The percentage of the Indian population that has been covered under health insurance is unfortunately very insignificant. Though there is increase in number of health care insurance policies over past few years, majority of the population remains without any coverage. Growing size of middle class population in India that spends on healthcare has led to the emergence of health insurance market.
  • Technology driven services: Significantly low presence of physicians in rural and semi-urban areas has led to the limited access to proper healthcare facilities for the people living in these areas. Telemedicine is considered to be one of the solutions to this lacuna in accessibility to health care services in rural and semi-urban areas. Growth of IT sector in India which plays crucial role in telemedicine has led to invest in healthcare sector.

Public-private partnership model in Indian healthcare

Private healthcare is coming forth as one of the fastest growing sectors in India, with chain hospital explorations into various cities (such as metros and tier II cities across the country), private players seeking accreditation and developing new healthcare models in recent days. Further, various states have launched innovative initiatives to attract PPP investments into healthcare space. These Public Private Partnership initiatives may help in improving the infrastructure and healthcare provision in the country for the needs raised.

Future of healthcare in India

There is a huge investment opportunities here for India, to maximise the use of diagnostics within the healthcare environment. We have got very good high-end labs, which are equivalent to any country around the world, said Mr Lance Little, Chairman and Managing Director, Roche Diagnostics India and South Asia.

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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