Investment in India

Indian economy gets a boost from new investment reforms

Encouraging indicators in the Indian economy in the form of advanced tax collection and industrial production at 17.6 per cent in the month of March 2010 have brought enough cheer to investors investing in India. According to the Union Finance Minister of India, Mr Pranab Mukherjee, these factors are propelling the economy in the right direction. Owing to the euro zone financial turmoil and better job security in the Gulf, investors too are returning to India and better monsoon and strong production output mean the growth story in India would continue to attract investments.

Exports have risen by 35 per cent to US$ 16.1 billion, on increasing demand in the western economies.  Better conducive environments prevail now in the states such as Karnataka, Kerala, etc., which have created industry friendly environs for doing business in India. The states are now implementing new industrial policies, revised IT policies too. Business Investment opportunities have opened up in sectors such as infrastructure, power, etc., which have helped in boosting the economy in the northward direction.

Overseas investors are now being guided through online facilitation platforms as OIFC, which engages in providing facilitation advice through an expert panel on queries related to investment opportunities and doing business in India. The refurbished foreign direct investment policy with updations scheduled on a regular basis by the government too is a step in this direction.

Tax reforms and incentives such as direct tax code (DTC), higher float in indices for free trading etc are initiatives that are expected to bolster more investments into the thrust sectors. The doors have opened to international trade with signing of free trade agreements (FTAs) with economies such as Finland and income tax agreements to avoid double taxation. The government has also set up two income tax overseas units (ITOUs) within Indian Missions in Singapore and Mauritius. Eight more such units have further been approved in USA, UK, Netherlands, Japan, Cyprus, Germany, France and UAE. These will facilitate smooth garnering of taxation revenues without hindrances and tax evasions in cross-border transactions.

The growth trend is substantiated with the report data that has come out recently. The Centre of Monitoring Indian Economy (CMIE) in its report stated that it expects industrial production to grow by a buoyant 9.2 per cent in 2010-11. The growth would come on top of a 10.4 per cent growth in industrial production, as measured by the Index of Industrial Production (IIP) in 2009-10, CMIE said.

These factors are hence expected to help retain continuity in investment in prime sectors.

Fillip to Investment Sectors in India, Opportunities Abound

Investment sectors such as infrastructure, healthcare and education are getting the requisite fillip for growth, owing to the channelization of foreign direct investments (FDI) into India.

Mr Subir Gokarn, who is the Deputy Governor of Reserve Bank of India (RBI), recently stated that India is becoming an investment destination. Further, he also indicated that investment opportunities in India were expected to gather even more scope in the coming days, on the back of enhanced liquidity in the global system. This rising liquidity has been evinced owing to pumping in of revenues for the euro rescue measures and Greek crisis management by governments. Several investors too have begun looking at India as a 'flight to safety' measure, i.e., a safe haven for investment and better returns.

The Planning Commission Deputy Chairman, Mr Montek Singh Ahluwalia, too recently opined that India had an edge over other economies being a developing nation and offering more potential for investment as compared to developed markets. He confirmed that India was likely to provide a very hospitable environment for foreign investments in the years to come and would attract good inflows.

Of late, Indian equities too have been rated as the second best avenues globally, after Indonesia, for giving the best returns for investments, according to report titled 'Asia Capital Markets Monitor' brought out by the Asian Development Bank. This is quite encouraging for all overseas investors, who can now look forward to employing some bold investment strategies such as investing in emerging economies such as India.

The government has in this respect, brought out the simplified FDI document which acts as an investment guide to help overseas investors with the caps and processes of investing into several sectors. Further, the Reserve Bank of India has also begun reforms such as revision of the pricing guidelines with respect of transfer of shares / debentures /equities etc by way of sale for overseas investors.  The public private partnership initiatives such as OIFC provide a forum for channelizing investments through an online facilitation platform.

Attracted by the tremendous scope for growth in sectors such as education, many investors such as venture capitalists and private equity players have invested more than US$ 140 million in the sector so far this year. This is almost 50 per cent more than the investment in 2009.

States in India such as Karnataka and Kerala too have all the makings of becoming favored destinations in several sectors for all investors. Kerala can now boast of having amongst the top tourist spots and is turning into a medical tourism hub in the country. Karnataka is already rated as the intellectual capital in the country. All in all, the prospects in India seem rosier for investors with factors such as reliability, liberalized reforms etc contributing their bit in opening up new avenues for investment.