Investment in India

Investments Opportunities in Indian Shipping Industry for NRIs

The Indian Shipping segment, with 187 minor ports and 13 major ports spread across nine maritime states, is poised to mark exponential growth in the years to come. The Government of India is geared to attract foreign investors in India by embarking on public-private partnership (PPP) route for modernisation and expansion of the Indian ports.

The total capacity of the port sector is envisaged to be 2,301.63 million tonnes (MT), to meet the overall projected traffic of 1,758.26 MT by 2016-17, as per the 12th Five Year Plan (2012-17) document. "The traffic forecast by the end of the 12th Plan would be 943.06 MT and 815.20 MT for the major and non-major ports respectively, with corresponding port capacities of 1,241.83 MT and 1,059.80 MT respectively," it added.

According to the Planning Commission, the capacity of Indian ports will have to nearly double to 2,302 MT over the next five years to be able to handle the fast growing cargo traffic.

The shipping industry of India has witnessed various deals and developments pertaining to foreign direct investment in India.

Indian Shipping Industry Goes Global

As the Government of India is determined to get Indian shipping industry at par with the global standards, it is in continuous discussions with foreign investors in India and across the world to achieve the growth targets.

The Ministry of Shipping expects that the bi-lateral co-operation would enable Indian organisations to acquire appropriate know-how, scientific knowledge and research and development (R&D) capabilities from the European country.

Moreover, India has recently shown interest to adopt new technology regarding decongestion of ports; information technology for the movement of container traffic and maritime training from Germany.

Investment Opportunities in Indian Shipping Industry

At the beginning of the financial year (2010-11), the Ministry of Shipping fixed a target of 21 projects under PPP for the major ports out of which two projects have been awarded so far at Tuticorin Port and Ennore Port.

The Government of India is focusing on port infrastructure development in the country and is promoting private participation and foreign direct investment in India. The Government has allowed 100 per cent foreign direct investments under the automatic route for:

• Leasing of existing assets of ports
• Construction/ creation and maintenance of assets such as-container terminals bulk/ break bulk/ multi-purpose and specialised cargo berths, warehousing, container freight stations, storage facilities and tank farms, cranage/ handling equipment, setting up of captive power plants, dry docking and ship repair facilities
• Leasing of equipment for port handling and leasing of floating crafts
• Captive facilities for port based industries

Investment Policy Updates

According to a Ministry of Shipping's press communication a new programme - Perspective 2020 - will replace the existing NMDP plan. The Maritime Agenda 2010-2020 is a perspective plan of the Shipping Ministry for the present decade which has set the goals as follows:

• To create a port capacity of around 3,200 MT to handle the expected traffic of about 2,500 MT by 2020
• To bring ports at par with the best international ports in terms of performance and capacity
• To increase the tonnage under the Indian flag and Indian control and also the share of Indian ships in our EXIM trade
• To promote coastal shipping as it will help in decongesting our roads and is environment friendly

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.

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 favoured 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.