Dec. 3 – After Ernst & Young ranked India as the most attractive investment destination in the world last week, strong quarterly growth figures indicate India’s economy is on track to expand by at least 5 percent in 2014.
In a press conference yesterday, Indian Finance Minister P. Chidambaram pointed to India’s decreasing account deficit, rupee stabilization, and rising exports as signs Asia’s third-largest economy is on the recovery path. Continue reading
Nov. 28 – International investors will now be able to buy offshore rupee-denominated bonds thanks to a program sponsored by the World Bank aimed at strengthening India’s financial markets and attracting greater overseas investment.
The program, run by the World Bank’s International Finance Corporation (IFC), will offer a series of rupee-linked bonds, worth a total of US$1 billion, to international investors. The first issue, valued at US$160 million, was released this month to overwhelming demand, according to a press release circulated by the IFC last week.
As a member of the Word Bank, the IFC is tasked with developing innovative strategies designed to boost economic opportunity around the world. The current bond program, with this goal in mind, was designed to “strengthen India’s capital markets and attract greater foreign investment in a time of renewed economic uncertainty across the world,” according to the release. Continue reading
Nov. 25 – After significant changes in FDI policy earlier this year, India was ranked by Ernst & Young as the most attractive investment destination in the world – surpassing both China and the United States.
Ernst & Young (EY), a leading global consulting firm, based the ranking upon a survey of 1600 senior executives from large companies across more than 70 countries.
Part of EY’s Capital Confidence Barometer report, the ranking aims to gauge corporate confidence in economic outlook and understand boardroom priorities by country. Continue reading
By Shawn Greene
Nov. 21 – Navigating foreign investment in India can be daunting. The World Bank’s Doing Business 2014 report ranks India among the most difficult countries in which to start a business – 179th out of 189 countries analyzed. As such, foreign firms are highly recommended to hire a professional services firm to assist with setup and investment in the country.
For foreign institutional investors (FII) and firms considering foreign direct investment (FDI), a familiarity with India’s recent changes in FDI policy is critical. Below, important amendments made to India’s foreign investment policy in 2013 are summarized, and changes currently under discussion for 2014 explored.
Amendments made this year in Indian FDI policy impact a number of key business sectors, and in many instances eliminate the need for foreign investors to obtain approval from the Indian Government before investing. Additionally, policy changes in 2013 alter the legal definition of ‘control’ and regulations for single and multi-brand retail trading. Continue reading
Nov. 19 – After a controversial acquisition earlier this year, India is considering strict new limits on foreign investment in the pharmaceutical industry.
According to a senior government official who spoke with the Wall Street Journal under condition of anonymity, the proposal currently under review would prohibit foreign companies from owning more than a 49 percent stake in Indian manufacturers of “rare and critical” medicines.
Under the existing law, foreign investors are permitted to buy 100 percent of local drug companies.
This February, U.S.-based Mylan Inc.’s acquisition of Agila Specialties Pvt. Ltd. – a local manufacturer of antibiotics and chemotherapy drugs – provoked outrage among Indian politicians who viewed the acquisition as a threat to domestic drug supply. Because India controls some drug prices domestically, many argued the acquisition could result in critical Indian-made pharmaceuticals being exported to more profitable markets – thereby endangering local access to inexpensive, lifesaving medicines. Continue reading
Nov. 15 – The Reserve Bank of India has issued a new circular designed to increase capital inflows by allowing foreign investors to purchase credit-enhanced bonds issued in India. The new decree, Circular No. 74, will allow foreign institutional investors (FII) and qualified foreign investors (QFI) to purchase a total of US$5 billion in domestically issued credit-enhanced bonds.
A credit-enhanced bond is a debt instrument issued with a third-party guarantee, often in the form of collateral or cash promises. These enhancements improve the bond’s credit rating and lower the issuing company’s interest obligations, resulting in a lower cost of debt.
As per Circular No. 94, issued in April of this year, the maximum investment quota for FIIs will remain fixed at US$51 billion for corporate debt and US$25 billion for government-issued debt. Continue reading
Nov. 14 – Indian Finance Minister Shri P. Chidambaram today announced the implementation of an IT-based Risk Management System (RMS) for exported customs goods. The RMS is designed to greatly speed up the clearance process for the export of goods and reduce the related transaction costs.
In explaining why the new RMS had to be implemented for the export process, Mr. Chidambaram stated that “the underlying principle is trade facilitation.” Continue reading
Nov. 13 – With PepsiCo announcing this week that it will invest US$5.5 billion dollars in India by 2020, PepsiCo CEO and Chairman Indra Nooyi remarked that India has fallen from a ‘must-invest’ to a ‘must-deal-with’ country.
Alongside these remarks, India’s Congress-led government lashed out at Goldman Sachs on Friday for what Anand Sharma, Minister of Commerce and Industry, called the investment firm’s “eagerness to mess around with India’s domestic politics.”
Goldman Sachs recently upgraded its assessment of India’s economy on the expectation that opposition leader Narendra Modi’s Bharatiya Janata Party (BJP) will be victorious in the upcoming general election. After a decade in power, this is something India’s ruling United Progressive Alliance (UPA) is very nervous about.
In light of these bold remarks by regional economic heavyweights, determining the UPA’s actual economic record remains tricky. Continue reading