Investment In India | "India FDI Investment Good to Go for MNCs at Davos Forum"

By: 2point6billion.com 
Category: Investment In India


Jan. 31 – A report issued by Ernst & Young at the World Economic Forum in Davos says that foreign direct investment in India is set to swell in the coming years as investors look beyond perennial issues such as a lack of transparency, poor infrastructure and government policy paralysis in their search for growth.
“The fundamentals that make India attractive to investors remain intact,” Farokh T. Balsara, head of markets at Ernst & Young India, wrote in the report released on Sunday. “However, our respondents continue to cite inadequate infrastructure and a lack of governance and transparency as major obstacles to investment.”
That said, foreign investment in Asia’s third-largest economy – after China and Japan – rose in 2011, the report stated, reflecting growing faith in the country as India develops an increasing middle-class and a large and cheap labor force. FDI in India rose 13 percent to US$50.81 billion in the first 11 months of 2011 from a year earlier, while the total number of projects rose 25 percent to 864, the report said, quoting additional data from the Financial Times’ FDI Intelligence service.
E&Y’s report is backed up by another recent survey from PricewaterhouseCoopers, which suggests that just over half of chief executives in India are “very confident” of revenue growth in the next 12 months. The majority of companies surveyed by E&Y were confident in the long-term prospects for investment in India, given sluggish growth in the United States and debt problems in Europe. Almost 70 percent of 382 international companies surveyed said they plan to increase or maintain their operations in India, while just 19 percent said they had no plans to enter the country or were preparing to withdraw. Robust domestic demand, cost competitiveness and a cheap, ever-growing labor force were cited as India’s key benefits.
“Although the ongoing global uncertainty… (has) prompted some discomfort among global investors to make long-term commitments, India’s inherent advantages and its proven resilience to counter macroeconomic challenges far outweigh these concerns,” Balsara said.
In terms of industry, automakers led the way in investing in India last year, boosting spending by 46 percent, E&Y said. Technology and life sciences companies were the other big spenders, while spending by foreign companies on infrastructure and retail projects declined. However, the latter is expected to gain a boost this year as foreign participation in single brand retail was liberalized in December 2011. Concerning auto, Ford stated earlier this month it would spend US$142 million on its Indian operations, and the Renault-Nissan alliance is another example out of many that has announced plans to step up their investments in India.

Investment In India | "FM for foreign investment in infra"

By: Press Trust Of India

Source: http://www.hindustantimes.com

Category: Investment In India 

Pitching for foreign investment in the infrastructure sector, which needs $1 trillion in the 12th five-year plan, finance minister Pranab Mukherjee on Sunday asked the US investors to access the Indian debt market through a mechanism of regulated entities with a sustained long-term interest rate.

Meeting leaders of Fortune 500 companies here, he assured them that India has evolved a transparent and stable regulatory regime in sectors such as electricity, telecommunications, ports, airports, petroleum and natural gas, and a regulator for the coal sector is on the anvil.

He told them that India has recently liberalised foreign participation in the debt-equity market by allowing foreign investors to invest in the Indian equity directly.

Seeking a “greater degree of involvement” of foreign investors, Mukherjee said the “debt requirement for the infrastructure sector is very large.”

He said India had recently evolved a mechanism to enable access to the Indian debt market through infrastructure debt funds, which will be regulated entities with a sustained long-term interest rate, long horizon entities like pension and infrastructure and insurance funds.

Those present at the meeting organised by the Chicago Council on Global Affairs (CCGA) included CCGA president Marshall Bouton; Stephen

Chipman, CEO Grant for Thornton LLP; James A Gordon, president and founder, Edgewater Funds; Brian Kenney, chairman and CEO of GATX; Jennifer Scanlon, president International and vice-president USG Corporation; Matthew J Shattock, CEO of Beam Inc; Gordon Hunter,  CEO Littelfuse Inc; and Rajeev Gautam,  CEO of UOP LLC — a Honeywell Company.

Source: http://www.hindustantimes.com/business-news/WorldEconomy/FM-for-foreign-investment-in-infra/Article1-803734.aspx

Investment In India | "India emerges as a strong investment destination at WEF meet"

By: IBN LIVE
Category: Investment In India


From Barun Jha Davos, Jan 29 (PTI) As the annual World Economic Forum summit heads for close today, the India story has emerged even stronger with the business world appreciating the country's fine balance between democratic processes and economic growth. A few even foresee the possibility of the country hosting a Davos-level congregation of the world's rich and powerful at some point in the future. The votaries of the Indian growth story include the likes of global rating agency S&P, which not long ago faced the ire of the US administration for downgrade of America's top-notch sovereign creditworthiness rating. S&P President Douglas Peterson said that the agency has an investment grade rating on India, with a stable outlook and the country is more likely to improve further on this. Brushing aside the concerns of slow reforms and the perceived notion of 'policy-paralysis', he said, "In a democracy, the policies are made after a prolonged dialogue and that is indeed a healthy practise." Apparently, impressed with the positive discussions about India, Peterson went on to say that it was quite a refreshing change that the talks have moved away from the European crisis to India at Davos. Still, India on its part reaffirmed its commitment to the economic reform agenda. Commerce and Industry Minister Anand Sharma said reforms would certainly take place and even the much-talked about FDI decision for retail was only on a pause and not a reversal. "And, remember that a pause cannot be for a long time," he said. Senior industrialist and Bharat Forge group chief Baba Kalyani said that India can certainly grow by 8 per cent.

Source: http://ibnlive.in.com/generalnewsfeed/news/india-emerges-as-a-strong-investment-destination-at-wef-meet/957466.html

Investment In India | "India still a foreign investment hot spot: Ernst & Young"

By: Reuters
Source: http://timesofindia.indiatimes.com
Category: Investment In India

MUMBAI: Foreign direct investment in India is set to swell in coming years as investors stomach a lack of transparency, poor infrastructure and policy paralysis in their search for growth, professional services firm Ernst & Young (E&Y) said in a report.

Overseas investment in Asia's third-largest economy rose for the first time in three years in 2011, the report noted, as global investors put their faith in rising salaries, an expanding middle-class and a large and cheap labour force.

"The fundamentals that make India attractive to investors remain intact," Farokh T. Balsara, head of markets at Ernst & Young India, wrote in the report released on Sunday.

"However, our respondents continue to cite inadequate infrastructure and a lack of governance and transparency as major obstacles to investment."

Foreign direct investment (FDI) in India rose 13 percent to $50.81 billion in the first 11 months of 2011 from a year earlier, while the total number of projects rose 25 percent to 864, the report said, citing data from the Financial Times' FDI Intelligence service.

Business confidence in India has declined over the past year, as economic growth slowed from an annual rate of 8.5 percent in 2010/11 to about 7 pe rcent, and corruption and policy paralysis discouraged investment in big projects.

Just over half of chief executives in India are still "very confident" of revenue growth in the next 12 months, down from 88 percent a year ago, according to a recent survey by PricewaterhouseCoopers.

The majority of companies surveyed by E&Y were confident in the long-term prospects for investment in India, given sluggish growth in the United States and debt problems in Europe.

Almost 70 percent of 382 international companies surveyed said they plan to increase or maintain their operations in India, said the report, which was prepared for the World Economic Forum gathering in Davos, Switzerland.

Just 19 percent said they had no plans to enter the country or were preparing to withdraw.

Robust domestic demand, cost competitiveness and a cheap, ever-growing labour force were cited India's key benefits.

"Although the ongoing global uncertainty...(has) prompted some discomfort among global investors to make long-term commitments, India's inherent advantages and its proven resilience to counter macroeconomic challenges far outweigh these concerns," Balsara said.

Automakers led the way in investing in India last year, boosting spending by 46 percent, E&Y said.

Technology and life sciences companies were other big spenders, while spending by foreign companies on infrastructure and retail projects declined.

Ford Motor Co, which said this month it would spend $142 million on its Indian operations, and the Renault-Nissan alliance are among companies that are stepping up investment in India.

Other companies, particularly retailers, are not so sure.

Sweden's IKEA, the world's biggest furniture retailer, said this week that would be difficult to set up shop in India because of complex government sourcing rules announced this month.

Plans by companies such as Wal-Mart were set back in December when the government, under pressure from political allies, abandoned a long-mooted policy to open up the supermarket sector to direct investment by foreign companies. 

 

Source: http://timesofindia.indiatimes.com/india/India-still-a-foreign-investment-hot-spot-Ernst-Young/articleshow/11672885.cms

Investment In India | "5 FAQs about foreign investment in Indian airlines"

By: Sandeep Phukan
Source: http://www.ndtv.com 
Category: Investment In India

 New Delhi:  In an attempt to bail out bleeding airlines, the government is considering whether to allow foreign airlines to own up to 49 per cent of Indian carriers. Right now, foreign investors can own up to 49 per cent stake in Indian airlines, but only if they are not in the airline business abroad. (Read: Can foreign airlines own upto 49% of Indian carriers?)

What the government is now considering would allow an airline like Virgin, for example, to own up to 49 per cent in a local carrier like Kingfisher - an earlier proposal suggested a cap on FDI at 26 per cent for foreign airlines.

Here is FDI in aviation made easy to understand in answers to five commonly-asked questions:

Q) Why is no foreign airline allowed to invest in Indian airline companies right now?

A) First, there is political opposition. The Left parties and trade unions have opposed this most vocally, as they have FDI in other key industries, citing fears of foreign takeover. Then, there is opposition by some domestic private airlines, especially big players like Jet Airways and Indigo. They too argue that the financial might of big airlines like might result in hostile bids and takeovers.

Security concerns, largely unfounded, have also been voiced that in a strategic sector like Aviation, what if rogue companies get access to vital information? That argument is countered by the fact that any foreign airlines that operate in and out of India would be privy to the same information.

All this opposition has meant that proposed joint ventures, like Tata-Singapore Airlines, never took off.

Q) So what is the government's new proposal?

A) In November last year, the commerce ministry proposed that foreign airlines should be allowed to own up to 26 per cent stake in an Indian airline.
Now, the government says that perhaps a foreign airline should be allowed to invest in an indian carrier up to 49 per cent. This proposal will be sent to the cabinet, after taking the opinion of the law ministry and home ministry, among others.

Q) So what has changed to bring this about now?

A) Of late, most airlines are losing money.  Air India and Kingfisher are, perhaps, the worst hit, but others are not in great shape either. Indigo is an exception. While the government can always fund an ailing Air India, bailout packages for a private carrier are a big no. Banks too are unwilling to give loans or pick up equity.

So, allowing FDI is an option as it would help the Indian carriers stay afloat,  would saves millions of jobs, would give scope for expansion and would also bring in global expertise and best industry practices

Q) But why would foreign investors come to India?

A) Despite the growth in recent years, many believe India has not realized or tapped its potential. The size and scope of expansion of the Indian markets should attract foreign investors, especially foreign airlines.

Q)  So how will all this affect the passenger?

A) Stronger brands coming in will ensure competition. This may lead to airlines offering bigger discounts, better product and, most certainly, more flexibility in international routes. So, on a single Virgin or Lufthansa ticket, you may be able to fly from Amritsar to Birmingham/Munich to Toronto with much more ease as Virgin/Lufthansa could well be a domestic player in India as it is in Britain/Germany.


Source: http://www.ndtv.com/article/india/5-faqs-about-foreign-investment-in-indian-airlines-168054

Read more at: http://www.ndtv.com/article/india/5-faqs-about-foreign-investment-in-indian-airlines-168054&cp

Investment In India | "Xerox India to focus on services business "

By: Vinita Gupta , InformationWeek
Category: Investment In India


The managed print services (MPS) market is increasingly growing. As per Photizo Group, the leading research and transformation firm for the MPS market, with a 27 percent year-on-year growth in 2010 revenue, the MPS market indicates a 20 percent CAGR (2010-15) and is forecast to top USD 78 billion in 2015. The research also listed India as the fastest growing country for MPS. This report shows that there is a huge opportunity for MPS vendors in India such as Xerox India.

Xerox India is not only focusing on MPS but on its entire services portfolio, which includes Communications and Marketing Services (CMS) and Document Transaction Processing Services (DTPS). Sectors like BFSI, telecom, retail, consumer goods and IT/ITES look very promising to Xerox India to accelerate its services business.

Xerox India claims to be the only player in the market that has the capability of streamlining the entire value chain for its customers. The company feels that it is well-positioned to participate and gain the leading share of the services growth market in India. Vishal Awal, Executive Director - Services, Xerox South Asia says, “There is an immediate need of MPS in the Indian market and the next logical step is print-related jobs that are outsourced. We have in-house end-to-end capabilities to transform and optimize business process and document management value chain. This is a key differentiator that Xerox brings to large enterprises in India. While several players offer compartmentalized solutions in these domains, the capability of streamlining the entire value chain is something that is unique to Xerox.”

Xerox India is looking at ways to expand their services business. The company has formed an alliance with Cisco, to provide its customers cloud-based services and solutions combining network intelligence and print. The two companies hope to use this partnership to improve efficiency for the workforce with solutions such as mobile printing.

To further increase its capabilities and asset base for offering differentiated services in the services space, the company is not just looking at partnerships but also acquisitions. For instance, in 2010 the company acquired Affiliated Computer Services (ACS). Through ACS, Xerox integrates MPS into the IT infrastructure to help businesses convert paper into digital, simplifying and speeding up workflows in ways that save time and money.

“For more than half a century, Xerox has been providing document technology and services. Through our acquisition of ACS, we are now in business process and IT outsourcing, offering global services from claims reimbursement, electronic health records, and automated toll transaction to customer care centers and HR benefits management. The acquisition also added BPO and IT outsourcing capabilities to our expertise,” elaborates Awal.

As a part of its market strategy for 2012, Xerox India has a two-pronged approach. It will continue to strengthen and accelerate its services business with focus on the fast growing verticals like BFSI and telecom. The company will also focus on the simplification of print infrastructure, robust security features and productivity enhancement technologies like mobile and cloud printing.

Source: http://informationweek.in/Services/12-01-23/Xerox_India_to_focus_on_services_business.aspx

Investment In India | "Thai PM's visit to India to boost bilateral ties"

By: ZEE NEWS
Source: http://zeenews.india.com
Category: Investment In India 


Bangkok: The visit of Yingluck Shinawatra, Thailand's first woman Prime Minister, to India next week will strengthen the rapidly increasing economic and political ties between the two maritime neighbours.

Yingluck, 44, the youngest sister of former premier Thaksin Shinawatra, is the chief guest at India's Republic Day Parade at Rajpath this year. She will arrive in India on Tuesday.

The photogenic premier, who is known for her chic fashion sense, is reportedly the youngest chief guest at the Parade in the last three decades.

The chief guest at the 2010 and 2011 parades were South Korean president and the Indonesian president. The young premier, known for her penchant for off the rack designer wear, will be leading a high-profile 100 member delegation during her three-day visit to India including the foreign minister and defence minister and a host of businessmen.

"New Delhi looks forward to this visit as an important milestone in the relationship between India and Thailand, and is confident that the visit will give a huge boost to the already strong ties between the two countries and lead to economic prosperity and greater connectivity in India and Thailand which are maritime neighbours," Anil Wadhwa, India's ambassador to Thailand, said.


Yingluck, during her short visit to India, plans to visit the Taj Mahal in Agra. Officials from India and Thailand will also hold talks covering several fields including trade, science and technology, defence and consular matters.

"Thailand is a good interlocutor in the Asean, and we see potential," Wadhwa said. "Extradition is one of the areas which will be taken up with the Thai side," Wadhwa said adding that India and Thailand had an "extradition arrangement" in place since 1982.

The last extradition treaty was signed by Thailand decades ago in 1902. The envoy said negotiations were over regarding "exchange of sentenced prisoners" and added that a mutual legal assistance treaty in commercial matters, a complement to extradition treaty, would be entered into by the two sides.

"We have a joint working group on security, exchanging information on all security issues like terrorism, counter-terrorism and other intelligence issues which we can help each other with," the envoy added.

India and Thailand signed the Free Trade Agreement (FTA) in 2003, which became effective in 2005. The focus of talks between Yingluck and the Indian leaders will focus on economy and investment and a declaration to finish the Comprehensive Economic Cooperation Treaty (CECA) by 2012 at the prime ministerial level.

"Talks have picked up momentum," Wadhwa said adding that several MoUs are expected to be inked during Yingluck's visit in the fields of trade, culture, defence, science and technology and consular matters.

India wants to expand defence cooperation with Thailand, Wadhwa said stressing that it was important to hold talks on coast guard cooperation, with sea piracy cases frequently reported.

The envoy said that Thai businessmen were also eager to take part in the booming Indian economy citing the example of CP Group which was interested in shrimp farming, poultry and setting up "quick chicken" kiosks along the highways.

India is also looking at joint projects in connectivity like the trilateral highway project involving Myanmar. Trade is rapidly picking up between the two countries with official figures noting that bilateral trade had multiplied six times since 2000, touching USD 7.46 billion in November 2011.

According to the January-November 2011 figures, Indian exports to Thailand were USD 4.72 billion, while imports were USD 2.74 billion dollars with the trade balance at USD 1.98 billion.

The growth rate has shot up rapidly over the years from 2.66 per cent in 2002 to 23.38 per cent by 2011. Indian companies too have expressed keen interest to enter Thailand. There are 45 Indian companies operating here.

India and Thailand do not compete directly with each other - the Thai jasmine rice is different than India's Basmati, India's strength is in software while Thailand is known for its hardware etc.

A total of 250,000 Indians live in Thailand out of which ethnic Indians, mostly Sikhs and Sindhis, number 90,000 while the rest are expatriate Indians.

The ICCR is planning to set up a "India Centre" with a Bangkok University, Wadhwa added. A local daily Phuket Express in a write up about Yingluck said the Thai premier was known to be terrified of geckos. A mother of a nine-year-old boy, Yingluck is married to Anusorn Amornchat, a business executive.





 
Source: http://zeenews.india.com/news/world/thai-pm-s-visit-to-india-to-boost-bilateral-ties_754213.html

Investment In India | "Microsoft may set up R&D centre in Kolkata"

By: India Blooms News Service 
Source: http://www.indiablooms.com 
Category: Investment In India 

West Bengal Commerce and Industry Minister Partha Chatterjee said on Friday, "We had a talk with Microsoft India officials on the issue and they are very much interested to set up their R&D centre in the city."

At present Microsoft has research centre in Bengaluru in Karnataka.

On the occasion of the 'Techvista Kolkata 2012' organised by Microsoft on Friday, he invited the software giant to come to Kolkata and join hands with the state for the technological development and to promote advanced studies in computer science and allied courses.

He requested the Indian companies to spend more on R&D to achieve global leadership in terms of advanced product development, so that Indian researchers and scientists could pursue higher studies as career.

Citing the example of some developed countries, Chatterjee said that in United State the government spends about 36 pct of their total GDP on R&D , whereas the Asian countries like Japan and China disburse 12.60 and 12.50 pct of their GDP respectively on the same.

"But In India it is sheer 2.50 pct of total GDP. So the government needs to expend more on R&D, so that our researchers were able to pursue higher studies and research.

Confirming about his government's plan to encourage technological development in the state he said that "we want to attract 25 percent of total Information Technology market of India in our state."

He said the state has captured six IT projects of total investment of Rs 1410 crore, which will generate 19,500 direct and 1,25,000 indirect employment.

Praising the talent pool of West Bengal, the minister said that "we have a highly productive and talented human resource but 75 pct of them are mismatch."

"So,our first priority is to build a specific manpower that will help drive the growth," he said 

Source: http://www.indiablooms.com/BusinessDetailsPage/2012/businessDetails210112a.php

Investment In India | "India needs more foreign investment"

By: National Editorial 
Source: http://www.thenational.ae 
Category: Investment In India


Two decades ago as India's minister of finance, Manmohan Singh pushed through reforms to end the "licence raj", a nightmare web of central planning permits and regulation that had sealed India's economy off from global trade and investment.

The reforms, most of them enacted while PV Narasimha Rao was prime minister, jump-started an Indian economic boom that helped hundreds of millions rise from poverty.

Today Mr Singh is prime minister himself, and he presides over a country that needs a new wave of reforms if its economy is ever going to lift the hundreds of millions of Indians still mired in poverty. A Supreme Court ruling on Friday points the way.

The world hears often and at length about India's corruption in high and low places and also about its appallingly pre-modern infrastructure. Indeed, both of these are all-too-effective brakes on development.
A third problem, less reported but no less serious, is the pervasive wariness, even hostility, about outside private investment. Twenty years after the licence raj, foreign investors are too often perceived as menacing, rather than essential partners in the growth India needs.

On Friday, the Supreme Court ruled in favour of Vodafone, the British telecom company, in a capital gains tax matter springing from its 2007 acquisition of an Indian mobile-phone firm. The ruling will spare Vodafone some $2.6 billion (Dh9.55bn) in taxes.

This is a legal ruling on a specific case. But over the years of legal combat, the Vodafone matter has acquired great symbolic significance, and has been watched attentively wherever investors aspire to do business with India. UAE-based Etisalat, which entered the Indian market in 2008 and is involved in its own legal battle, is among those paying attention.

The ruling may, as we hope, serve as a clarion call to Indian lawmakers and bureaucrats, helping them to understand that an unpredictable, avaricious bureaucratic climate is a damaging deterrent to investment. Tax policy, labour law, regulatory delays and other aspects of the country's business climate all need attention. So, as always, do the wider problems of infrastructure and corruption.

To be sure, India's complex, tumultuous politics can slow progress to a crawl. The government has recently had to abandon much, though not all, of a plan to allow foreign retailers into the country, for example.

But if Mr Singh and his allies can rediscover the spirit that led to the reforms of the early '90s, all Indians will stand to benefit.

Source: http://www.thenational.ae/thenationalconversation/editorial/india-needs-more-foreign-investment

Investment In India | "Foreign investment eyed to rescue Indian airlines"

Move could help country's carriers pay off $20b debt

By: Boomerang
Source: http://gulfnews.com 
Category: Investment In India 

Investment In India

Mumbai: The bonds of state-owned Air India are rallying for a fourth month as the government seeks foreign investment to fund a rescue plan for the nation's debt-laden airlines.

Aviation Minister Ajit Singh said in New Delhi on January 17 that the cabinet may soon allow international airlines to buy as much as 49 per cent of local operators, helping the industry repay debt the government estimates will approach $20 billion (Dh73.4 billion) by March. Kingfisher Airlines, which cut flights after 16 straight quarterly losses depleted its cash, told lenders it may receive a $250 million equity investment, said three people familiar with the transaction who declined to be identified because the talks are private.

The yield on Air India's 10.05 per cent notes due in 2031 fell 25 basis points this month to 9.20 per cent on January 12, the lowest level since the notes were issued in September, according to prices from the Fixed Income Money Market and Derivatives Association of India. That compares with 10.72 per cent on the 2016 bonds of AMR, the American Airlines parent that filed for bankruptcy protection in November.
‘No clear rationale'

"Allowing foreign carriers to participate in the industry would be a welcome decision, as there's no clear rationale to bar an investor class with most expertise," Binit Somaia, a Sydney-based director at CAPA Centre for Aviation, an industry consultant, said in an interview on January 17. "Strategic investment by global carriers will provide confidence for further institutional capital inflows."

India's move to ease investment rules may help the nation's cash-strapped airlines access funds and expertise and give an opportunity for overseas carriers to get a slice of the domestic market, where traffic is forecast to surge fourfold by 2020. Foreign airlines are now barred from owning shares in Indian carriers while non-airline investors from overseas can hold as much as 49 per cent.

The combination of seven interest-rate increases by the Reserve Bank of India and a 31 per cent jump in jet-fuel costs in the past year has widened losses, with low-cost carrier IndiGo being the nation's only profitable airline. Five-year borrowing costs for AAA-rated companies climbed 24 basis points in the period to 9.40 per cent on Wednesday, while similar yields fell 35 basis points to 4.62 per cent in China.
Avions de Transport Regional, a joint venture of European Aeronautic, Defence & Space Co. and Finmeccanica of Italy, removed an order for new planes from Kingfisher from its bookings tally last year after assessing the financial risk of the Indian carrier, ATR chief executive officer Filippo Bagnato said in Paris on Wednesday.

India's airlines need about $2.5 billion of new cash to maintain operations, including $1.32 billion for Air India, according to the Sydney-based CAPA.

Kingfisher needs about $400 million by next month, according to CAPA. In November, the heads of Indian carriers met Prime Minister Manmohan Singh, seeking the government's assistance to stem industry losses.

Mounting losses
 
Losses at Bangalore-based Kingfisher, controlled by billionaire brewing tycoon Vijay Mallya, more than doubled to Rs4.69 billion (Dh341.6 million) in the three months ending September 30. Gurgaon, India-based SpiceJet lost Rs2.4 billion in the same period. Jet Airways may report a fourth straight quarterly loss of Rs3.5 billion for the last three months of 2011, according to the median estimate of analysts in a Bloomberg survey.

Air India, unprofitable for four years, has taken Rs32 billion in government handouts since April 2009 to stay in business.

Source: http://gulfnews.com/business/aviation/foreign-investment-eyed-to-rescue-indian-airlines-1.968354


 

Investment In India | "Samsung plans $41bn investment in 2012"

By: Reuters
Source: http://timesofindia.indiatimes.com
Category: Investment In India

Samsung India

SEOUL: Samsung Group, which includes Samsung Electronics Co, said it is raising its 2012 investment to a record $41.4 billion, as the South Korean conglomerate seeks to consolidate its leading position in mobile chips and flat screens.

Best known for making massive investments in new technologies ahead of rivals, Samsung is now banking on logic chips and OLED displays to repeat its roaring success in flash chips, computer memory chips and LCD flat-screens, even as a gloomy global economic and IT spending outlook make its peers stick to conservative plans.

Samsung Group, South Korea's biggest business group, did not provide a breakdown of the 47.8 trillion won investment. But analysts have widely expected it to raise investment in mobile chips and next-generation OLED (organic light emitting diode) flat-screen displays.

"Samsung's got strong cash flow to make bold bets in new technologies. No other IT company can beat it in terms of investment and that's how Samsung finds new revenue sources ahead of rivals and widen its gap," Lee Sun-tae, an analyst at NH Investment & Securities.

Of the total investment, capital spending will amount to 31 trillion won, up 11 per cent from a year ago, Samsung said in a statement.

Analysts expect some 25 trillion won, or 80 per cent of the capital spending, will be from Samsung Electronics, the world's biggest technology firm by revenue, and its display unit, mainly to boost capacity of system chips and OLEDs.

Investment in system chips such as mobile processors and sensors used in smartphones, tablets, and cameras is likely to exceed spending on its bread-and-butter memory chips for the first time, reaching 7.5 trillion won, or some 1 trillion won higher than investment in memory chips, according to analysts.

Investment in OLED is likely to rise to 7 trillion won from last year's some 5 trillion won, and the rest will be spent on LCDs, rechargeable batteries and LEDs, analysts said.

Samsung Electronics makes mobile processors to power Apple's iPhone and iPad as well as its own Galaxy line of mobile products. Its display unit, Samsung Mobile Display, is also a near monopolistic supplier of OLED displays, which are mainly used in high-end mobile gadgets and are set to become dominant in TV screens to replace LCD.

OLED display revenues are expected to exceed $20 billion by 2018 to account for 16 per cent of the total display industry, up from the current 4 per cent, according to research firm DisplaySearch.

The record spending, which is up 12 per cent from last year's 42.8 trillion won, comes as its key home rival, LG Group, which owns LG Electronics Inc and LG Display, cuts its 2012 investment by some $3 billion amid uncertain global business outlook.

Samsung is South Korea's biggest business conglomerate and has around 80 companies. Its total revenues account for some 20 per cent of South Korea's annual gross domestic product which is valued at 1,200 trillion won.

With this year's investment, Samsung's spending since 2009 will total 148 trillion won ($128.2 billion).

By 0230 GMT, shares in Samsung Electronics, Asia's biggest technology firm by market value, rose 0.6 per cent, lagging a 1.4 per cent rise in the broader market. Samsung Elec has a market value of about $144 billion. 

Source: http://www.blogger.com/blogger.g?blogID=6269059779339500306#editor/target=post;postID=6212062129792325629

Investment In India | "Intel Capital looking for product company opportunities in India"

By: Sridhar K. Chari
Source: http://www.livemint.com
Category: Investment In India

Intel Capital, chip maker Intel Corp.’s global investment arm, is keen on using some of the $50 million (around Rs.257 crore) left over from its $250 million India Technology Fund to finance product start-ups this year—to fuel greater adoption of the chips it hopes to make for tablet computers and smartphones.
It is particularly keen on a tablet for the education sector, increasingly seen as a huge market opportunity in India.
“If somebody can come up with an innovative tablet, with an innovative interface—after all, we are a country of many languages—that would be of great interest,” said Sudheer Kuppam, Intel Capital managing director for India, Japan, Australia, New Zealand and South-East Asia.
“For 2012 and beyond, Intel Capital’s global focus is on ultrabooks, smartphones, tablets, and services around cloud and security,” he said in an interview. “I would like to see Indian entrepreneurs come up with their share of offerings.”
Nitin Khanapurkar, executive director at consulting firm KPMG, said there is space in India for better tablets than low-cost ones such as Aakash, the Indian government’s sub-$35 tablet for students.
“People have already seen the high-end tablets. So, even for educational use, if someone can create a device with better performance, may be using Intel chips, at a higher price point, it can find space,” he said. “But content and pricing of content will also become important.”
The India Technology Fund, set up in December 2005, began investing in May 2006. So far it has invested $200 million. In 2011, its investments totalled $56 million, a “record year for Intel Capital”, said Kuppam.
Most of these investments, however, went into services companies. Of the 17 companies it invested in last year, only two are product companies—Saankhya Labs Pvt. Ltd, a semi-conductor company, and Duron Energy Pvt. Ltd, which makes affordable solar power products for off-grid use. Both are based in Bangalore.
“It is the other way around not only in the US but even in China. It was in 2011 that we for the first time saw product innovation in India. We do expect a kind of increase in the product innovation space,” said Kuppam.
For that to happen in India, Intel Capital, like any venture capital or private equity firm, is looking for ideas with large market opportunities, given that product start-ups are capital intensive. The second aspect is expertise.
“Currently, most of the product design and R&D expertise resides in the West. But that is slowly changing. MNCs have completed around a decade here in India and there is a critical mass with industrial experience. Whether they are exposed to the latest and greatest is a question, but it is happening,” Kuppam said.
On services, Kuppam cited Intel Capital’s investment in Ashok Soota’s Happiest Minds Technologies Pvt. Ltd as an example. “We invested because of Soota’s vision to bring cloud and security services to India,” he said.
Intel Capital typically does not release investment figures for individual companies, preferring to club a few together and provide a consolidated number. Saankhya Labs and Duron Energy, for example, were among six companies for which funding of $20 million was announced in September.
Intel Capital has been vocal about its intent to get into the smartphone business, currently dominated by ARM Ltd’s architecture-based chips. This, too, creates investment opportunities, Kuppam said.
“Any time you are talking about new products, to bring out an Intel Inside smartphone you have to port the operating system to Intel architecture. A Chinese company we funded in 2011, called Borqs, is doing just that, on Android,” Kuppam said.
Intel Capital considers itself a “stage-agnostic” strategic investor—meaning it funds starts-ups regardless of their phase of growth, but the bulk of its investments are mid- to late-stage. “That is where the capital requirements are largest. We look for meaningful ownership, which means at least 10%, so that means we have to write the big checks,” Kuppam said.

Source: http://www.livemint.com/2012/01/10215600/Intel-Capital-looking-for-prod.html?atype=tp

Investment In India | "India: Land of Energy Opportunity"

By: Marin Katusa
Source:  http://jutiagroup.com
Category: Investment In India

Investment In India

Investment In India

Quick, what country is the economic engine that will power world growth? If you answered “China,” you’re far from alone. But there’s another country that deserves as much attention and better yet, is much friendlier to investment: India, home to 1.2 billion people. To electrify all those houses, power the industries that keep all those people employed, and fuel the vehicles that more and more Indians own, India’s energy needs are shooting skyward.

First question to consider: what kind of energy does India need? Just about every kind, really. India encompasses significant reserves of coal, oil, and gas, but each year it has to import more and more to meet its rapidly rising demand. Domestic production increases have been hampered by land disputes, interminably slow permitting, and government-regulated pricing mechanisms that discourage development.

That’s got to change if India wants to keep up, and its government knows it. Domestic supplies always come with better reliability, better prices, and other benefits that we can shorten into two words: energy security.

So India is reaching out to foreign oil majors, quietly setting up deals to exchange stakes in giant, underexplored oil and gas fields for the technical expertise it needs to best develop these resources. These partnerships are working into place slowly. However, they show Delhi is serious about the welcome mat it rolled out in 2000, when it passed a policy that allows foreign companies to own 100% of any oil and gas assets they may want to acquire for exploration and development.

And what we really like is that explorers are welcome in a democratic and reasonably friendly country that harbors none of the risk of asset nationalization that clings to other underexplored locales, like Venezuela.

Oil demand in India is set to rise some 4% annually for the next decade; natural gas requirements are expected to climb 10% per year for the next five years. Put together, India is a place that desperately needs more energy, has resources and reserves to exploit, and is working to encourage foreign investment in them.

We’re ready to take India up on the offer, so let’s learn a little more about its circumstances and potential.

Setting up Shop

In the 1990s, as India’s growth was beginning to snowball, Delhi realized the country needed to look abroad for expertise to shorten its learning curve and for capital to fuel it. Accordingly, the government wrote policies to attract foreign investment. The one we mentioned above is called NELP, for New Exploration Licensing Policy, designed to even out the playing field between national and private companies. India’s oil and gas industry has traditionally been dominated by state-owned companies.

With NELP enabling foreign companies to own oil and gas assets, Delhi next needed to develop a fiscal structure. What they chose is a PSC (production-sharing contract) system, and it’s not a bad one – not as favorable as the UK North Sea, but not Iraq either. (Governments set up different ways to collect what they consider their share of income from the development of their resources. In India, companies that find oil or gas – and are not state-owned – have to negotiate production-sharing contracts, or PSCs, with the government. PSCs designate a portion of production for companies that they hope will offset their expenses. Beyond this “cost oil, ” any “profit oil” is split between government and company, according to the terms of the all-important contract.)

India and Oil

India is the world’s fourth-largest oil consumer, trailing only the United States, China, and Japan. The country has 5.6 billion barrels of proven oil reserves, but production averages just 761,800 barrels per day (bbl/d), about the same that it did 25 years ago.

In contrast, the country’s consumption has more than tripled in the same period. It currently consumes about 3.1 million bbl/d, and it relies on imports for 70% of that. No government in its right mind would like this trend.

India’s oil sector is dominated by state-owned enterprises. The largest oil company is the state-owned Oil and Natural Gas Corporation (ONGC), followed by state-owned Oil India Limited (OIL). The NELP system has opened up opportunities for other companies, however, and India will need that foreign investment and exploration to boost domestic production.

The country is working the other side of the street as well to meet its energy needs. Indian national oil companies have bought stakes in international projects in recent years, aiming to gain control over some non-domestic supplies. For example, the international arm of ONGC has oil and gas operations in 13 countries including Vietnam, Russia, Iran, Iraq, Sudan, and Brazil.

Indian companies are also opening up to the notion of partnering with global firms, as we mentioned earlier. While no state-owned companies have inked major partnerships as yet, privately owned Reliance Industries Ltd signed a US$7.2 billion deal with BP (NYSE.BP, L.BP) in August. Reliance sold BP a 30% stake in 21 exploration blocks and is now using the British energy giant’s expertise in deepwater drilling to revamp its plans around exploration and boosting production from its operational fields.

This first major deal could well act as a model for future exploration partnerships in India. Companies know that international partners can bring valuable expertise, especially with respect to increasing output from mature fields.

One aspect of India’s oil sector that needs adjustment is its subsidy system. The government subsidizes prices of domestic oil products to help disadvantaged Indian consumers. But requiring its national companies to sell their products at reduced prices regularly forces them into major financial losses – more than US$23 billion in fiscal 2010-2011 alone, according to the International Energy Agency.

And the subsidy situation only gets worse as the rupee depreciates. Global oil costs have eased some 8% this year, but the rupee’s 9% slide against the dollar has wiped out any cost savings. The oil minister said recently that every one-rupee decline in the Indian currency against the dollar increases annual revenue loss for the three state-owned refiners by 80 billion rupees, or US$1.6 billion.

No easy solution for this issue, unfortunately. Clearly, raising prices for Indian consumers would carry a heavy political price. But just as clearly, the Indian government cannot continue subsidizing oil prices at this level for long.

India and Natural Gas

When it comes to India and natural gas, the question is really one of keeping pace with electricity demand. The country was gas self-sufficient for years, but economic growth turned it into a net importer in 2004 despite steady increases in production.

Even imports are not enough: According to the World Bank, roughly 40% of residences in India are without electricity, and blackouts are still common in main cities. Import needs have climbed by an average of 35% annually.

Natural-gas demand in India is projected to grow 10% annually for the next five years as the country works to diversify away from a reliance on coal, which currently generates 70% of India’s power.

Several large natural-gas deposits have been discovered in India over the last few years, primarily offshore in the Bay of Bengal. But demand will continue to outpace production for the next several years at least. For one thing, Reliance’s huge KG-D6 field – its first offshore field – is producing 20% to 40% less gas than expected, a problem that will take even its new partner BP at least three years to reverse.

Then there’s the subsidy issue again. Some gas finds are being left undeveloped because the regulated price of natural gas is simply too low to justify the cost of developing the field. The price more than doubled in May 2010, but US$4.20 per MMBtu is still only one-third that of the open market in Asia.

The country is trying to add infrastructure to help meet its growing import needs, but it’s running into hurdles here, too. A variety of economic and political issues keep delaying the Iran-Pakistan-India pipeline, under discussion since 1994. Similarly, India is the planned endpoint for the Trans-Afghan pipeline from Turkmenistan, but work is yet to begin due to concerns about route security and the adequacy of Turkmen supplies.

A liquefied natural gas (LNG) terminal has made it to construction phase, adding a third to two already in operation in India. Long-term growth demand for LNG in India remains unclear, however, because… you guessed it… that gas subsidy means domestic gas is notably cheaper than imported LNG.




Source: http://jutiagroup.com/20120112-india-land-of-energy-opportunity/

 

Investment In India | "US companies happy to see FDI limit on single-brand retail go"

By: Uttara Choudhury 
Source: http://www.firstpost.com
Category: Investment In India


New York: US investors heaved a sigh of relief as the government on Tuesday formally cleared the decks for 100 percent foreign direct investment (FDI) in single-brand retail. The decision eases the entry of predominantly single-brand US retailers such as Starbucks and Gap into India’s retail market, allowing them to operate without a local partner.
It is no secret that many foreign chains, most notably Ikea, which buys a lot of furniture and furnishings from India, have not opened stores in the country because they did not want to take on Indian partners.
The rule change also raised expectations that the Manmohan Singh government might loosen restrictions on foreign multi-brand retailers, after reversing a decision last month to let the likes of Wal-Mart open supermarkets in India to appease opposition parties and waspish allies.
“The opening of India’s single-brand retail sector sends a crystal clear signal that India is open for business at a time when economic opportunity is certainly welcome amidst global uncertainty,” said Ron Somers, president of US-India Business Council (USIBC).
Somers, an Indophile who actively promoted the India-US civil nuclear energy deal in Washington, had earlier lashed out at the government for its decision to suspend plans to open India’s retail sector to foreign supermarket chains.

“While USIBC is encouraged by this lifting of FDI caps in single-brand retail, there is still much work to be done. USIBC will focus on helping companies navigate the conditions required by the Press Note, particularly concerning local sourcing, recognising India’s goal to spur local manufacturing and create employment. We will simultaneously continue to seek an opening for the multi-brand retail sector, as well,” Somers said.
Strict conditions
Still, the approval comes with some strict conditions that may be difficult for some companies to meet. Among them is a requirement that single-brand retailers buy 30 percent of the value of their products from small Indian businesses and artisans — defined as businesses and individuals that have invested less than $1 million in factories or equipment. The government is hoping the mandatory sourcing from India’s cottage industries will have a positive impact on the employment situation in India.
“We have now allowed foreign investment up to 100 percent with the stipulation that in respect of proposals involving FDI beyond 51 percent there will be mandatory sourcing of at least 30 percent of the total value of the products sold…from Indian small industries/village and cottage industries and craftsmen,” commerce and industry minister Anand Sharma said in a statement.
“This step will provide stimulus to domestic manufacturing, value addition and help in technical upgradation of our local small industry.”
The new rules also say that investors wishing to hold 100 percent of single-brand stores must own the brands that their stores sell, a provision that would preclude franchisers.
Bolstering flagging investor confidence
Prime Minister Manmohan Singh has promised he will renew the multi-brand retail initiative after regional elections this year.
“We hope the initiative is a precursor to further liberalisation in the sector in the days to come,” Rajan Bharti Mittal, managing director at Bharti Enterprises, Wal-Mart’s India partner for wholesale stores, told Bloomberg.
The government took a decision to allow 100 percent FDI in single-brand retail as it was the only way to attract serious investment. Under the current regime of 51 percent FDI in single-brand retail, a paltry $44.45 million trickled into India in the last five years. The new move will galvanise single-brand US chains like Starbucks, Gap, Banana Republic and others to enter India.
“Globally, single-brand retail follows a business model of 100 percent ownership and global majors have been reluctant to establish their presence in a restrictive policy environment,” the department of industrial policy and promotion (DIPP), said in a statement.
It stands to reason that prominent American brands like Nike, Reebok, Calvin Klein, Estée Lauder and others who already have a presence in India under various operating models may also expand their India operations after the rule change.

Source: http://www.firstpost.com/business/us-companies-happy-to-see-fdi-limit-on-single-brand-retail-go-179341.html

Investment In India | "Restrictions on FDI in single-brand retail lifted"

By: Reuters
Source:  http://ibnlive.in.com
Category: Investment In India

Investment In India

New Delhi/Mumbai: India formally eliminated restrictions on foreign investment in its single-brand retail sector on Tuesday, opening the door to the likes of Swedish furniture giant IKEA to open stores in Asia's third-largest economy.

Foreign retailers that want to invest beyond the previous cap of 51 per cent ownership will need to source 30 per cent of their goods from small and village industries, said the government, which faces five state elections in the next few months.

Big local retailers cheered the change, which was pushed through by a government that has struggled to shake off perceptions of policy drift at a time when economic growth is slowing and inflation remains above 9 per cent.

"This is a welcome move with a clear potential to lift the general mood in the economy," said Rajan Bharti Mittal, managing director of Bharti Enterprises, which operates a cash-and-carry business in partnership with Wal-Mart Stores Inc.

Apart from improving consumer choices, the change will help to make Indian enterprises more efficient by improving access to global designs, technologies and management practices, he said.

Tuesday's decision did not come as a surprise, although Prime Minister Manmohan Singh's attempts to free up the retail sector have met fierce political opposition and protests by small retailers who fear it will kill their livelihoods.

In December, the government suspended plans to open India's $450 billion supermarket sector to foreign firms, backtracking from one of its boldest reforms in years in the face of the backlash.
The retreat, within two weeks of the policy being announced, was seen as another nail in the coffin for Singh's economic reform programme.

Removing restrictions in the single-brand sector - which was announced at the same time as the supermarket policy change - was relatively uncontroversial.

Single-brand retailers such as Britain's Marks & Spencer have built a major presence in India, riding an economic boom that has created a swelling, affluent middle class.

Others, such as IKEA, have said they would only enter the country when investment restrictions were eased.
Tuesday's announcement may not hasten a policy change in the supermarket sector, known locally as multi-brand.

Closely watched by the likes of Wal-Mart, France's Carrefour and Britain's Tesco Plc, such a move remains politically dangerous for the coalition government.

"The notification was expected because single-brand is less controversial, as the brand will not compete with a local retailer," said Bijou Kurien, who heads the lifestyle division of Reliance Retail, which runs department stores, hyper-markets and supermarkets.

Reliance, a unit of industrial conglomerate Reliance Industries, has joint ventures with Marks & Spencer, US home improvement giant Home Depot and US clothing chain Diesel, among others.
"Our partners are quite happy and have no plans of a JV buyout," Kurien added.

Swedish fashion retailer Hennes and Mauritz (H&M), the world's second largest apparel retailer, said that while India was an interesting market, it was too early to comment on any plans it had to open stores.

Source: http://ibnlive.in.com/news/restrictions-on-fdi-in-singlebrand-retail-lifted/219698-7.html

Investment In India | "Simplify rules, cut taxes to make India the investment destination"

By: Nagaland Post
Source: http://www.nagalandpost.com
Category: Investment In India


The year 2012 should usher in a change in outlook. The 1991-type reform is not the ultimate. It was the beginning for a change but it is not the end in itself for India. When the prime minister Manmohan Singh says that it was one of the corrupt regime enmeshed in licence-permit raj, he is correct. But 21 years after that beginning the country has not tried to review the gains and losses of the liberalisation – if that is there or not, and the so called economic reforms – if it can be called so.
The liberalisation is there more in government announcements – one window clearance, no bureaucratic hassle, end of inspector raj. On reality check many of these are still in a quagmire of bureaucratic hassles. The process has seen the bureaucracy becoming more powerful as also the weakening of the political power. Many ministers have become ornamental and many others feel frustrated as their officials do not take the command from them. In a democratic polity the politician should be the master and not the officials. When that happens, nations need to worry. A powerful bureaucracy resists change and perpetuates the known way of functioning – non-functioning!
It is the fear of the known. The much publicised economic reforms have taken the country virtually back to the crisis of 1990. The prices are on spiral, forex reserves are dwindling, gold is touching new highs, investments are getting into critical zone and hawala is strengthening.
The worse the banks are is severe stress, need `2.7 lakh crore recapitalisation. It is likely to spread to structured finances this year, which is likely to witness default in repayments from the commercial vehicle and other sectors.
Pessimism is setting in as the much-touted tax reforms have not happened. Worse the Direct Tax Code, thankfully put off by parliamentary standing committee, has not proposed one new idea nor  tried to simplify the tax process. It has only tried to strengthen the shackles of the tax officials.
It has also seen expenses of the tax collection system increasing with induction of more officials at all levels. Expenditure on tax collection is going beyond the 48 per cent of the total taxes collected, estimated by the Tendulkar committee almost a decade back.
As the economy slows down whether Singh and planning commission chairman MS Ahluwalia agree or not, the tax collections are coming down. The necessary changes in the system are not even being mulled over. It is the bane of the economy.
One needs to think over why in 2011, the outward foreign investment, by indigenous corporate, from India totalled a massive $ 29 billion. The inward direct investment (FDI) was only $ 23 billion. Capital does not flow out of a country that is viewed as a very attractive investment destination in many terms including the tax regime. If the hawala route is included, the flight would be much more. Yes, India generates a huge “black money” every year for the lack of political will – dictated by the bureaucratic insinuations – to simplify the tax rules. All such money is really not black. It is earned through legitimate means but owing to complicated and high tax rates, businessmen devise ways to skip taxes. For making the system more stringent, the bank deposits were brought under the rule of tax deduction at source (TDS). It has been one of least wise decisions.
The rationale – to tap “black money” through bank deposits is extremely faulted. People who put the money in banks already pay tax on their income. They put their hard-earned savings in banks. This is put by the government and banks for profitable investments. They pay a small interest on such deposits. It is a contribution of the people for helping build the nation. They had every right to spend or fritter that money away. Why should that be taxed?
There is bureaucratic rationale – for boosting government coffers. But they forget how it makes banking operations more expensive. Apart there used to be many small businessmen, who used to put their money in banks with the lure of earning that small interest. But as TDS started eating even their principal up, they now prefer to keep it away.
Businessmen have saved their money, but it has gone out of the banking system. Today, it is creating a big problem for the banks as they are facing sevinvestmentere fund crunch. It is now burdening the government’s revenue as `2.7 lakh crore has to come from its coffers. It bares the prudence of taxing bank deposits.
Even multinationals have devised ways to save their taxes through various operative and accounting practices.
Much of the present growth crunch and flight of capital is owed to skewed tax policies. India remains one of the highest and complicated taxed systems. If the country wants to progress it has to ensure a low tax regime with the highest tax being not more than 17 to 20 per cent, keep deposits free of TDS.
It also has to learn to end harassing so called tax defaulters. If someone cannot pay it in one financial year for any reason he should be allowed to pay that in subsequent years without any penal interest or of it is not a large amount it could even be allowed to forgone. The tax system should be lucrative and inviting for businesses to put their money in the country.
If it is not done once again the country would be condemned to repeat the history of 1990 – high taxes, low investment and growth a misnomer. It is unfortunate that bureaucrats have successfully turned the disenchantment against them to the politician. Yes, the politicians need to learn the art of governance and not fall into traps led by the bureaucracy. They also need to consider how to keep the bureaucracy lean so that people’s voices are heard.
The new reform has to be the process in simplifying of rules, procedures and functioning where the bureaucrats have the least ways to become corrupt. Stringent laws and rules, multiplication of institutions lead to higher corruption. That stymies growth. India has to become the best  destination, which it is not today. It calls for the beginning of democratisation of the business and economics free from the shackles of bureaucratic control for a better functioning state.

Source: http://www.nagalandpost.com/blog/BlogArticle.aspx?baid=QkExMDAwMDAzMjU%3D-w76qFg6pwLM%3D&bid=QzEwMDA3-z9Hu68WczSk%3D

Investment In India | "Promise of an Indian spring for investors"

The Delhi government has opened up its market to private investors, and despite the share free-fall last year, the omens are good

By:Julian Knight
Source: http://www.independent.co.uk
Category: Investment In India


If there is such a thing as a sure bet in life, surely investing in India is it.

The economy is coming up on the rails of China and even the US, and it has a young, dynamic population, with a tech and science base that's becoming the envy of the world. The 20th century was America's, yet the 21st may turn out to be India's, and not China's after all.

However, any private investor with money in an India investment fund over the past 12 months will be counting the cost: "The last year has not been a good one in the emerging markets for investors, but worst of the lot has been India," says Edward Bland, head of research at Duncan Lawrie.

"The Indian stock market is down 25 per cent, and there is a similar drop in the value of the rupee against the dollar, which shows the perceived weakness of the economy and eats into returns for people looking to repatriate an investment," Mr Bland said.

A quick scan of the funds that invest in India reveal that over the past year the best performing, the First State Indian Subcontinent fund, has still managed to decline by 22.8 per cent, and the worst, HSBC GIF Indian Equity fund, has lost a whopping 43.6 per cent. Compared with a 5.5 per cent fall in the UK FTSE in 2011, this is a scale of loss which should give investors – big and small – pause for thought.

Against this backdrop, institutional investors – such as pension and investment funds – have been rapidly selling Indian company shares, driving the market further down.

Now, in response, the Indian government is to make good on its promise to allow foreign private investors to make direct investments into Indian companies. Previously, only unit trusts and pension funds were able to invest, but from 15 January you and I will be able to invest directly. But with institutional cash still running for the hills, should private investors resist India's new-found conversion to open economics?

"There has been to-ing and froing from the Indian government over liberalising its economy and accepting foreign direct investment in companies, and this has spooked the institutions," says Tom Stevenson, investment director at the giant fund management group Fidelity.

"There have also been problems with the economy, in particular inflation – largely from higher food prices. This has led to a 4 per cent rise in interest rates and tailing off of economic activity in some quarters," he adds.

However, such bad news could also be the signal to invest in what long-term still looks like a success story: "It's a very young population and it is rapidly urbanising, like China, and, unlike the West, has very low levels of household debt," Mr Stevenson says. "There is an entrepreneurial culture in India – a pent-up desire for growth hemmed in by bureaucracy. After a torrid 2011, share price valuations in Indian companies look very attractive and corporate profits healthy."

As for the banking sector, which has sparked some concerns, this is apparently in good health, particularly when compared with the West.

"There appears to be a significant concern, if valuations are a guide, that Indian banks could suffer unsustainable losses as a result of the slowdown. This is highly unlikely. Bank balance sheets in India are reasonably robust compared with most banking systems in the world today," Avinash Vazirani, the manager of the Jupiter India Fund says.

What's more, the majority of India's still largely rural population do not have a bank, which means that long-term consumer credit and other banking services are set to grow. Meanwhile, transport, utilities and public building projects are all harbingers of immense growth: "India is modernising fast, and there is infrastructure roll-out which the Chinese have already undergone," Mr Bland says.

As for the bugbear of inflation, which helped to prompt the Indian share sell-off last year, this is easing.

"Food inflation is already at the lowest level for four years, and should decrease further in the next few weeks. I expect inflation to continue to reduce as energy and food price falls feed through, which should allow the Reserve Bank of India to cut rates significantly this year," Mr Vazirani adds.

But direct investment in Indian firms for small private investors may be tricky to undertake, relatively more expensive than deals in the UK and crucially high risk, as single company shares are far more volatile than buying a basket of shares through a unit trust or an exchange traded fund.

"It's best for most small investors to look at funds rather than direct investment as these help spread risk," says Darius McDermott from Chelsea Financial Services. "As a rule of thumb we wouldn't recommend investors have more than 5 per cent of a share portfolio in the Indian stock market, and less than this – or not at all – if you are, for example, nearing retirement and have a short- to medium-term investment timeframe.

"For investors wanting a pure India play, we would recommend the Fidelity India Focus fund. The manager, Teera Chanpongsang, is someone who has impressed us. For those wanting more diversification, we would recommend the Allianz RCM BRIC fund, Aberdeen Emerging Markets fund or one of the new funds from JOHCM which look very promising."

Expert View

Tom Stevenson, Investment director, Fidelity

"As long as you remember that investment is for the long term and remember that emerging markets can be very volatile then the prospects for India are exciting. The economy is fundamentally quite strong and it has a very young demographic. Bearing this in mind, valuations look very good right now, near the level we saw at the nadir of the last global recession."


Source: http://www.independent.co.uk/money/spend-save/promise-of-an-indian-spring-for-investors-6286483.html

Investment In India | "Auto Expo 2012: Honda Motorcycle to invest Rs 1,000 crore in 2012-13"

By: The Economic Times
Source: http://economictimes.indiatimes.com
Category: Investment In India

Honda Motors

NEW DELHI: After exiting from its Indian joint venture Hero Honda, two-wheeler manufacturer Honda Motorcycle and Scooter India today announced an aggressive expansion plan for India which includes an additional investment of Rs 1,000 crore during 2012-13 and unveiled 7 new models to take on competition.

Besides, the company also announced a new India specific brand identity with a new slogan.

"Till now investment is Rs 1,800 crore. We will invest Rs 1,000 crore next year," Honda Motorcycle and Scooter India Naresh Kumar Rattan said while unveiling 7 new models to be rolled out over a period of next 4 months.

The third plant would be coming up soon in Karnataka, he said at the 11th Auto Expo here.

Currently, the company, a wholly-owned subsidiary Honda Motor Company of Japan, has a two-wheeler manufacturing plant at Manesar in Haryana and Tapukara in Rajasthan.

The company which is third largest two-wheeler manufacturer plans to double its capacity from 22 lakh units per year to 40 lakh units per year over a period of next 2 years, he said.

By 2020, the company aims to achieve production target of 1 crore units and become the largest two-wheeler company in the country.

The company plans increase its market share from the existing 14-15 per cent to 30 per cent by 2020.

On the network expansion, Rattan said at present "we have 1,200 outlets which will go up to 1,500 crore by the end of this year".

It is to be noted that Honda Motor Co exited Hero Honda completely after selling its 26 per cent stake last year.


Source: http://economictimes.indiatimes.com/news/news-by-industry/auto/two-wheelers/auto-expo-2012-honda-motorcycle-to-invest-rs-1000-crore-in-2012-13/articleshow/11375557.cms

Investment In India | "India to allow foreign investment"

By: Natalie Obiko Pearson
Source: http://www.examiner.ie
Category: Investment In India



INDIA’S government will allow overseas individual investors to directly buy local equities as the country seeks to boost capital inflows and reduce volatility in the stockmarket.

The new rule from the central bank and stock market regulator is expected to take effect by January 15, the government said yesterday.

Currently, individual investors can only invest in Indian shares through so-called participatory notes.

The move has been anticipated since October 2010 when a Finance Ministry official, who declined to be identified at the time, said that the change was being considered.

R Gopalan, secretary of economic affairs at the Finance Ministry, confirmed this on November 15.

The new rule will "widen the class of investors, attract more foreign funds, and reduce market volatility," as well as deepen the Indian capital market, the government said in its statement. Foreign investors pulled out €373.6 million from India’s equities last year, compared with a record inflow of €22.17 billion in 2010, data from the exchange regulator show.

The benchmark BSE India Sensitive Index dropped 25% in 2011.

Source: http://www.examiner.ie/business/kfqlididauey