Foreign Investment In India | "India shines in Asia on stable earnings, reform hopes"

By: BS Reporters
Source: http://www.business-standard.com
Category: Foreign Investment In India

Despite a worsening macroeconomic scenario, overseas investors continue to prefer Indian shares over their emerging markets and Asian peers due to stable corporate earnings, expectations of government action and increasing probability of further global monetary easing.

Foreign institutional investors (FIIs) have poured in about Rs 62,412 crore ($11.76 billion) into Indian shares this year till August 27, Securities and Exchange Board of India (Sebi) data showed. This is the highest among Asian countries for which Bloomberg compiles data.The Bombay Stock Exchange (BSE) benchmark, Sensex has gained 13 per cent so far this year in rupee terms (7.6 per cent in dollar terms), making India one of the best performing markets in Asia. Indian shares have also outperformed other emerging markets like China, Russia and Brazil during this period. According to JP Morgan, Indian equities have outperformed other emerging markets in the last three months on expectations that the government would act. The foreign bank is of the view that the markets are hoping for government measures like a diesel price rise, allowing or increasing direct foreign investment limits in multi-brand retail and aviation and faster clearances for investment projects, particularly in the power and coal sectors.

However, JP Morgan strategists warn bulls are now getting edgy due to policy inaction. “The first volley of reforms was expected after the Presidential poll in late July. But this has not been the case. The monsoon session of Parliament has been stalled following the Comptroller and Auditor General of India’s report on coal block sanctions. Coalition allies continue to be reluctant on key reforms,” Bharat Iyer, executive director and head of India equity research at JPMorgan, stated in a strategy report early this week. “Expectations are now for the government to move in the eight-week window after the monsoon session of Parliament concludes (September 7) and before the state elections in Gujarat in November.”

Indian shares have also performed better than other comparable markets on anticipation of monetary easing by the US Federal Reserve and the European Central Bank (ECB), according to CLSA.

“Despite the continued downward earnings momentum in corporate earnings, MSCI India has moved up by five per cent over the last one month on increasing probability of further global monetary easing,” CLSA's India strategists Mahesh Nandurkar and Bhavesh Pravin Shah on Wednesday stated in a report. “While India is the best risk-on market, our analysis of the previous six global liquidity events highlights that market performance has been weak post facto if the index has already moved up on anticipation, which seems to be the case now."

However, strong FII inflows into India this year have also raised concerns among some market participants about their authenticity.

BNP Paribas, in a report early this month, stated almost half the FII flows in India seem to have come from unexplained sources.

“This could lend credence to the oft-repeated conspiracy theory that a lot of FII flows into India are, in reality, Indian money disguised as FII money,” said Manishi Raychaudhuri in a report early this month.

However, BNP Paribas is of the view that FIIs are buying Indian shares because of the country's relative earnings stability. “Over the past one to two quarters Indian earnings estimates have remained stable while those for large Asian peers have declined 7-10 per cent,” Raychaudhuri said in the report.

Raychaudhuri believes the answer to the riddle why FIIs are not selling India when selling the rest of Asia lies in the kind of stocks that FIIs have bought in India recently. “Over the past two to three quarters, FIIs bought predominantly stocks that offer visibility on revenues and earnings. The top 15 stocks, contributing 65 per cent of FII buying, fall largely in this category. In contrast, in 2008, FIIs sold India heavily when they sold the rest of Asia,” he said in the report.

Source: http://www.business-standard.com/india/news/india-shines-in-asiastable-earnings-reform-hopes/484833/

Business In India | "Hawkers eat into restaurants' business in Mapusa market"

By: TNN
Source: http://timesofindia.indiatimes.com
Category: Business In India

MAPUSA: Disappointed with the loss of business due to mobile hawkers selling tea and snacks, the Mapusa uphar graha owners association (MUGOA) has lodged a complaint with the Mapusa municipal council (MMC) and demanded action against these hawkers.

Around 36 restaurant owners submitted the complaint to the chairperson of the MMC, Sudhir Kandolkar, on Wednesday. In it, they stated that persons roaming with a kettle of tea and eatables in the Mapusa municipal area have had an adverse impact on their businesses.

The owners stated that because hawkers supply items like tea, coffee, samosa and bread to the fish, vegetable and fruit vendors in the area, they (the restauranteurs) lose clientele, thus causing heavy losses to them.

"The vendors are then reluctant to leave their place and enter out restaurants, or even order stuff from our establishments," says Santosh Belekar, who owns a restaurant in Mapusa. "Our items thus get wasted every day," he further lamented.

The hawkers aren't new to Mapusa, though. What's new is their increased number. "Earlier, they used to be a few, and went unnoticed; they didn't have much of an adverse effect on our business," said another restaurant owner. "Now, their number has increased sharply and they are eating into out business."

Another hotel owner, Raju Nanodkar, complained that "There is no check on these hawkers, due to which they roam freely all over town".

Members of the association that filed the complaint, have also threatened that if the council fails to take action against the hawkers, then they would do what it takes to control the menace.

"Earlier (a week ago), we had submitted a memorandum to the chief officer of the MMC, but nothing has been done. We should not be held responsible if we take the law into our own hands to evict these vendors for the survival of our business," Santosh Belekar said.

MMC chairperson Sudhir Kandolkar said that he would take up the issue with other council members in a council meeting and take necessary action.

When contacted, Salim Velji, director of food and drugs administration (FDA), said that there is no provision for allowing the selling of tea and foodstuff by mobile hawkers, and hence, there is no regulation.

"It may be a delivery system," Velji further said. "These boys must be attached to some hotels, the source could be the hotels and restaurants, and the boys could be delivery boys. If the sources of these eatables do not have valid licences, then they can be penalized."

He also said that the FDA is willing to take action on unlicensed vendors. "If there's a complant that these eatables are prepared at a place without licence, they should approach us, and we'll take action," he said.

Moving off on a different tangent, the FDA director then added, "If those are minor boys, then they can approach the police."

Source: http://timesofindia.indiatimes.com/city/goa/Hawkers-eat-into-restaurants-business-in-Mapusa-market/articleshow/15966531.cms

Investment In India | "Nereus Capital Raises IFC Investment for India Projects"

By: Natalie Obiko Pearson
Source: http://www.businessweek.com
Category: Investment In India

The World Bank’s International Finance Corp. unit has agreed to invest in a fund managed by Nereus Capital Management LLC that’s targeting clean-energy companies in India.

The $20 million investment is part of $250 million that Nereus plans to raise in the next year, Nereus founder Jonathan Winer said today in a phone interview from New Delhi. It already raised more than $20 million from another investor whom Winer declined to identify, citing a confidentiality agreement.

Nereus seeks to “develop hard assets on the ground,” Winer said. “We’re trying to back companies with scalable business models that address the larger opportunity created by the supply-demand imbalance in the Indian power market.”

India, which suffered the world’s biggest blackout last month, depends on coal to generate more than half its electricity and struggles with a 9 percent power deficit at peak hours. The government seeks to boost alternative energy sources as infrastructure bottlenecks cripple utilities, creating a 30- gigawatt backup power market by businesses switching to diesel generators when lights go out.

Nereus’s first investment may be in a company developing a waste-heat recovery power plant, Winer said. Such plants use heat released as a byproduct of industrial operations, such as flue gases at factories, to heat water to run turbines.

The fund is expected to make seven to 10 investments of $15 million to $35 million each, according to a summary of IFC’s investment proposal on its website. Winer said there’s no cap on the amount it invests in a single company or industry.

Potential investment targets also include developers of wind farms, small hydropower, off-grid solar projects, engineering contractors and suppliers servicing the clean-energy industry, Winer said.

The IFC has invested $3 billion in 190 funds globally, according to Vikram Raju, who heads private equity investments for the organization in South Asia.

To contact the reporter on this story: Natalie Obiko Pearson in Mumbai at npearson7@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

Source: http://www.businessweek.com/news/2012-08-29/nereus-capital-raises-ifc-investment-for-india-projects

Investment In India | "STAR India to invest in cricket-based services"

By: Gaurav Laghate
Source: http://www.business-standard.com
Category: Investment In India

STAR India, the exclusive media rights holder for the Board of Control for Cricket in India (BCCI)’s international and domestic cricket matches, is planning to invest Rs 100 crore in the first year to enhance the consumer experience, mainly beyond television.

STAR, the Rupert Murdoch-led News Corp’s Indian subsidiary that has acquired all media rights of BCCI for six years from April this year, is also planning to tighten the noose on the piracy of content that is rampant on mobile and internet. “There is lot of piracy beyond television as far as sports is concerned. The rights are not being honoured and the sad part is that big mobile companies are making money and rights holders are not getting anything. We at STAR India believe this blatant misuse of rights should be punished and we will crackdown heavily on such piracy,” Sanjay Gupta, chief operating officer of STAR India, told Business Standard.
Gupta added mobile companies often use low-quality content from content aggregators and offer them to consumers. “We will invest Rs 100 crore in the first year for shaping up the system, manpower, technology, analytic, etc to offer much better user experience on mobile via value-added services (VAS),” Gupta claimed.

Asked about the return on investment, he said it was not significant right now, but in three to five years, it would be a significant revenue stream. “Today, there may not be a huge revenue leakage, but what is worst is that we are not shaping the future and this piracy will kill any prospect of making mobile VAS as a potential revenue stream,” Gupta said.

At present, an average consumer spends 20 hours per week on television, while just 10 minutes on consuming content on mobile devices and it is here that STAR India is looking enough value to unlock.

STAR India had also published a public notice in the country’s leading dailies on Friday, announcing that it is the exclusive owner of the BCCI rights and that no entity, without its prior permission, should engage in mobile any activity that infringe or interfere with it rights. It had also said STAR India is authorised to take legal action against such entities.

Gupta added: “It’s time that people should recognise and respect that we hold the rights. We are going to educate them, engage them. It is going to take lot of efforts and time, and STAR is fully geared up for it.”

Source: http://www.business-standard.com/india/news/star-india-to-invest-in-cricket-based-services/484649/

Investment In India | "Amazon Expands Kindle Business To India"

By: Dianna Dilworth
Source: http://www.mediabistro.com
Category: Investment In India

After opening up in various European markets last year and announcing a move into Japan earlier this summer, Amazon has expanded its global push by opening its Kindle business in India.

AppNewser has more: “Kindle India launches with more than a million titles priced in Indian Rupees. The India Kindle Store features titles from around the world including various works from Indian authors, including Chetan Bhagat, Ashwin Sanghi, Ravinder Singh and Amish Tripathi.”

Amazon first launched its e-commerce site in India back in February. Like Amazon.com, Junglee.com, the Indian storefront sells everything from books and electronics to shoes and baby toys.


With the launch of the Kindle store in India, Amazon is also opening its Kindle Direct Publishing platform, the company’s self-publishing platform, in India. Indian authors can use the platform to publish their works in Kindle stores around the world, setting prices specific for India, and receiving royalty payments in rupees.

Source: http://www.mediabistro.com/galleycat/amazon-expands-kindle-business-to-india_b56404

Investment In India | "China and India Are Catching Up to the U.S. in College Graduates"

By: SERENA DAI
Source: http://www.theatlanticwire.com
Category: Investment In India

If investment in education is correlated with business competition, then the U.S. better watch out: India and China are on our tails as far college graduates go, according to this chart by research institute Center for American Progress. In an analysis comparing investments in the workforce called "The Competition that Really Matters," Donna Cooper, Adam Hersh, and Ann O'Leary looked at each country's share of the world's college graduates.

The authors used data from the U.S. Census Bureau and a paper by the National Bureau of Economic Research. The yellow bar represents a projection based on demographic data and college enrollment trends.

While the U.S.'s share of world graduates goes down, China and India are seeing larger shares of college grads. The paper suggests that the changes in this graph indicate China and India's growing competitiveness. Per Cooper, Hersh, and O'Leary: "[Economic] research consistently points to education and broader human capital investments as the most important drivers of economic progress over time," they write. "The sheer population sizes of China and India mean that relatively soon they will match the United States in the number of skilled-workers competing in globally-mobile industries."

The authors' ultimate conclusion? If the U.S. wants to compete with China and India, it's going to have to invest more in education.

Source: http://www.theatlanticwire.com/global/2012/08/china-and-india-are-catching-us-college-graduates/56071/

Investment In India | "MLMs now want to ‘invest’ money in India, really?"

By: SUCHETA DALAL & YOGESH SAPKALE
Source: http://www.moneylife.in
Category: Investment In India

The Foreign Investment Promotion Board (FIPB) will meet on 24th August to deliberate on the perils of allowing foreign direct investment (FDI) in multi-level marketing (MLM) companies, says a PTI report. However, experts worry that top multinational MLMs will use the meeting to legitimise their existence, which is currently uncertain under the Prize Chits & Money Circulations Schemes (Banning) Act, 1978.

Following reports of the FIPB meeting on 24th August, EAS Sarma, former expenditure secretary, Government of India, has written to Arvind Mayaram, secretary for economic affairs warning, “I apprehend that the FIPB route will be sought to be misused to obtain cover for these MLM companies which are nothing but a way to swindle the public to raise illegal funds to enrich unethical and anti-social persons.”

“Many of these (MLM) companies are not even registered under the Companies Act. Even those registered evade regulation. Those booked regroup under different names and continue to cheat the people. All these companies and those that promote them should be dealt with an iron hand and be prosecuted effectively,” he said. This follows several letters by him to the prime minister, ministry of corporate affairs, ministry of finance, Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and others, on the subject. All of this has been backed by a solid body of investigation and research by Hyderabad-based DIG V C Sajjanar.

Meanwhile, pressure against MLMs and various other ponzi schemes has been mounting. Moneylife has been exposing scores of the shady operators over the past two years. Moneylife Foundation, a not-for-profit entity has also sent a representation to the prime minister, urging for a complete ban on MLM companies or to bring them under the regulatory ambit of either RBI or SEBI.

A set of powerful MLMs, which are part of an exclusive closed club, called the Indian Direct Selling Association or IDSA (on the lines of the Direct Selling Association of the US) has been lobbying hard to make a distinction between their operations and those of others, who they call, fly-by-night operators such as SpeakAsia and Ad Magnet. In fact, the tens of thousand ponzi/double-your-money schemes that exploit poor financial literacy cause the biggest losses to Indians across the economic spectrum today. SpeakAsia, the most notorious of these in recent times, raised over Rs1,300 crore in under a year from 12 lakh people, managed to do so without even registering the parent company in India. Instead, a bunch of entities, which flew below the regulatory radar were registered all over India to act as collection agents that pooled the collections from SpeakAsia’s empanelment fees of Rs11,000 per identity and transferred them overseas. The case is important because various regulators including the RBI and the ministry of corporate affairs claimed not to have the power or jurisdiction to act against the company.

Moneylife has also exposed the links between Speak Asia and AdMatrix, both operating with a similar modus operandi to deprive people of their savings. We pointed out that both these MLM companies were started by the same set of people who are working together since 2003.

MLMs, chain companies or networking companies—also known as chit funds or blade companies, have turned very powerful in several states which are ruled by regional parties and have strong political connections. Their political funding protects them from any action. Also, as Mr Sarma has pointed out, “Many of these promoters have political links and they approach various ministries in the guise of marketing companies and make overtures to protect themselves. They know that they can play one ministry against the other and get away with their loot.”

This is reflected in the fact that the ministry of corporate affairs (MCA) has been warning people against investing in the schemes (‘Multi-level marketing companies con many to benefit few’) while the FIPB wants to discuss FDI in these companies. A company like Amway, which would have been disallowed under the Prize Chits Act, entered India through the FIPB route. It has been embroiled in long drawn litigation on the subject. Interestingly, a MCA study itself concludes that “such (MLM) schemes are inherently money circulation schemes and sale of products is only a camouflage... (and) voilative of the Prize Chits and Money Circulation Schemes (Banning Act), 1978.”

According to the study, the products by multi-level marketing companies are “over-priced” to enable them to pay huge commissions to people sitting at the top of pyramid and earn exorbitant profits for the company.”Such schemes enrich the company and the top of the pyramid participants at the cost of 90% of the participants who are at the bottom two levels,” it said.

The study added that in the pyramid or multi-level marketing schemes ‘product’ “is only a way to disguise the real intention” and such schemes are primarily “a variant of the earlier money circulation schemes” without any products.

The study further said that now the trend was to introduce sale of products to camouflage real intention and to give an air of legitimacy, deceive the regulatory, law enforcement agencies, media and the public into accepting them as legitimate business.

“These pyramid schemes are so cleverly designed that unless a very meticulous investigation is done and the con game is properly understood, it would be difficult to establish the deceptive nature of the schemes,” it said.

The main difference, it added, between direct sales and pyramid sales is that in direct sales the person making the sales gets the maximum commission, while in pyramidal scheme the person at the top of the pyramid gets maximum commission.

“Such a compensation plan rewards enrolling more members down line rather than give incentives to sell directly to the consumers who are not interested in becoming members. The deceptive and fraudulent nature of such scheme is because very soon saturation is reached and more members cannot be enrolled,” it said.

The MCA study said, “The scheme is inherently deceptive because mathematically it is not possible to create an endless chain in enrolment. Such schemes are extremely dangerous from society’s point of view because to gullible public, the scheme looks very attractive. The opportunity of being self-employed and earning money sitting at home by contacting family and friends appeals to most of the people”.

In April, the then corporate affairs minister Veerappa Moily had said he has suggested to the home ministry to set up an SFIO-type special body to probe frauds by the multi-level marketing companies and chit funds in a time-bound manner.

Source: http://www.moneylife.in/article/mlms-now-want-to-invest-money-in-india-really/27968.html

Investment In India | "South Africa keen to have Indian investments"

By: IANS
Source: http://www.newstrackindia.com
Category: Investment In India

New Delhi, August 22 (IANS) South Africa and India are set to reach a target of trade worth $15 billion by 2014 and South Africa is keen about Indian investment in the country, its Deputy Minister for Trade and Industry Elizabeth Thabethe said Wednesday.
"We want to encourage Indian investments in all sectors in South Africa as part of our efforts at job creation. President Jacob Zuma has set a target of five million jobs to be created by 2020," Thabethe told IANS on the sidelines of a seminar here on the occasion of South Africa's Women's Month organised by FICCI Ladies Organisation.
"The latest developments have indicated that India has progressed impressively in the area of informal business development and the Indian institutions that we will be engaging with will present simple solutions for our SMEs, including technology and market development," said Thabethe.
India is one of South Africa's top ten export countries and it is among the top five import countries for South Africa.
Indian companies that are investing in South Africa include Mahindra, Tata, UB Group, a number of pharmaceutical companies like Ranbaxy and CIPLA, IT companies and some investments in the mining sector.
"Several South African companies operate in India, such as the Airports Company South Africa, which is assisting India's Mumbai airport, and Sasol, which is planning to invest," the minister said.
South African investments in India are led by SAB Miller (breweries), SANLAM and Old Mutual (insurance), ALTECH (set-top boxes), Adcock Ingram (pharmaceuticals), Rand Merchant Bank (banking).
The two countries cooperate bilaterally in a number of areas at forums such as the South Africa-India CEOs' Forum, while multi-laterally there is cooperation in the IBSA Business Forum and the BRICS Business Forum, which provide for direct business- to- business interaction and allow for collective consensus building on global policy areas.
From 2002 to 2011, South African exports to India increased by 21 percent, while imports from India went up by 28 percent.
"As for joint ventures between women of both countries, we encourage them in all sectors but certain areas like crafts and jewellery making have been identified as specially favourable for women entrepreneurs," Thabethe said.
"Among new areas of cooperation, agro-processing is of immense potential as both countries have food security as a major priority."
Besides New Delhi, Thabethe will visit Kerala, Chennai and Mumbai.

Source: http://www.newstrackindia.com/newsdetails/2012/08/22/272--South-Africa-keen-to-have-Indian-investments-.html

Investment In India | "Citi venture fund to invest $138 mln in Cox & Kings"

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

HONG KONG (Reuters) - Global buyout fund KKR & Co LP is in early stage discussions to launch a debt fund to invest in India that could raise between $750 million to $1 billion, sources with direct knowledge of the matter told Reuters.
KKR's first dedicated India fund would aim to benefit from the country's four-year high interest rate and tap the opportunity to lend to cash-strapped Indian corporations.
The firm has not yet sent out marketing materials to potential investors, or limited partners (LP), and would not launch a new fund until it has closed its second pan-Asia fund, targeted at over $6 billion, the sources said.
The firm has held a first close of $3 billion on the pan-Asia fund.
The sources declined to be identified as the plans were not public.
KKR received approval for a fund, KKR India Alternative Credit Opportunities Fund 1, on August 14, documents posted on the Indian market regulator's website showed.
"Credit products are already structured and being delivered to Indian corporations through NBFCs (Non-Bank Financial Companies). The AIF (Alternative Investment Funds) licence received further enables KKR to broaden its alternatives strategy in India. Nothing is planned in this regard for the time being," said a KKR spokesman.
(Reporting by Stephen Aldred, Indulal PM and Nishant Khumar; Editing by Denny Thomas and Edmund Klamann)
HONG KONG (Reuters) - Global buyout fund KKR & Co LP is in early stage discussions to launch a debt fund to invest in India that could raise between $750 million to $1 billion, sources with direct knowledge of the matter told Reuters.
KKR's first dedicated India fund would aim to benefit from the country's four-year high interest rate and tap the opportunity to lend to cash-strapped Indian corporations.
The firm has not yet sent out marketing materials to potential investors, or limited partners (LP), and would not launch a new fund until it has closed its second pan-Asia fund, targeted at over $6 billion, the sources said.
The firm has held a first close of $3 billion on the pan-Asia fund.
The sources declined to be identified as the plans were not public.
KKR received approval for a fund, KKR India Alternative Credit Opportunities Fund 1, on August 14, documents posted on the Indian market regulator's website showed.
"Credit products are already structured and being delivered to Indian corporations through NBFCs (Non-Bank Financial Companies). The AIF (Alternative Investment Funds) licence received further enables KKR to broaden its alternatives strategy in India. Nothing is planned in this regard for the time being," said a KKR spokesman.
(Reporting by Stephen Aldred, Indulal PM and Nishant Khumar; Editing by Denny Thomas and Edmund Klamann)
Reuters Market Eye - Rupee trades at 55.46/47 versus its previous close of 55.5650/5750 amid thin volumes in the absence of some large banks and client flows on account of a nation-wide bank strike.
"We are trading as usual today. However, branches are closed and hence there are no client flows. SBI is out, hence, volumes are thin, USD/INR expected to stay rangebound through the day," a dealer with a large state-run bank said.
Traders say they do not expect much action through the day with the pair expected to continue trading in the range of 55.40 to 55.60.
The euro also continued to trade steady while stocks were marginally negative, failing to provide any clear direction to the pair.
Reuters Market Eye - Rupee trades at 55.46/47 versus its previous close of 55.5650/5750 amid thin volumes in the absence of some large banks and client flows on account of a nation-wide bank strike.
"We are trading as usual today. However, branches are closed and hence there are no client flows. SBI is out, hence, volumes are thin, USD/INR expected to stay rangebound through the day," a dealer with a large state-run bank said.
Traders say they do not expect much action through the day with the pair expected to continue trading in the range of 55.40 to 55.60.
The euro also continued to trade steady while stocks were marginally negative, failing to provide any clear direction to the pair.
Reuters Market Eye - Rupee trades at 55.46/47 versus its previous close of 55.5650/5750 amid thin volumes in the absence of some large banks and client flows on account of a nation-wide bank strike.
"We are trading as usual today. However, branches are closed and hence there are no client flows. SBI is out, hence, volumes are thin, USD/INR expected to stay rangebound through the day," a dealer with a large state-run bank said.
Traders say they do not expect much action through the day with the pair expected to continue trading in the range of 55.40 to 55.60. * The euro also continued to trade steady while stocks were marginally negative, failing to provide any clear direction to the pair.
NEW DELHI (Reuters) - Indian tour operator Cox & Kings Ltd said on Wednesday Citigroup's venture capital arm will invest $137.75 million in its U.K. unit, sending its shares up 8.2 percent.
The funds will be used to retire the debt Prometheon Holdings, Cox & King's U.K unit, raised when it bought British specialist travel company Holidaybreak last July.
The company, the parent of UK-based unlisted Cox and Kings, gets around half its overall revenue from its international operations and has been looking at overseas acquisitions to tap the booming outbound market and drive future earnings growth.

Source: http://ibnlive.in.com/generalnewsfeed/news/citi-venture-fund-to-invest-138-mln-in-cox--kings/1047813.html

Investment In India | "Ascott looks to buy properties in Mumbai, Delhi"

By:  Sangeetha G.
Source: http://wrd.mydigitalfc.com
Category: Investment In India

With a focus on high-growth business cities, international serviced residence provider Ascott is looking at the option of acquiring or managing existing properties in cities like Mumbai and Delhi, apart from investing in greenfield projects

The company is currently in the process of developing five properties with more than 1,100 apartment units in Ahmedabad, Bangalore, Chennai and Hyderabad. Along with two properties under operation in Bangalore and Chennai, the company plans to invest $250 million in India by 2015.

“Our strategy for India is to expand in high growth cities where there is strong demand for international-class serviced residence from foreign expatriates and business travellers. Apart from the four cities where our properties are under development, we are looking at extending our footprint to other key business cities across India including Mumbai, New Delhi and Pune through acquisitions and management contract,” said Ajit Koushik, Area General Manager, India, Ascott International Management.

According to Koushik, there is a supply-demand gap for quality accommodation for extended stay in India.

“With the increase in FDI into the country, the number of international arrivals into the country has also increased over the last few years. As per World Travel and Tourism Council estimates, international tourist arrivals estimated to increase more than 80 per cent from over six million in 2011 to over 11 million by 2021. Foreign expatriates and business travellers coming to India on extended stays of more than a month are no longer satisfied with 300 sq ft hotel rooms. They prefer larger spaces that provide a home-like atmosphere complemented by the services and facilities of a hotel,” he said.

According to him, serviced apartments are not too much impacted by fluctuations in occupancy and seasonality in business as in the case of hotels. He finds that development in sectors like IT and ITeS, banking, automobile and manufacturing are the growth drivers for the serviced residence industry.

“In India, more specifically in Bangalore and Chennai, where we currently have properties in operation, the growth drivers are different for each market. In Bangalore, the main contribution to our business comes from the IT/ ITeS and banking industries. Whereas in Chennai, most of our clientele is from the manufacturing and automobile industries,” he said.

With operations in 70 cities of 21 countries, Ascott expects to leverage its brand value among expatriates travelling to India.

“We have a global clientele of multinational companies which operate in the Indian market and we will be attracting the same. We will be leveraging our strong international operational expertise and brand recall to deliver proven quality in products and services”, he added.

Source: http://wrd.mydigitalfc.com/news/ascott-looks-buy-properties-mumbai-delhi-462

Investment In India | "SEBI allows seven alternative investment funds to operate in India"

By: MDT/PTI
Source: http://www.moneylife.in
Category: Investment In India

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) has allowed seven alternative investment funds (AIFs) to set shop in the country under a newly formulated route, which allows pooling of funds for investments in areas like real estate, private equity and hedge funds, reports PTI.

The approval has been given to all the seven AIFs by the SEBI in a period of less than one month, as per the information available with the market regulator.

SEBI had notified its guidelines in May for AIFs, which are funds established or incorporated in India for the purpose of pooling in of capital from Indian and foreign investors for investing as per a pre-decided policy.

As per SEBI data, six AIFs have got registered with the regulator during August 2012, while one was granted registration on 23rd July.

In a board meeting held yesterday, SEBI had decided that the promoters of listed companies can offload 10% of equity to AIFs such as such as SME Funds, Infrastructure Funds, PE funds and Venture Capital Funds registered with the market regulator to attain minimum 25% public holding.

Under SEBI guidelines, AIFs can operate broadly in three categories and it is mandatory for them to get registered with the regulator. The SEBI rules apply to all AIFs, including those operating as private equity funds, real estate funds and hedge funds, among others.

The seven AIFs that have got registered with SEBI include IFCI Syncamore India Infrastructure Fund, Utthishta Yekum Fund, Indiaquotient Investment Trust, Forefront Alternate Investment Trust, Excedo Realty Fund, Sabre Partners Trust and KKR India Alternate Credit Opportunities Fund.

The Category I AIFs are those funds that might get certain incentives or concessions from the government, SEBI or other regulators in India and include Social Venture Funds, Infrastructure Funds, Venture Capital Funds and SME Funds.

The Category III AIFs are those trading with a view to make short term returns and include hedge funds, among others.

The Category II AIFs are those funds which can invest anywhere in any combination but are prohibited from raising debt, except for meeting their day-to-day operational requirements. These AIFs include PE funds, debt funds or fund of funds, as also all others falling outside the ambit of Category I and Category III.

Source: http://www.moneylife.in/article/sebi-allows-seven-alternative-investment-funds-to-operate-in-india/27851.html

Investment In India | "Have to create confidence to attract investments in India: PM"

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

New Delhi: India will have to create confidence among foreign investors that there are no barriers for them to invest in the country, Prime Minister Manmohan Singh Wednesday said.

"To attract foreign capital, we will have to create confidence at the international level that there are no barriers to investment in India," Singh said in his Independence Day address.

His statement comes against the backdrop of certain sections of foreign investors expressing concerns over the government moves such as retrospective amendments to the Income-Tax laws and the General Anti-Avoidance Rules (GAAR).

The Prime Minister's Office (PMO) has already set up an expert committee for making suggestions on draft guidelines and framing a roadmap for the implementation of GAAR. The committee would submit its report by September 30.

"We will leave no stone unturned to encourage investment into our country so that our entrepreneurs can make a substantial contribution to our economy," Singh said.

He also said that ambitious targets have been fixed in roads, airports, railways, electricity generation and coal production.

The Government will take steps to increase investment for infrastructure development with the help of the private sector, he added.

Foreign direct investment (FDI) in the country declined by over 65 per cent to USD 4.64 billion during the April-June quarter of the 2012-13 fiscal, as against USD 13.4 billion in same period last year.

The government has also been making efforts to liberalise norms to attract FDI in various sectors, including multi-brand retail. It has already raised the limit of foreign holding in single-brand retail to 100 percent.

The government has received six proposals, including that of Tommy Hilfiger, Promod and Damiani for single-brand retailing in the country.

Source: http://zeenews.india.com/business/news/economy/have-to-create-confidence-to-attract-investments-in-india-pm_58141.html

Investment In India | "NRI Consortium to invest over Rs 2,000 crore in Kerala"

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

Kochi: A Dubai based consortium of NRIs from various countries around the world propose to invest over Rs 2000 crore in Kerala to set up IT/ITES enabled Business Parks and Life Spaces projects.

The investments would primarily be through Foreign Direct Investment (FDI), Sebastian Joseph, Chairman of the Consortium, told reporters here.

The proposed 'Emerging Kerala' initiative of the state government here next month and its investment friendly policies have given the NRIs confidence to start their project in Kochi, he said.

Pravasi Investment Consortium & Equity Holdings Ltd (PRINCE Holding) promoted Prince GATES (Global Advanced Technology Enabled Society) projects are proposed to be set up in about 100 acres in Kochi, Joseph said.

The consortium is awaiting clearances from the concerned authorities and discussions are on with various government authorities and execution partners in this regard, he said. The project is expected to give 20,000 job opportunities.

Each GATES project will contain a Special Business Zone, a Centre for Excellence in Advanced Technology and Innovation, an International Financial Centre, an Education Zone and Hospiltality zones comprising clubs, spas, Service apartments and NRI facilitation centre, he said.

This is perhaps first of its kind investment by NRIs in the country.

At least 350-500 NRIs are participating in each of the projects as a part of the consortium. After the Kerala project takes off, plans are to replicate the same model in other major South Indian cities like Bangalore and Chennai, Joseph said.

The development is envisaged to be completely 'sustainable' and 'self sufficient'.

The focus is to collectively pool resources of individual consortium members to create an infrastructure that is conducive to and supporting of technology based firm.

It is aimed at facilitating interaction, technology development, economic growth, new venture creation, Shaji Baby John, Chairman Kings Infra Ventures ltd, said.

Source: http://zeenews.india.com/business/realestate/upcoming-projects/nri-consortium-to-invest-over-rs-2-000-crore-in-kerala_58362.html

Investment In India | "Growth will be back on track after revival of investment: Chidambaram"

By: ANI
Source: http://www.newstrackindia.com
Category: Investment In India

New Delhi, Aug.19 (ANI): Economic growth in India will be back on track after the revival of investments in various sectors, claimed Finance Minister P. Chidambaram.
Chidambaram said this while speaking to reporters after meeting chiefs of the nationalized banks in New Delhi.
"The aim is to quicken investment, industries and business houses which have business plans must bring forward their investment plans rather than defer it by six months or a year. Once we get the investment cycle going, once we get the investment engine started I think many of our problems can be resolved," said Chidambaram.
He also reviewed the performance of the public sector banks in light of the economic slowdown and discussed methods that need to be taken to upgrade banking services.
"We had a very substantial agenda, matters including agricultural credit, lending to minorities, education loans, financial inclusion plans and then of course the state of health of the banking sector in terms of mobilization, resources, extension of credit, return on assets, profit after tax and also about greater use of technology to quicken the services of banks and make it more efficient. I have reviewed this after about four years. I am very happy that the health of the banking sector is extremely good," said Chidambaram.
He added that banks have been advised to start cash deposit facilities in automated teller machines (ATMs) and increase doorstep banking services, which would mobilize savings.
"Now banks have been advised to quickly upgrade their ATMs into not only cash-dispersing machines but also cash-accepting machines. Work has already started; all banks have been told that ATMS should not only be cash-dispersing machines but also cash-accepting machines. Banks would now also intensify doorstep banking in bazaars, in markets to collect their daily collection of shops in order to mobilize the savings of the people," Chidambaram concurred Saturday.
He also said the Indian banking system is sound and there had been a minor increase in non-performing assets (NPAs) which was not upsetting.
India's economic growth has lost momentum due to global headwinds, sluggish policymaking and more lately worries about a drought in parts of the country. Fearful of a popular backlash, the government has failed to cut expenditure or liberalise the economy to attract investment.
Economists suggest the government is moving towards a deficit in 2012-13 of around 6 percent of GDP and credit default swap markets already price the country at junk, or non-investment grade.
Global agencies Fitch Ratings and Standard and Poor's Ratings Services this year warned that India may become the first of the BRICS group of large emerging markets to lose its investment grade rating if it did not control the fiscal and current account deficits.
India's current account, the broadest measure of its trade in goods and services with the rest of the world, ballooned to a record deficit of $21.7 billion or 4.5 percent of GDP in the March quarter. (ANI)

Source: http://www.newstrackindia.com/newsdetails/2012/08/19/39-Growth-will-be-back-on-track-after-revival-of-investment-Chidambaram.html

Investment In India | "Chicago Hosts China India EB-5 Investment Gorum August 23-24, 2012"

By: PRWeb
Source: http://www.virtual-strategy.com
Category: Investment In India

Chicago, IL (PRWEB) August 19, 2012

Artisan Business Group will be hosting a two day China and India investment conference in Chicago August 23-24, 2012. The event will focus on exploring inbound EB-5 investment and foreign direct investment from China and India.

“US China India Investment Forum” will be drawing U.S. business executives, attorneys, investment bankers, government officials, and venture capitalists, among others, to be educated on the latest trends in EB-5 immigrant investors program and foreign direct investment from China and Inida. In addition to its educational value, the event will provide a great opportunity for capital seekers to network and connect with others in the industry. The conference aims to help U.S. companies tap into foreign capital sources, with the ultimate goal of stimulating the economy and creating American jobs.

The two day event will feature some of the most highly-renowned and experienced international investment professionals. Scheduled speakers include, Mr. Seann Nelipinath, Founder, Chairman & President, India Chamber of Commerce, Ms. Radhika Reddy, Founding Partner Ariel Ventures, LLC & Ariel Int'l Center, LLC. Mr. Rajan Pillai, COO Nanocrystal Technology, Inc. Mr. Suraj Krishnan Director, AlixPartners. Dr. J. Mark Muno,z Associate Professor of International Business, Millikin University, Mr. Vishal Bhandari, Principal, A.T. Kearney. Mr. Brian Su, CEO, Artisan Business Group, Inc. Mr. Lu Sun, VP of Maslink Group (China), Mr. John Jiang, President, Micon International, Ms. Hong Yu, Project Manager, Wailian Overseas Group (China), Mr. John Li, CEO of EB5Supermarket.com. Legal experts will also be speaking at the two day forum.

The conference will provide valuable insight and networking opportunities to those with previous international investment experience, as well as to first-time capital seekers. This year’s event is being hosted and sponsored by Artisan Business Group, Inc., and will be held at the Embassy Suites Chicago Lakefront, 511 North Columbus Drive. Those attending the event also have the opportunity to meet the prior day with Artisan Business Group’s CEO, Mr. Brian Su, for a 1-hour private consultation.

Source: http://www.virtual-strategy.com/2012/08/19/chicago-hosts-china-india-eb-5-investment-gorum-august-23-24-2012

Investment In India | "Private sector investment in power sector high in Rajasthan"

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

JAIPUR: A recent Confederation of Indian Industry CII report on the power situation in north India, titled 'Power Scenario in Northern India', highlighted the significant gap between demand and supply in almost all the northern states.

According to the report, UP had the highest quantum of deficit among the northern states. Along with UP, Haryana and J&K witnessed a rise in energy deficits, while Punjab, Rajasthan and Uttarakhand witnessed a fall for the year 2010-11 from the previous year (2009-10).

A comparative analysis of the power situation in the northern states (on technical, financial and outlook parameters) reveals that Himachal Pradesh, Delhi and Rajasthan emerge as the best performers. In 2010-11, deficits in Himachal Pradesh were at a comparatively low level of 3.4%, thanks to the pro-activeness of the government in exploiting the state's hydro potential and reducing T&D and aggregated technical and commercial losses. Delhi has the lowest energy deficits among all the northern states at 0.3%. Peak deficits are also comparatively lower than other states. Further, Delhi has one of the best working T&D systems in the north. A remarkable improvement in all the parameters can be seen since Delhi privatised its distribution system in 2002.Like Delhi, Rajasthan too has one of the lowest deficits -- both energy and peak deficits.

"The government of Rajasthan has been successful in anticipating the increase in power demand and has accordingly invested in increasing installed capacity. During the period 2005-06 to 2010-11, Rajasthan had one of the highest Compounded Annual Growth Rates (CAGRs) in terms of capacity additions, both in public as well as private sector," stresses the report.

Rajasthan's success in attracting private investment can be seen in the fact that the percentage of private sector in total installed capacity in the state is 16.4%, higher than most other states. The state has also been successful in encouraging renewable energy. A quick overview of the power sector reforms in the country shows that the history and evolution of the power sector in India has been a chequered one, marked by fragmented efforts to reduce structural deficiencies, enhance performance and strengthen institutions.

The policy and legal structure that guides the power system in India today is a product of challenges perceived in the past and policy interventions that sought to overcome them. In most northern states so far, the strategy followed to improve power availability has mainly concentrated on capacity additions, with emphasis on coal-based thermal plants.

However, given the scarce coal resources in the country, a broader, more sustainable strategy needs to be adopted. Such a strategy should include supply side management, demand side management, improvement/modernisation of T&D network, load centre based flexible generation, tariff rationalisation and peaking power solution.

Source: http://timesofindia.indiatimes.com/business/india-business/Private-sector-investment-in-power-sector-high-in-Rajasthan/articleshow/15559289.cms

Investment In India | "India one of the most risk ridden data centre locations in the world"

By: Raj Saxena
Source: http://www.thinkdigit.com
Category: Investment In India

India has milked its reputation of offering cheap IT labour for long but the reputation might be in danger tells us a study conducted by Cushman & Wakefield and Hurleypalmerflatt named ‘Data Centre Risk Index’ . The study evaluated “Data Centre Risk Index” i.e., the risks to global data centre facilities and international investment in business critical IT infrastructure.

In the survey, India scored an unsurprising second position in the most risk ridden Data Centre location among top 30 countries, the last being Brazil. The centre of global outsourcing over the past few years may not look so attractive anymore! This may be due to India’s low score in “Ease of Business”, “Inflation”, “per capita GDP” and “Corporate Tax”. The recent power grid collapse only adds to such a low ranking of India in the study.

Arvind Nandan, Executive Director, Consultancy, India, Cushman & Wakefield says, “India and key Asian economies remain preferred locations for DCs and have witnessed a growth in demand owing to various advantages. India offers the advantages of cost benefits and sustainability of operations. We would expect the growth to continue as this is also coupled with a rising domestic demand for IT services where internet and mobile communication penetration is still moderate. Investment by overseas players continues showing confidence in the future potential of India. At the same time it is important to put in place various initiatives for developing other areas such as energy, bandwidth, improving business environment, data protection laws, etc., which can enhance the proposition for India.”

More and more companies are looking towards the Nordic nations to locate their data centers as they offer renewable sources of energy. Another reason may be that the countries have been blessed by Boreas with cold weather which is favourable for data centers as they bring down the cooling costs of the data centers.

The US retains the top position in the ranking as the lowest risk location to set up a data centre and UK ranks second as these data centers have the good bandwidth, perform well in other tiers such as tier 1 risk categories, and have the largest percentage of their population completing tertiary education.

The safest place in Asia to setup a data centre is Hong Kong, the second being South Korea, ranking seventh and thirteenth respectively.

Stephen Whatling, Global Service Director at Hurleypalmerflatt, said: “Indonesia, India and Brazil are all considered growth markets, but with barriers to entry, regulated markets and high energy costs they do score poorly relative to the more established economic markets. Connectivity is also a problem but as these markets continue to be invested in and the infrastructure becomes more developed we would expect them to rise up the rankings.”

The Indian government will have to come up with better policies and reforms to make India a lucrative market again for major IT companies. Let us wait and watch what the Indian government does (rather let’s hope it does something) to revitalize the business critical IT infrastructure in India.

Source: http://www.thinkdigit.com/Internet/India-one-of-the-most-risk-ridden_10489.html

Investment In India | "Chicago hosts China India Investment Conference"

By: Theodore Koumelis
Source: http://www.traveldailynews.com
Category: Investment In India

Artisan Business Group will be sponsoring a two day China and India investment conference in Chicago August 23-24, 2012. The event will focus on exploring inbound EB-5 investment and foreign direct investment from China and India.

“US China India Investment Forum” will be drawing U.S. business executives, attorneys, investment bankers, government officials, and venture capitalists, among others, to be educated on the latest trends in EB-5 immigrant investors program and foreign direct investment from China and India. In addition to its educational value, the event will provide a great opportunity for capital seekers to network and connect with others in the industry. The conference aims to help U.S. companies tap into foreign capital sources, with the ultimate goal of stimulating the economy and creating American jobs.

The two day event will feature some of the most highly-renowned and experienced international investment professionals. Scheduled speakers include, Mr. Seann Nelipinath, Founder, Chairman & President, India Chamber of Commerce, Ms. Radhika Reddy, Founding Partner Ariel Ventures, LLC & Ariel Int'l Center, LLC. Mr. Rajan Pillai, COO Nanocrystal Technology, Inc. Mr. Suraj Krishnan Director, AlixPartners. Dr. J. Mark Muno,z Associate Professor of International Business, Millikin University, Mr. Vishal Bhandari, Principal, A.T. Kearney. Mr. Brian Su, CEO, Artisan Business Group, Inc. Mr. Lu Sun, VP of Maslink Group (China), Mr. John Jiang, President, Micon International. Legal experts will also be speaking at the two day forum.

The conference will provide valuable insight and networking opportunities to those with previous international investment experience, as well as to first-time capital seekers. This year’s event is being hosted and sponsored by Artisan Business Group, Inc., and will be held at the Embassy Suites Chicago Lakefront, 511 North Columbus Drive. Those attending the event also have the opportunity to meet the prior day with Artisan Business Group’s CEO, Mr. Brian Su, for a 1-hour private consultation.

Source: http://www.traveldailynews.com/news/article/50880/chicago-hosts-china-india-investment

Investment In India | "Govt to soon announce steps to boost investments: Sharma"

By: Anand Sharma
Source: http://zeenews.india.com
Category: Investment In India

New Delhi: The government is likely to announce major decisions in the next three weeks to boost investments and revive economic growth, Commerce and Industry Minister Anand Sharma said on Thursday.

"What can be done is under active consideration. You can expect some firm steps taken by the government. There have been consultations among senior secretaries of the concerned ministries and departments and also between key ministers and the Prime Minister," Sharma said.

He was speaking to reporters after holding a meeting with industry leaders from CII and Ficci.

".... We hope that in the next three-weeks, there will be decisions by the government which will bring a positive improvement," the Minister said.

Sharma said the industry has raised issues related to cost of credit, reduction in capacity addition and matters related with foreign direct investment.

"There is a sharp concern about the decline in industrial production particularly in the manufacturing sector. We know that there are strong head winds and a conscious effort has to be made...I will urge the RBI to take an early view on cost of credit for industry," he added.

Worsening economic situation has pulled down the index of industrial production by 1.8 percent in June, third fall in four months.

"Though inflationary pressure is there but depreciation of rupee also adds to that pressure. The economic activity has to continue. Cost of credit has to be made available and it has to be affordable...In the rest of the world, the cost of credit has been brought down," Sharma said.

The Minister said the industry has also raised problems related with land acquisition. "In the new Land Bill we have already registered this issue that the manufacturing zones, DMIC and SEZ have to be included in what is described in public purpose," Sharma added.

CII former President Sunil Munjal said there is need for urgent steps to improve investment climate in the country.

"Unless some quick action is taken, the slowdown may continue or even get worsened because global slowdown is not showing any type of improvement," Munjal said.

He also suggested the government to reduce subsidy bill and incentivise investments for capacity addition and job creation.

Hit hard by global woes and domestic problems, India's economic growth rate slowed to a nine-year low, both in the March quarter at 5.3 percent as well as in 2011-12 at 6.5 percent.

It was the fourth meeting of the government-industry task force which was constituted in July last year.

Besides, industry leaders, secretaries participated in the meeting include Department of Industrial Policy and Promotion, Revenue, Commerce, Environment and Forest and Labour.

Sharma said that industry leaders have also raised the issue of rationalisation and simplification of procedures to set up units.

"To a large extent that has been done so that the timeframe for starting up (an unit) after the mandatory approvals are compressed, which in India has been fairly high. That has been done both for National Investment and Manufacturing Zones (NIMZs) and Delhi-Mumbai Industrial Corridor Project (DMIC)," Sharma said.

Ficci President R V Kanoria said the government should ensure a political consensus and tackle uncertainties dogging the economy in earnest.

"The government should bring down interest rates as public financing of fiscal deficit is crowding out private investment. They should ensure competitiveness by bringing in GST as the levy is a self-policing mechanism as well as a stimulus," Kanoria said.

Kanoria also asked to re-introduce investment allowance, abolition of minimum alternate tax on infrastructure projects and allowing access to pension and insurance funds for infrastructure development.

Source: http://zeenews.india.com/business/news/economy/govt-to-soon-announce-steps-to-boost-investments-sharma_58240.html 

Investment In India | "CM's panel to frame investment policies"

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

KOLKATA: Unlike her predecessor Buddhadeb Bhattacharjee, who explored private routes only, chief minister Mamata Banerjee has kept both the doors - public and private players or a mix of both - open to fetch investments for the state. While she plans a deep sea port in Sagar in collaboration with the Railways and Kolkata Port Trust, the other sea port will be set up by reclaiming land at Rasulpur, 35 km from Haldia and within 50 km from Nandigram, by a consortium of public and private investors.

In a bid to boost the investment climate, Mamata has set up a committee of empowered group of ministers (EGoM) like the one at the Centre to spearhead policies matching the "upbeat investment climate." State finance minister Amit Mitra will lead the panel that includes state commerce and industry minister Partha Chatterjee, panchayat minister Subrata Mukherjee, labour minister Purnendu Bose and power minister Manish Gupta.

The EoGM will help the government carve out an investment policy, a policy for the NRIs, a software policy and a new industrial policy that will make a difference with the policies pursued by the erstwhile Left Front government.

What is unique among Mamata's policy prescriptions is a Big Bazaar-like mall to be set up over 150 acres of government land at Bolpur where artisans, craftsmen, jewellers and zari workers will display their items to the tourists. Mamata has conceived the idea to showcase the works of the self-help groups who seldom find a market to sell their commodities.

The Cabinet sub-committee on infrastructure in its meeting on Thursday took note of the plight of tea garden workers. "Workers are reeling under financial crunch in sick tea gardens of the state. There are some legal hassles over the garden lands but we have decided to address the problems of the garden workers. In a bid to offer them roti, kapda and makan, the government will engage them under the National Rural Employment Guarantee Scheme and offer them housing under schemes such as Gitanjali, Amar Thikana and Indira Abas Yojna," the chief minister said.

The sub-committee also took stock of the rise in sugar prices. "Centre's quota for the state has been slashed. However, we are writing to the Centre to increase the quota of sugar and suji during festival time," Mamata said.

She observed in the meeting that the price rise was mainly due to the escalation in road transport and production costs. However, the CM asked the task force to keep tabs on sugar, oil and maida prices and avert artificial crisis.

Source: http://timesofindia.indiatimes.com/city/kolkata/CMs-panel-to-frame-investment-policies/articleshow/15525019.cms

Investment In India | "India, Nigeria hope to have direct flights"

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

ABUJA: India is set to review the bilateral air service agreement (BASA) with Nigeria so that airlines can operate non-stop flights to both countries.

Indian high commissioner Mahesh Sachdev said direct flights were necessary as trade and investment between the two countries now stands at $26 billion.

"We are negotiating with Nigeria renewal of BASA. Ideally, it should be possible for us to use the opportunity to ensure direct flights, especially for medical tourists," Xinhua quoted him as saying.

According to the envoy, the excellent relations between Nigeria and India were evident in the current volume of trade.

"The data from the Nigerian Bureau of Statistics (NBS) in the first quarter of this year shows we have become the largest market in Nigeria, overtaking the US," he added.

Sachdev said the current trade figure was in favour of Nigeria, with an annual gain of $12 billion. "Nigeria sells more than they buy from India."

Saying India's investment in Nigeria had doubled to $9 billion since 2009 in pharmaceuticals, transportation and IT, Sachdev explained that people-to-people contacts were rising.

Some 33,000 visas were issued to Nigerians in 2011.

In 2005, Bellview Airline launched a non-stop flight from Lagos to Mumbai, but the firm was grounded after one of its Abuja-bound flights crashed last year killing all 117 passengers and crew.

Source: http://timesofindia.indiatimes.com/india/India-Nigeria-hope-to-have-direct-flights/articleshow/15514633.cms

Investment In India | "Indian PM urges steps to boost economy"

By:   Nirmala George  
Source:  http://www.businessweek.com
Category: Investment In India

NEW DELHI (AP) — India's national security is at risk if urgent steps are not taken to boost economic growth, attract new investment in infrastructure and legislate against corruption, Prime Minister Manmohan Singh said Wednesday.

Singh warned that if economic growth remained stagnant, new investments were discouraged, government finances did not improve and energy security was not ensured, "then it most certainly affects our national security."

Singh's speech marking the 65th anniversary of India's independence from British rule comes after large parts of India's power grid collapsed over two days last month, leaving hundreds of millions without electricity.

Singh promised to accelerate infrastructure development and said the government would work to remove barriers to investment to attract foreign capital in those sectors of the economy.

The government has set ambitious targets to develop roads, airports, railways, electricity generation and coal production for which it would seek help from private companies, he said.

"To attract foreign capital, we will have to create confidence at the international level that there are no barriers to investment in India," he said.

Singh called on political parties to pass legislation to reduce corruption and bring greater accountability to the government. The measure has already passed the lower house but awaits approval from the upper house.

In an effort to curb corruption, Singh also said the government would ensure that every household in the nation of 1.2 billion people had a bank account within the next two years.

"We want to create a system in which money from government schemes — pensions for old people, scholarships for students or wages for laborers can be credited directly into people's bank accounts."

In the past year, India has been roiled by widespread protests by millions of people who are fed up with the rampant corruption that infests almost every part of government. The past two years also saw a string of scandals involving top government officials while hundreds of millions of people are trapped in poverty.

Singh's image as an honest technocrat has been dented by accusations that he has not done enough to curb corruption since his Congress Party was first voted into office in 2004 and for a second term in 2009.

Singh's government has faced a slew of corruption allegations involving the murky sale of cellphone licenses in 2008 and the hosting of the 2010 Commonwealth Games. Critics estimate that those two events alone cost the country as much as $45 billion. Meanwhile, a leaked auditor's report in March suggested that up to $210 billion in potential revenues were lost as coal assets were sold cheaply without a competitive bidding process.

Anti-graft activists say it is not enough for Singh to claim he is honest if he remains oblivious to misdoings of his colleagues in government.

Source:  http://www.businessweek.com/ap/2012-08-15/indian-pm-urges-steps-to-boost-economy

Investment In India | "Nalco plans Rs 40,000 cr investment in projects, energy sector entry"

By:  Bhubaneswar   
Source:  http://businesstoday.intoday.in
Category: Investment In India

Aluminium giant Nalco plans to invest about Rs 40,000 crore in various projects - new and existing, with special focus on its entry into the energy sector.

The company has formed a joint venture with Nuclear Power Corporation of India Ltd (NPCIL) to set up nuclear power plants in India.

Both the partners have selected Kakrapar Units 3 and 4 of 700 MW each in Gujarat as their first JV project with an estimated project cost of Rs 11,500 crore.

"The company has taken up several greenfield projects. As part of this drive, plans are afoot to set up a new smelter in Western Odisha with an investment of about Rs 16,000 crore," Nalco Chairman and Managing Director B L Bagra said.

The project is now being pursued with the Odisha government by the Navaratna PSU, he said

PROFILE: Nuclear Power Corp

The company is also planning to set up a Rs 4,500 crore alumina refinery in Gujarat with 1 million tonne per annum capacity. Preparation of Detailed Project Report (DPR) has been taken up.

It also has plans to set up a 1.4 million tonne a year alumina refinery in Andhra Pradesh, based on bauxite reserves in that state.

"To start with, some CSR works have been undertaken in the vicinity," he added.

On the NPCIL venture, Bagra said the construction work has already started and the project is scheduled to be commissioned by December 2015.

Besides, Nalco is setting up a Rs 274 crore Wind Power Project in Andhra Pradesh with a capacity of 50.4 MW, which is in the final stage of commissioning. Plans are afoot for a second Wind Power Project of equal capacity, he said.

A third plant has been planned in the company's own worked out mined area at Panchpatmali in Koraput district of Odisha. Also, a Solar Power Plant of 15 MW is on the cards.

Nalco has also shown keen interest in the proposed 4,000 MW Ultra Megal Power Plant (UMPP) in at Bedabahal in Sundargarh district of Odisha, Bagra said, adding that the bidding for the project is likely later this year.

The company is in the process of forming a consortium of PSUs including BHEL, NMDC and Neyvelli Lignite Corporation in an effort to strengthen its bid.

Carrying forward its diversification plan, Nalco has expressed keen interest in the steel sector too.

The company proposes to take over Kalinga Iron Works Ltd (KIWL) at Barbil in Odisha, he said, adding that a proposal for takeover and establishment of a 1 MTPA steel plant has been submitted to the state government.

Referring to expansion plans, Bagra said Nalco has initiated activities for 3rd phase brownfield expansion at the existing facilities in Odisha at an estimated investment of Rs 7,500 crore.

Source:  http://businesstoday.intoday.in/story/nalco-plans-rs-40000-cr-investment-energy-sector-entry/1/187244.html

Investment In India | "Regulations need to encourage pooling of funds in India: Raja Kumar"

By: Raghuvir Badrinath
Source:  http://www.business-standard.com
Category: Investment In India

Ascent Capital, which manages $600 million across three funds, was among the few Asian private equity (PE) firms able to raise funds successfully, before closing the fund during the tumultuous period of 2009. Founder and Chief Executive Officer Raja Kumar, also a former senior officer at the Securities and Exchange Board of India (Sebi), in an interview with Raghuvir Badrinath, tells how the Indian PE industry has learnt its lessons the hard way. Edited excerpts:

The Indian PE industry is seeing turbulent times, with a 50 per cent fall in investments in the June quarter. What led to this?
The pace of investments has slowed considerably, owing to uncertainty over policy and regulations, especially the General Anti-Avoidance Rules, which led to concern among venture capital (VC)/PE investors. Also, fund managers have become selective and due diligence efforts are taking considerably longer. Thankfully, ‘auctions’ and ‘chasing deals’ is history. Fundamentally, the change is we now have fund managers who have been through the entire cycle of VC/PE investing and have learnt their lessons the hard way. The VC/PE industry in India is maturing and this bodes well for its future.Given the fall in PE investments, you are probably facing intense heat in deploying funds. How are you gearing for this?
We have concluded seven investments from our third fund, the latest being iNurture, a company in the higher education space. iNurture bridges the gap between the academia and industry by developing industry-relevant courses that boost employability. It offers these courses in collaboration with established universities and colleges. We continue to focus on backing quality businesses with good management teams. We have already invested in sectors such as infrastructure, healthcare and education, and are actively scouting for opportunities in the technology, life sciences and consumer-facing businesses. In a development at the firm level, we have taken majority positions in certain niche businesses. We believe the next two years would provide an excellent opportunity to invest in good companies at reasonable valuations, and we intend to make the most of it.
You are among the few fund managers who have seen various cycles. As you embark on the next, arguably one of the toughest for exits, what are the major differences this time?
These are challenging times for the Indian VC/PE industry. During the boom years of 2006 and 2007, the number of fund managers had risen from 30 to 300 and a lot of VC/PE capital was committed to India. Investors had taken a macroeconomic call on India, but Indian general partners have not delivered, leading to restraint among investors on committing more capital to the country. Fund raising would, therefore, remain a challenge. Also, there isn’t room for so many fund managers. My estimate is only 50-60 managers would be active in the next five years. VC/PE investments made in 2006 and 2007 have turned out to be high-cost ones. There was lack of traction in portfolio companies of most funds over the past three years, owing to high interest costs. And, lacklustre equity markets have not helped, with exits being deferred indefinitely. The industry is ripe for consolidation and only funds with a good track record of exits would survive.

Various regulatory issues related to the PE sector in India drew flak. How would the new Alternate Investment Fund (AIF) regulations shape the sector?
AIF regulations have accommodated a few of the industry’s suggestions. These include the ability to make secondary purchases in listed securities and investment in non-banking financial companies. Many existing funds are unable to avail of these regulations due to lack of clarity on ‘tax pass-through’.

However, some provisions in the regulations impinge on the operational freedom of VC/PE fund managers and their investors (limited partners, or LPs). Unlike in mutual funds, LPs in VC/PE funds exercise direct control over their fund managers and prefer to retain the ability to change the fund’s strategy, based on circumstances. Such investors are not looking at a regulator for protection. Ideally, funds that raise capital from large investors (Rs 10 crore per investor) should be covered by a specific set of AIF regulations that provide more operational freedom. Today, most VC/PE funds prefer to pool their funds abroad, as this provides more operational freedom. AIF regulations need to address this issue to encourage pooling of funds in India, as this brings about a level playing field between funds pooled abroad and those pooled in India.

The tax status of VC/PE funds has been debated. How would this weigh on the sector?
VC/PE funds are not significant tax-generating entities per se (the nature of income is mostly long-term capital gains). However, their portfolio companies are robust tax-paying entities that can sustain growth in tax revenue for several years. An illustrative study by our fund estimated total revenue potential for the government from a Rs 1,000-crore VC/PE fund’s portfolio companies at Rs 1,800 crore, through the term of the fund.

Considering more than $60 billion has been invested by VC/PE funds since 2005, the revenue realisation to the government from VC/PE-backed companies is significant. A thriving VC/PE industry can be a golden goose for the government to realise sustainable tax revenue. All investors are seeking is clarity and certainty on tax laws.

Source:  http://www.business-standard.com/india/news/regulations-need-to-encourage-poolingfunds-in-india-raja-kumar/483390/

Investment In India | "Goldman Sachs invests in Nova Medical Centres"

By: Sumitra Deb Roy
Source:  http://timesofindia.indiatimes.com
Category: Investment In India

MUMBAI: Global investment bank Goldman Sachs will be investing in Nova Medical Centers, who have led the way in establishing the idea of day/short-stay surgical care in the country. Goldman Sachs will invest INR 2.2 billion.

NEA, a leading venture capital firm, has also announced that it will make an add-on investment of INR 800 million. Nova operates day/short-stay surgical centers in partnership with surgeons across India and the Middle East. It pioneered the concept of short-stay surgical care in India and undertakes procedures that take 24-72 hours from admission to discharge.

A large majority of Nova's patients get discharged the same day. Nova provides around 700 surgical procedures in orthopaedics, spine surgery, general surgery, gynaecology, bariatric surgery, ENT, plastic & cosmetic surgery, urology, gastroenterology, ophthalmology, pain management and IVF. Nova was based on a 'doctor-owned and doctor-managed' concept enabling doctors to have a sense of ownership and a long-term association with the company. It recently grabbed headlines in the city when it announced a centre for teen bariatric surgery.

Suresh Soni, chairman and CEO, Nova Medical Centers, said, "This landmark investment will ultimately better serve India's healthcare delivery services industry, surgeons and, most importantly, patients."

Source:  http://timesofindia.indiatimes.com/city/mumbai/Goldman-Sachs-invests-in-Nova-Medical-Centres/articleshow/15512790.cms?

Investment In India | "FIIs invest Rs 4,800 crore in August so far"

By: THE TIMES OF INDIA
Source: http://timesofindia.indiatimes.com
Category: Investment In India

NEW DELHI: Overseas investors seem to be unperturbed by the country's slow economic growth and weak monsoon as they pumped nearly Rs 4,800 crore into stock markets this month so far.

During August 1-10, foreign institutional investors (FIIs) were gross buyers of shares worth Rs 17,544 crore, while they sold equities amounting to Rs 12,750 crore, translating into net inflows of Rs 4,794 crore, according to the data available with the Securities and Exchange Board of India ( SEBI).

Market experts said foreign investors have sidelined concerns over weak monsoon, slowing economic growth and a high interest rate regime, mainly on hopes that government would initiate fresh reforms initiatives. "With the government indicating a softer stance on the controversial General Anti-Avoidance Rules (GAAR) and retrospective taxation issues, many FIIs which had stayed away with the Indian equities are once again coming back to India," a stock broker said.

Another analyst Destimoney Securities MD and CEO Sudip Bandhopadhyay said, "The huge FII inflows were not driven by the country's fundamentals, its mainly because of the global factors such as ECB and the US Federal Reserve. In India, there are some concerns like weak monsoon, slowing economic growth among others."

Industrial production declined by 1.8 per cent in June mainly due to sharp dip in manufacturing and capital goods sectors, official data showed last week.

On the hand, FIIs withdrew Rs 143 crore from the debt market this month.

FIIs poured in Rs 10,273 crore in the stock market last month after a pull out of Rs 1,957 crore in the April-June quarter.

Buoyed by strong inflows, BSE's benchmark Sensex rose 321 points, or 1.8 per cent, this month so far to settle at 17,236.18 points on Friday.

After taking the latest inflows into account, FIIs investment in the equity market stood at Rs 57,060 crore so far in 2012 and Rs 24,109 crore in the debt market during the same period.

The number of registered sub-accounts has risen to 6,362 as on August 10 from 6,278 at the end of last year, while the number of registered FIIs has fallen to 1,756 from 1,767 during the same period.


Source: http://timesofindia.indiatimes.com/business/india-business/FIIs-invest-Rs-4800-crore-in-August-so-far/articleshow/15463385.cms

Investment In India | "Brazil's auto demand, incentives lure foreign investment"

By: Imaduddin
Source: http://www.brecorder.com
Category: Investment In India

SAO PAULO: Rising demand and government incentives are prompting foreign carmakers to boost their investment in Brazil, which analysts say could become the third largest auto market in the world as early as 2015.
Industry group ANFAVEA forecast that domestic sales of cars and light commercial vehicles may grow by four to five percent this year compared to 2011, to up to 3.81 million vehicles.
Production is slated to reach 3.49 million units, up about two percent from last year, the National Association of Motor Vehicle Manufacturers added.
On Thursday, Japanese giant Toyota inaugurated its third plant in Brazil, in the southeastern town of Sorocaba, with the goal of producing 70,000 new Etios compact models a year.
A modified version of a model already being sold in India and South Africa, the Etios will be available from September, priced at an average of $17,300 to compete with similar models from Volkswagen, Fiat, General Motors and Hyundai.
Toyota, in Brazil since 1958, said it also planned to begin selling the Prius, its popular hybrid electric car, in Brazil later this year and to invest $495 million to build an engine plant near Sorocaba.
With a share of less than three percent of the Brazilian auto market last year, the Japanese carmaker lags behind leading players Fiat, Volkswagen and General Motors.
But the world's biggest carmaker plans to double its sales in Brazil to around 200,000 vehicles in the next two years and become one of market leaders in the next decade.
Industry Minister Fernando Pimentel said the Sorocaba plant, which employs 1,500 workers, amounted to a vote of confidence by Toyota "in the strength of the Brazilian economy and the Brazilian auto market."
Although sales dropped 1.2 percent in the first half of 2012, leading carmakers and analysts are generally upbeat about the future.
"The Brazilian economy is going to post solid growth in the second half of the year. Interest rates (now down to a record low of 8 percent) will continue to decline, and credit will continue to expand," ANFAVEA president Cledorvino Belini said Monday.
Home to 191 million people, Brazil currently ranks as the world's fourth largest car market behind the United States, China and Japan.
The industry, which employs 147,000 people, contributes roughly 5 percent of Brazil's GDP.
But rising demand for better quality cars by the country's expanding middle class -- now estimated at 95 million people -- a low motorization rate (333 cars per 1,000 inhabitants), the absence of domestic producers and government incentives offer good prospects for foreign makers, analysts say.
Roland Berger Strategy Consultants estimates that Brazil, the world's sixth largest economy, could displace Japan as the world's third biggest market by 2015 and sales rise to 6.6 million vehicles by 2020.
In April, the government introduced new rules to make the auto industry more competitive.
The rules require carmakers to increase regional content by purchasing more locally-produced spare parts, invest in engineering and innovation, and improve car fuel efficiency, or face higher taxes.
Sao Paulo state, where nearly half of the national auto industry is concentrated, also provides tax breaks to attract foreign makers.
South Korea's Hyundai is also set to begin production at a $600 million plant in the state in September while Nissan, Fiat, Volkswagen and PSA Peugeot Citroen are expanding their plants or building new ones.
But analysts said foreign carmakers face a host of problems such as high production costs due to relatively expensive wages, a lack of automation and low productivity.
General Motors, for example, is facing growing unrest from workers at its plant in the industrial hub of Sao Jose dos Campos over its plans to cut 1,840 jobs at a struggling production line.
The two sides have agreed to delay the cuts until at least November.
The US carmaker told union representatives it intends to shut down the production line, which has already stopped making Zafira, Merica and Corsa models and would not make any new investments in Sao Jose dos Campos due to "structural adjustments."
The workers have appealed to the federal government to intervene to save their jobs.

Source: http://www.brecorder.com/world/global-business-a-economy/73315-brazils-auto-demand-incentives-lure-foreign-investment-.html

Investment In India | "India to establish a pharmaceutical manufacturing hub in Sri Lanka"

By: Quintus Perera
Source: http://www.sundaytimes.lk
Category: Investment In India

Indian Commerce, Industry and Textile Minister Anand Sharma, who was in Sri Lanka last week with a large contingent of businessmen and officials representing 108 large Indian companies, highlighted how the bilateral trade and investments would be further accelerated.
He said trade and investment between the two countries would expand and be enhanced to $10 billion by 2015. Several Sri Lankan ministers were present at the inauguration of the Indian Show and among them were Dr Sarath Amunugama, Senior Minister of International Monetary Cooperation, Rishad Bathiudeen, Minister of Industry and Commerce and Basil Rajapakse, Minister of Economic Affairs.

The first India Show was held in 2003 and the second was in 2005. The show was organized by the Confederation of Indian Industry (CII) in partnership with the Ceylon Chamber of Commerce (CCC). The Indian Show 2012 went on for three days held at the BMICH.
Mr Sharma indicated that the Indian investments are directly linked to manufacturing and exports and preferential access would create better prospects for both countries. He said that they would also venture into what they have not already gone into such as agro-processing, pharmaceuticals, bio-tech, tourism and knowledge based activities. He said that Indian business leaders would strengthen these investment decisions through Sri Lankan counterparts.

Some of the highlights Mr Sharma made were to establish two new export zones and to be directly involved in promoting the five hub strategies of Sri Lanka and establish a pharmaceutical manufacturing hub in Sri Lanka with the participation of Indian pharmaceutical firms. India is also keen to expand their presence in the oil and gas exploration in Sri Lanka. The hospitality industry is another area they hope to involve.

The export manufacturing zone that would come up in the Trincomalee district would manufacture auto components and engineering goods, and to assist the zone an industrial skills training institute would also be established. The Indian Show promotes a two-way flow of goods and services between India and Sri Lanka enabling Indian companies to show their prowess and encourage Indian investment in Sri Lanka and to provide opportunities to the Sri Lankan companies to enter into partnerships and collaborations with Indian companies.
Sri Lanka now is India’s largest trade partner in SAARC and India is Sri Lanka’s largest trade partner worldwide.

Some of the key sectors represented at the exhibition were infrastructure, power, mineral fuels, oil related products, electrical machinery and components, food products, agro-processing, mining machinery, railway equipment, rolling stock, paper, paper board and paper pulp, handicrafts, textiles and garments, information and communications technology and financial services.

Source: http://www.sundaytimes.lk/120812/business-times/india-to-establish-a-pharmaceutical-manufacturing-hub-in-sri-lanka-8089.html

Investment In India | "Hyundai WIA to invest $30 million in machine tools"

By: V. RISHI KUMAR
Source: http://www.thehindubusinessline.com
Category: Investment In India

HYDERABAD, AUG 11:
Hyundai WIA India plans to invest up to $30 million in setting up machine tools division at Sriperumbudur near Chennai.

Young Kim, Head-Machine Tools Division, Hyundai WIA, part of the diversified Hyundai of Korea, said the company plans to complete the heavy machine tools division unit by July. “We may invest $10 million more in the project later to expand the facility and also add more products,” he said. “This is very crucial for our operations in India and will support our internal expansion and also existing manufacturing plants in the country. We plan to repeat the success we achieved in China by setting up such a facility there,” he told Business Line. Young Kim was here as part of the Machine Tools and Engineering Process Conference at Fapcci. The company is seeking to display its precision engineering and tooling capability, which played a crucial role in the growth of the Korean automotive major.

Source: http://www.thehindubusinessline.com/companies/article3754770.ece

Investment In India | "Reality of realty investment"

By: Jayant Pai
Source: http://www.business-standard.com
Category: Investment In India

Many investors (especially high net worth) prefer real estate over the stocks as an investment option. They argue that that stocks are too volatile and the price rise in real estate is substantially more.

While it is true that property prices have risen over time, so have stock prices. Sure, properties in prime locations in the metros (where supply is scarce) have risen rather exponentially. Investors who compare this price performance with the rise in the broad stock market indices will surely feel that stocks pale in comparison. However, to counter this, I can also think of myriad stocks whose rise has been nothing short of spectacular. Hence both these examples are not really representative. There are some other features of the stock market which, rather perversely, have actually bolstered this rather erroneous belief in investors’ minds. They are:
Transparency
Today, everyone can get virtually minute-by-minute updates on stock prices either on the television or internet. Watching prices bounce all over the place, fosters the impression that stocks are volatile.

On the other hand, in the case of real estate there is no mechanism to disseminate prices in this manner. In fact one hardly gets any update unless it is sought actively. Even after that, there is no one credible source of information. Often, one just averages the estimates of various brokers or websites in order to arrive at some figure. Since this is a relatively tedious process, one embarks on it rather infrequently (often, only once every few years). After that when one compares the period-on-period change, optically it may appear outsized, and consequently, impressive. However, if one drills it down to a Compounded Annual Growth Rate (CAGR) figure, it may not be much different from the CAGR offered by stocks during the same period.

Again, as mentioned earlier, as there is no single property index which is widely followed in India, one cannot make accurate comparisons vis-a-vis the stock market indices.

Liquidity
Undoubtedly, this is a positive feature for any investment. However, the flip side to it is that it may encourage over-trading. Benjamin Graham has often mentioned a fictional character known as Mr Market in his books. This person apparently visits you several times a day, offering to buy from you or sell to you. Constantly being in the company of Mr Market makes it difficult for you to resist the urge to trade. You are drawn to the flashing prices on the screen like a moth to a flame. Consequently, many a time you sell off good stocks on a whim, merely because you have earned a small profit, thereby foregoing any future potential appreciation. After that you will blame the stock market for not giving decent returns.

On the other hand, in the case of property, as there is no one who visits you daily with a quotation to purchase your house, you often end up holding the property for many years. When the time comes to actually sell it, you are pleasantly surprised by the price appreciation that has ensued in the interim. I often tell my friends in South Mumbai that if their parents (who had bought the houses in the 1980s) were visited by Mr Market daily in the mid 1990s they would have sold their houses long ago and missed out on the parabolic appreciation witnessed in the 2000s.

Lack of liquidity may cut the other way too. Investors who are overweight on property, sometimes end up being asset rich and cash poor. They may be compelled to to liquidate their property at a steep discount in case of emergencies.

Returns
You may be driven by the fact that property prices appreciate substantially. It easily rises 5-6 times in 6-7 years in any big city. But, remember all the increase is just notional! If you calculate the internal rate of return (IRR) for an investment in property, you will see that it isn’t great.

To calculate the same you need to factor in the maintenance costs, loan cost, tax and the rent you receive, if any. You will see that very often a three time increase turns out to be a 6 per cent return on investment. If a property is lying vacant, then the return may go down further.

Sample this, a person bought a flat for Rs 1 lakh in 1980s. Today the property is valued at more than Rs 1.50 crore. Some sample calculations will show that the IRR is not more than 10-11 per cent. You need the correct maintenance and accrual cost. This kind of return even fixed income instruments like fixed deposits (in some cases) and fixed maturity plans (FMPs) are giving today. Over such long tenures, stocks always give very good returns, easily 12-15 per cent.

Investment amount
To own a property, you need heavy investments while you can buy even one share if you don’t have enough cash. Assuming you want to buy a house worth Rs 50 lakh. A bank would be willing to lend you 80 per cent of this amount, or Rs 40 lakh. You will need Rs 10 lakh as down-payment. While in case of stocks you can buy even one, which depending on the price of the stock will be very less in comparison.

Tax
Your investments in stocks can be exempt from capital gains taxes if you hold the investment for one year or more. While in case of real estate the same increases to three years. A property held for less than three years is subjected to short-term capital gains tax.

I believe that both, property and stocks are an essential part of one’s portfolio. Both have different liquidity and volatility characteristics and are often a good fit in tandem. To be obsessed with one at the cost of another may therefore be sub-optimal.

Source: http://www.business-standard.com/india/news/realityrealty-investment-/483021/