Banking on Modi, foreign investors to pour $60 bn into India

[Rahul9090]

Foreign investment inflows are estimated to more than double and cross the $60-billion level this fiscal as overseas investors repose confidence in the Narendra Modi-led government that is expected to unleash reforms to reboot the economy, says an Assocham study.

“Riding on huge expectations from the incoming Modi government, global investors are gung ho on the Indian economy which is expected to witness over 100 per cent increase in foreign investment inflows — both FDI and FIIs — to above $60 billion in the current financial year, as against $29 billion during 2013—14,” the study projected.

The net foreign investment inflows, led by aggressive foreign institutional investors (FIIs) in the Indian equity and debt markets in 2014—15, are expected to even overtake the figure of $46.17 billion during fiscal 2012—13, one of the best years for overseas investment inflows, it estimated.

“The unfolding scenario also points to easing of prices and lowering of interest rates, the two major challenges that the Indian economy had been facing for some years now,” Assocham President Rana Kapoor said.

However, the emerging situation will pose a new challenge to the Reserve Bank to deal as it will have to balance the rupee rate and inflation from the increased liquidity into the system.

The new Finance Minister and the RBI, thus, will have to be on the same page in dealing with this scenario which will see strengthening of Rupee and a further improvement on the current account balance, Assocham said.

In the current fiscal, the FII investment would remain more than the FDI inflows, Assocham said. The expectations are that FII investment in both debt and equity could exceed $35 billion while the FDI money could be above $25 billion.

“If the Modi government is able to take some reform-friendly measures along with taming inflation and earning goodwill of the people, the FDI will do a fast catch-up with the FIIs. The euphoria must be taken advantage of and things will move on from there,” Mr. Kapoor said.

Significantly, India will continue to outpace all other emerging economies in terms of FII inflows which would not be affected much by the tapering of the Quantitative Easing by the US Federal Reserve, the study found.

Besides, as the new government goes about removing obstacles in investment, FDI is likely to pick up again in the key infrastructure areas of ports, airports, roads and energy, the study said.


Banking on Modi, foreign investors to pour $60 bn into India - The Hindu

 

[Markus]

One man show Modi single handedly turned around sentiment in the financial markets.

I hope he delivers on the economic front. And if that happens, atleast the Indian financial sector has really good days ahead.

 

[Tshering22]

This is good. We need a lot of FDI in our manufacturing more than service industry. We need roads that connect factories to main cities and factories that can produce goods by the million tonnes.

If we have to churn 5 million urban white collar jobs and 20 million middle and 50 million lower level skilled jobs every year, then we badly need to take a stronger step towards Asian integration.

1-Make our bureaucratic structure lean and mean.

2- Open up sectors like retail to foreign giants on the monitored condition that they will 100% source their raw materials from local farmers, labour etc (like vegetables and meat from local suppliers in India rather than importing etc).

3- Open up Coal India's blocks to private participation (ONLY Indian, or partly to countries like Japan, Korea, Russia etc). The monopoly is rusting India's potential. We have the world's 4th largest coal reserves and we still are ranked 3rd highest importers.

4- STEEL. Steel, steel, steel and more steel. Any superpower aspirant has always followed this textbook formula: indigenize the production of different steel grades and en masse. Rather than exporting pig iron to Japan and import Japanese finished steel, look to develop own steel building capability.

5- Open up defense PSUs to private acquisitions and allow 49% FDI in defence sector to trusted countries. Transform need based industries into profit making defence industries. Look for stronger defence tech JVs with second level military goods manufacturers like Brazil, South Africa, Argentina, Sweden, Israel, Korea, Japan, Indonesia,

6- Boost shipbuilding and container building. Replicate models of Han Jin, China Shipping etc.

7- Open up Railway sector towards Private participation. Nations like Japan and Korea are keen to invest in Indian Railways apart from helping us upgrade our infrastructure. Allow that to happen. It will in the long term boost economy as our transport rail infrastructure upgrades.

8- Cancel import duties for critical industries like aerospace, aviation, shipping and transport while simultaneously building indigenous capacities.