India as a Favoured Investment Destination

With a robust growth in core sector, Business Confidence Index (BCI) up 1.5 points, India's FY11 GDP seen at 8.2 per cent are all indicators that India is emerging as one of the most potential investment destinations in the world. Also, India will have a larger say in the affairs of the World Bank as it has become the seventh largest shareholder in the multilateral lender with 2.91 per cent voting rights.

From overseas Indian investors to software giants to telecom biggies Nokia and Samsung to auto majors Honda and Toyota, global players are now eyeing India as the most attractive destination for doing business in India, and are planning aggressive investment strategies to this effect. The last quarter (Jan-March 2010) alone witnessed a sudden surge in exports, forex reserves and so on.

Middle-market private equity firm Olympus Capital Holdings Asia is betting big on the clean technology space in India, a market with seemingly insatiable energy demand. Olympus has a US$-250 million regional environment fund. "About 40-50% of this fund would be invested in India," said Frederick J. Long, founding managing director of Olympus Capital. Top Japanese consultants, including Mitsubishi, Nikken Sekkei and IBM Japan, have joined hands with three state governments and the Delhi-Mumbai Industrial Corridor Development Corporation (DMIDC) to develop eco-friendly infrastructure for new cities planned in the US$ 90-billion Delhi-Mumbai Industrial Corridor (DMIC).

Several reports and surveys by various industry bodies have conveyed drastic improvements across sectors. According to the recently released data by Dow Jones Venture Source, investment in India by global venture capitalists in Indian companies more than doubled to US$ 259 million during the first quarter of 2010, with business and financial services firms accounting for a major chunk. Also, a new report by PricewaterhouseCoopers (PwC) on emerging MNCs conveys that India is expected to produce the highest number of new multinational companies (MNCs). Over 2,200 Indian companies are likely to open operations outside the country over the next 15 years.

The month of April also witnessed India Inc's merger and acquisition (M&A) deal activity picking up and touching US$ 1.74 billion totalling the M&A kitty so far this year to US$ 21 billion.

Telecom companies also are boosting their investment strategies in India. For example, forging ahead with its expansion plans in the country, India's second largest consumer durables brand, Samsung India, after inaugurating three new air conditioner production lines at Noida and Chennai plants, is coming up with a new plant for refrigerators in Chennai by August.

The automobile sector is also slated to witness a lot of action with foreign car makers driving to India. BMW, the German luxury car major launched four new variants of the 5-Series sedan, priced between Rs 38.9 lakh and Rs 45.9 lakh. The general insurance industry too recorded 13.4 per cent growth in gross premium collected during the last financial year. The industry collected gross premium of Rs 34,627 crore in 2009-10 compared with Rs 30,528 crore in 2008-09.

Investment is pouring in into other industry sectors too as the Indian economy fundamentals remain robust and perfect for global investors to make the most of potential business investment opportunities.