July 2, 2013

Investment opportunities for NRIs in the booming Indian Economy

A stable, prosperous foundation is the primary requirement to grow oneís business in India. India offers such a foundation. It provides rich business opportunities and markets to non-resident Indians (NRIs) and persons of Indian origins (PIO) for new products and services. It is one of the fastest, easiest and lucrative investment destinations in the world to set up business. India is the second-most profitable destination, according to UNCTADs World Investment Prospects Survey.

To attract foreign investment in India, the Government has offered several facilities to the NRIs, PIO and overseas corporate bodies (OCBs).

Investment options for NRIs in India

National priority level and state-specific projects are being implemented across the country. These projects offer huge investment opportunities in India. The government is in fact, promoting Public Private Partnerships (PPPs) in many projects opening up new vistas in sectors such as infrastructure, education, healthcare etc.

The health care sector of India has also opened new investment opportunities for NRIs investing in India because of the rise in disposable income, penetration of health insurance and rising health related lifestyle challenges across demographics.

The returns from the real estate sector in India have consistently been high and have even outperformed other investment options. The Government of India has created many policies and schemes to maximize investment options for NRIs/PIOs looking to invest in Indian real estate sector.

Some of the most popular investment opportunities available to the NRIs and PIOs for investments in India are:

• Non-Resident (External) Rupee (NRE) Accounts: NRE account may be in the form of savings, current, recurring or fixed deposit accounts. Such accounts can be opened only by the non-resident himself and not through the holder of the power of attorney. The interest rates on NRE Savings deposits shall be at the rate applicable to domestic savings deposits.
• Non-Resident Ordinary (NRO) Rupee Account: NRO accounts may be opened / maintained in the form of current, savings, recurring or fixed deposit accounts. Account should be denominated in Indian Rupees. Permissible credits to NRO account are transfers from rupee accounts of non-resident banks.
• Bank Fixed Deposits: Bank failures are rare in India so bank fixed deposits are a very safe way to invest for NRIs investing in India . You know the rates up front so there is no uncertainty there. Taxes can eat into your returns though, especially if you are in the high tax bracket, but even then a fixed deposit (FD) that compounds quarterly and is done for a long maturity will yield well.
• Foreign Currency Non Resident (Bank) Account ñ FCNR (B) Account: FCNR (B) accounts are only in the form of term deposits of 1 to 5 years. All debits / credits permissible in respect of NRE accounts, including credit of sale proceeds of FDI investments, are permissible in FCNR (B) accounts also. Account can be in any freely convertible currency.
• Senior Citizens Savings Scheme (SCSS): It is a new investment opportunity in India for Senior Citizen. The account may be opened by an individual, who has attained age of 60 years or above on the date of opening of the account.
• National Savings Certificates (NSC) IX Issue: This is another safe investment with decent returns. There is no maximum limit for investment and no tax deduction at source (TDS). Certificates can be kept as collateral security to get loan from banks.

Investment options in Indian energy sector

Energy plays a key factor in determining the economic development of all countries. The Indian energy sector has witnessed a rapid growth in order to meet the demands of a developing nation. Areas like resource exploration and exploitation, capacity additions, and energy sector reforms have been revolutionized.

Energy sector in India comprises of both non-renewable (coal, lignite, petroleum and natural gas) and renewable energy sources (wind, solar, small hydro, biomass, cogeneration bagasse etc.).

India has retained its position in top five world wind energy markets in 2012. The country remained the third largest market for new turbines in 2012 with capacity addition of 2,441 megawatt (MW), according to World Wind Energy Report 2012. Worlds wind turbine capacity addition grew at 19 per cent to 44,609 MW.

Major investments in Indian energy sector

The investment climate is very positive for investors in India. The power sector has witnessed a surge of higher investment flows than envisaged. The Ministry of Power has set a target for adding 76,000 MW of electricity capacity in the 12th Plan (2012-17) and 93,000 MW in the 13th Plan (2017-22).

Some of the major investments in the Indian energy sector:

• National Aluminium Company Ltd (Nalco) has set up its second wind power plant in Jaisalmer district of Rajasthan with a capacity of 47.6 MW. The Rs 283 crore wind power project is being executed through Gamesa Wind Turbines Private Ltd
• Coal India Ltd (CIL) plans to invest Rs 340 crore to embark on the second round of exploration at Mozambique coal blocks
• Jakson Power Solutions has won two new orders for installing solar rooftop systems in Bengaluru and Pune. The first order is to set up the 80 kilowatt peak (KWp) solar rooftop unit with a facility of battery back-up at Karnataka State Disaster Management Centre, Bengaluru, said Mr Sundeep Gupta, Joint Managing Director, Jakson Power Solutions
• Vikram Solar plans to put up a 10 MW power plant at Tamil Nadu (TN) under the second phase of the states solar policy
• Mytrah Energy Ltd plans to acquire 59.75 MW of existing operational wind power assets in Tamil Nadu (TN) and Maharashtra. The company expects to have a capacity of 370 MW against previously anticipated 334 MW by 2013 wind season

Government Initiatives to promote investments in the energy sector

The Government has initiated several policies to attract investors in India to invest in the Indian energy sector. To accelerate capacity addition, several policy initiatives have been undertaken by the Ministry of Power. The National Electricity Policy (NEP) in fact, stipulates power for all and annual per capita consumption of electricity to rise to 1,000 units by 2012.

Some of the major investments taken by the Government of India to garner investments in the energy sector are as follows:

• Foreign direct investments (FDI) up to 100 per cent is permitted under automatic route for projects of electricity generation (except atomic energy), transmission, distribution and power trading
• Under the Union Budget 2013-14, the Government of India has approved a scheme for the financial restructuring of DISCOMS to restore the health of the energy sector in India
• In a boost to power firms with plans to set up units in Special Economic Zones (SEZ), the Government has exempted them from the positive net foreign exchange (NFE) obligation applicable to regular units in such enclaves

Investment options in India, one of the most attractive economies in the world

The Indian economy continues to grow at a good pace and holds a strong position. Indiaís economy is amongst the largest in the world on the basis of purchasing power parity (PPP). It is today one of the most attractive destinations for business investment opportunities with the available large manpower base, diversified natural resources and strong macroeconomic fundamentals. During April-January 2012-13, India received foreign direct investments (FDI) worth US$ 30.82 billion while FDI equity inflows during January 2013 stood at US$ 2.16 billion, according to latest data released by the Department of Industrial Policy and Promotion (DIPP).

India is the third-most attractive destination for FDI in the world. Indian markets have significant potential and a favorable regulatory regime for foreign investors, according to a survey titled World Investment Prospects Survey 2012ñ2014 by UNCTAD.

We are keen to see FDI investment to surge in India and to that end, a favourable business climate will be helpful in going forward. We are encouraged to see there is a continued path towards fiscal consolidation, according to Ms Christine Lagarde, Chief, International Monetary Fund (IMF).

Changes made by the Mr P Chidambaram, Union Minister for Finance, Government of India, in the Union Budget 2013-14 can greatly benefit high net worth individuals looking to invest in India, where returns on investments are higher than in any other market.

Key sectors in India where foreign investors can invest

India has become a trillion dollar economy with a self-sufficient agricultural sector, a varied industrial base and a well-established financial and services sector. There are numerous sectors that offer lucrative business opportunities in India. Some of the key investment sectors are:

• Aerospace & Defence
• Automotive
• Banking
• Biotechnology
• Information Technology
• Insurance
• Power
• Real Estate
• Retail
• Telecommunications

Government Initiatives in supporting business investments opportunities in India

In order to enable investors to have the complete benefit of available business opportunities in India, the Government of India has taken following initiatives:

• The Government of India has relaxed in expense ratios for mutual funds and the prospects of higher FDI limits in insurance sectors could unlock huge opportunities in these investment sectors .
• The Government has allowed Qualified Foreign Investors (QFIs) ó individuals, groups or associations ó to invest directly in Indian equities and bond markets.
• To encourage the micro, small and medium enterprises (MSMEs), the Government of Tamil Nadu (TN) has announced a special component package, which includes creation of an additional land bank for setting up new industrial estates in the state, increase in subsidy for machinery purchases and creation of a single window clearance committee to facilitate speedy approvals for industrial estates, said Ms J Jayalalithaa, Chief Minister of Tamil Nadu (TN).

Investment facilitation in India

The Ministry of Overseas Indian Affairs in partnership with Confederation of Indian Industry (CII) has set up an Overseas Indian Facilitation Centre (OIFC) as a not-for-profit-trust, to facilitate non-resident Indians (NRIs), overseas corporate bodies of overseas Indians and non-resident Indians who want to invest in India.

In order to ease the process for foreign investors to invest in India, OIFC has developed an online toolkit Investment Guide to India . The toolkit serves as a simple, practical and stage-wise investment guide for the non-resident Indians wanting to invest in India.

Investment opportunities in Indian states

India is one of the oldest civilisations in the world with diverse cultural heritage. It is divided into twenty eight States and seven Union Territories (UT). Each and every Indian states and UTs has a unique demography, history, language etc. which provides various investment opportunities. These states/UTs are blessed with large number of tourist places beautiful landscapes, wildlife and forests, hills, plateaus, valleys, monuments, forts, palaces, temples, etc. Tourism is the major source for investments in Kerala.

States and UTs of India are also gifted with distinct inherent strengths from abundant supply of mineral resources and large forest reserves to the availability of good fertile lands, which are suitable for growing variety of agricultural and horticultural crops.

Several global majors are present in these States which brings large investments into the country. These companies/ industries are confined to iron and steel, cement, textiles, agro-processing, mineral-based industries, drugs and pharmaceuticals, chemicals, electronics, automobiles, etc. Pharmaceuticals and automobiles are the major source of investments in Gujarat.

Information technology (IT) is now being recognized as an essential part of the economy by the various State Governments, thereby attracting new players into the market. IT revolution is committed to provide good governance that ensures transparency, reduction in transaction costs, efficiency and citizen centric delivery of public services. Therefore, the Government is making all efforts to facilitate the growth of such industries and promote overall development of the economy.

Major investment states of India

Haryana: Due to its strategic location, Haryana has been recognised as a business-friendly State. Panipat, Rohtak, Gurgaon, Faridabad and Sonepat have a special potential for accelerated socio-economic development. Land and water are the important resources of the State, making it an agriculturally rich State. Large number of food grains and horticultural crops are produced, by using available irrigation facilities.

Kerala: The State of Kerala constitutes one of the most advanced society of the country. Its literacy rate is the highest among the Indian States. The State has several advantageous features pro-active administrative set up, simple and transparent procedures for investment, rich natural resource base, educated and hardworking manpower, including the highest density of science and technology personnel, etc. The Government has taken several policy measures and incentives for attracting investments in Kerala .

Punjab: Punjab is a land of numerous opportunities which are embedded in its advantageous position. These include:

• Simple and responsive administrative set-up
• Educated and professional work force with abundance of skilled workers
• Strong agricultural and industrial base
• Efficient infrastructural set up including transportation, telecommunication, stable and cheap power

Gujarat: Gujarat is the leading industrialized State of India. It houses a number of multinational corporations, private sector companies, public sector enterprises and a large number of medium and small scale units. It is a manufacturing powerhouse with world-class production capabilities. Textiles, petrochemicals, pharmaceuticals are some of the few sectors which attracts investment in Gujarat . The State is also known for its entrepreneurial spirit as well as robust social and physical infrastructure.

Andhra Pradesh: Andhra Pradesh is the resourceful land of minerals which includes coal, oil and natural gas, bauxite, limestone, gold, diamonds and much more. It is an agriculturally-prosperous State, endowed with fertile land, water and conducive agro-climatic conditions. It is among the largest producers of food grains, fruits, vegetables, cotton, maize, dairy and poultry products in the country.

June 3, 2013

India: An attractive destination for NRIs to invest

India’s economy is amongst the largest in the world on the basis of purchasing power parity (PPP). It is today one of the most attractive destinations for investment opportunities with the available large manpower base, diversified natural resources and strong macroeconomic fundamentals.

The Indian investment market offers a plethora of investment avenues. However the asset class that an investor chooses has to primarily do with the risk appetite of the investor. Every investor looks for a certain element of safety before investing a kind of assurance that even in the case of unfortunate market events s/he at least gets back the capital invested.

A higher level of safety comes with a cost': investors will have to compromise on the returns front, as one cannot expect higher safety with higher returns.

Returns offered by low risk investments will be low to moderate i.e. up to 9 per cent and in some cases the post-tax returns would be even lesser. It would hence be ideal if an investor can have a mix of asset classes with varying degrees of risk, to address safety and returns.

Investment options in India for NRIs

If youre thinking about investing in India to make money especially into real estate, you need to first determine your financial goals. Do you need to make money quickly, invest for your children’s college fund, or build wealth for your retirement? Once you determine your financial goals, you need investment consultants who helps investors with their long-term investment planning.

A consultant, unlike a broker, does more in-depth work on formulating clients investment strategies, helping them fulfill their needs and goals. The idea behind a consultant is that they be part of the clients investment strategy for a long period of time. The investment consultant job is to actively monitor the clients investments and continue to work with the client as goals change over time.

Some of the major investment options for NRIs are:

Short-term avenues

• Savings bank account: This is the primary savings product that anyone would have; however it provides low returns of 4 to 5 per cent. Any funds in this account makes sense only if the balance is sufficient to cover needs that are supposed to arise within a month as it offers highest liquidity.
• Fixed deposit schemes (Bank FD): Bank FD comes with a fixed tenure of investment which acts like a lock in period. While early withdrawal is possible it entails a penalty. It is essential to plan this investment since it comes with a fixed tenure/lock in.