Investment in Indian market
India, among the European investors, is believed to be a good investment despite political uncertainty, bureaucratic hassles, shortages of power and infrastructural deficiencies. India presents a vast potential for overseas investment and is actively encouraging the entrance of foreign players into the market. No company, of any size, aspiring to be a global player can, for long ignore this country which is expected to become one of the top three emerging economies.

Success in India
Success in India will depend on the correct estimation of the country’s potential, underestimation of its complexity or overestimation of its possibilities can lead to failure. While calculating, due consideration should be given to the factor of the inherent difficulties and uncertainties of functioning in the Indian system.Entering India’s marketplace requires a well-designed plan backed by serious thought and careful research. For those who take the time and look to India as an opportunity for long-term growth, not short-term profit- the trip will be well worth the effort.

Market potential
India is the fifth largest economy in the world (ranking above France, Italy, the United Kingdom, and Russia) and has the third largest GDP in the entire continent of Asia. It is also the second largest among emerging nations. (These indicators are based on purchasing power parity.) India is also one of the few markets in the world which offers high prospects for growth and earning potential in practically all areas of business.Yet, despite the practically unlimited possibilities in India for overseas businesses, the world’s most populous democracy has, until fairly recently, failed to get the kind of enthusiastic attention generated by other emerging economies such as China.

Lack of enthusiasm among investors
The reason being, after independence from Britain 50 years ago, India developed a highly protected, semi-socialist autarkic economy. Structural and bureaucratic impediments were vigorously fostered, along with a distrust of foreign business. Even as today the climate in India has seen a seachange, smashing barriers and actively seeking foreign investment, many companies still see it as a difficult market. India is rightfully quoted to be an incomparable country and is both frustrating and challenging at the same time. Foreign investors should be prepared to take India as it is with all of its difficulties, contradictions and challenges.

Developing a basic understanding or potential of the Indian market, envisaging and developing a Market Entry Strategy and implementing these strategies when actually entering the market are three basic steps to make a successful entry into India.

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RBI against foreign firms raising money in India via IDRs.

Unlike American depository receipts and global depository receipts, the proposed Indian depository receipts may not be made fungible soon as the Reserve Bank of India is not ready to allow them to be converted into underlying equity shares listed overseas.

The Securities and Exchange Board of India recently announced guidelines for foreign companies to mobilise resources from India through issue of IDRs on the lines of ADRs and GDRs.

The capital market regulator has set a floor of Rs 50 crore and the minimum amount for issuing IDRs and the minimum investment by retail investors have been set at Rs 2 lakh. Non-resident Indians and foreign institutional investors are required to take the RBI�s permission before investing in such instruments.

During its discussions with Sebi, the banking regulator has reportedly expressed reservations in allowing IDRs to be converted into underlying equity shares listed overseas on the lines of ADRs and GDRs.

However, the RBI does not mind an investor holding the receipts and trading them in the domestic market. Market sources pointed out that unless IDRs were made fungible, Indian investors would not have a level playing field vis-�-vis overseas players investing in Indian equities.

The RBI has suggested capping of investments by Indian investors in IDR issues as an alternative to denial of fungibility, as it does not have a mechanism in place for monitoring Indian investments in foreign equity markets on a daily basis.

The RBI had gone to the extent of suggesting to Sebi to hold back the IDR proposal until the SS Tarapore Committee submitted a road map for fuller capital account convertibility and till a clear picture on rupee convertibility emerged, sources pointed out. The committee is expected to submit its report in July.

Source: http://www.business-standard.com/banking

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For the first nine months of FY06, out of a total of $1.6bn in overseas Indian investment approvals, close to $244m has been earmarked for the Netherlands, with the US close behind at $225m in approvals.

There has been a dramatic improvement in the Netherland�s attractiveness as an investment destination for India Inc. Overseas investments from India, measured in terms of approvals, to the Netherlands between April �05 and January �06 were higher than the cumulative FDI from India to that country between April 1996 and March �05.

A growing number of manufacturing and software companies from India are looking towards the European market to establish a stronger presence in the region. Indian investments to the European Common Market have been the highest among other regions, with manufacturing and non-financial services constituting the bulk of FDI approvals.

�Increasing investments into the Netherlands are largely due to the fact that the country is very investment-friendly and it offers the best place for Indian companies to establish their presence in Europe. The wide usage of English as a medium of communication gives it an added advantage,� says Rajiv Kumar, chief executive, ICRIER.

In addition, some Indian companies have also set up their holding companies in the Netherlands to route their investments to Europe and the US. With India Inc stepping up its presence in these regions, more investments are now being routed through these holding companies.

Indian companies are not the only ones attracted to the Dutch market this year. According to the Netherlands Foreign Investment agency (NFIA), �05 saw the highest number of new investment projects by foreign companies into the Netherlands, with a major chunk from Asia.

While this has been the largest amount of FDI received by the Netherlands from India in any given year, on a cumulative basis, Russia and the US continue to occupy the top spots.

The Netherlands remains the tenth-largest recipient of Indian overseas investments, if cumulative investment approvals since 1996 are taken into account. Within the other top ten recipient countries, Vietnam and Oman have been replaced by Sudan and Singapore in the last seven years, as the favoured destination for Indian investments.

While investments in Sudan were mostly for oil exploration, Singapore has attracted mostly IT and tech investments from India. According to the RBI annual report, more than 1,400 Indian companies are operating in Singapore, of which, around 450 are technology enterprises.

On the whole, there has been a 70% rise in actual FDI outflows from India between April �05 and January �06 over the corresponding period last year. The share of manufacturing is above 50% and the share of non-financial services is 30%.

Source: http://economictimes.indiatimes.com/articleshow/1534205.cms

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Mumbai: The Rupee today (May15, 2006) tumbled again the US currency on renewed hectic dollar demand amid a slowdown in foreign fund inflows in nervous early trade at the Interbank Foreign Exchange market.

Opening distinctly weak at Rs 45.10/12 per dollar, the rupee plunged to Rs 45.4750/1850 per dollar, sharply lower from Friday’s close of Rs 45.0450/0550.

Despite a retreating dollar overseas, the rupee once again succumbed to heavy dollar demand from corporates and importers amid a slowdown in FIIs inflows.

Foreign Institutional Investors (FII) pulled out a massive US$ 266.80 million from the Equity market on May 11 on fears of a slowdown in economic reforms following the left parties thumping win in two crucial states.

World crude oil prices were hovering around US$ 71.35 a barrel in early trade today due to supply concerns.

The BSE Sensex tumbled by over 145 points and was quoted at 12,139.26 within 15 minutes trading on Monday.

In Cross Currency Trade, the Euro was quoted at Rs 58.32/34, Pound Sterling at Rs 85.52/54 and a Japanese Yen (100) at Rs 41.16/18.

Source: http://finance.indiainfo.com/news/2006/05/15/1505rupee-early-trade.html

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Investment advice may now come under the direct scrutiny of Sebi. With self-styled investment advisors mushrooming all over the country and the sensex in the stratosphere, the market regulator is beginning to feel a bit uneasy about the quality of prescription on offer.

Sebi chairman M Dam-odaran told ET, �We are not against investment tips being given by advisors per se. But we do feel that such advisors should first declare the portfolio they hold themselves, so that we are sure about the quality of their advice.�

In fact, Sebi is also monitoring the multitude of recommendations given by market intermediaries, hired by the electronic media. �If found guilty, they will be punished and barred from dispensing advice for sometime,� Mr Damodaran said.

The market regulator has, therefore, decided to bring about certain regulations in place so that the millions of investment tips doled out by such advisors, many of whom have little or no experience, can be qualitatively judged. This is a very important move, considering the fact that lakhs of unsuspecting ordinary investors often lap up these recommendations and land into grief.

Hence, Sebi has decided to regulate this segment as a whole, as is done globally. �Recommendations should be backed by a clear and unambiguous disclosure of what the advisor actually holds at that point of time. We propose to prescribe qualifications for advisors in due course,� he said.

Early this year, Sebi had passed an order barring a company run by an investment advisor that was hired by a television channel to air investment comments and analysis.

Mr Damodaran said that the regulator has been receiving umpteen complaints from various quarters about the quality of investment advice being given out. He said the regulator is also trying to strengthen its surveillance and legal department.

The market regulator has recently recruited around 80 MBAs, chartered accountants, cost accountants and even legal experts to do some quality surveillance on behalf of the regulator. All of them will undergo rigorous training for a month at the Indian Institute of Capital Market and work in various Sebi departments, before they are assigned a surveillance role in Sebi.

Source: http://economictimes.indiatimes.com/articleshow/1529368.cms

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NEW DELHI - To tap growing opportunities in the Indian aviation sector, investment bank IL&FS and US-based finance leasing company Bravia Capital Partners (BCP) announced setting up a joint venture for providing commercial aircraft on lease to airlines in the country.

The venture would invest in commercial aircraft to be leased to or financed for airlines in India, IL&FS said in a release.

"Few markets in the world are as vibrant as the Indian aviation sector. Our knowledge of the aviation business and their expertise in local infrastructure development make our JV with IL&FS the perfect combination of strengths," BCP CEO Bharat Bhise said.

IL&FS, which has an asset footing of US$1.75 billion, and Bravia would jointly market the venture to airline operators, besides developing local financial structure to support these transactions.

"Our alliance with Bravia will enable us to build localized solutions for the sector and attract domestic banks and financial institutions to the sector on the back of sound technical, risk management and financial structures," IL&FS Financial Services COO Milind Patel said.

Bravia would provide technical support for each aircraft transaction, including cargo conversion and maintenance management facilities.

Source: http://www.atimes.com/atimes/South_Asia/HE11Df02.html

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