Have you had a bad time with Indian banks when   you tried to open an account or buy property?   Did you get taken for a ride by
unscrupulous agents? Can you, as an NRI, bank   on Indian financial institutions? Here’s one   NRI’s take on it.

Do Indian banks ignore NRIs? The answer to   this question was most certainly a resounding yes   – till about a decade ago. About ten years ago   Indian banks were busy ignoring even people   living on the same street as the bank!

So has anything changed?Yes, plenty. Reforms have been slow and fitful, but the results are beginning to show. The rupee has stabilized, the Reserve Bank issues contemporary guidelines to attract your investment, banks have evolved a plethora of schemes for you and practically every major international bank has or will shortly have a footprint in India, giving you access to their facilities at home and in India.

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India has emerged as the second most-attractive location after China, ahead of the US and Russia, for global foreign direct investment (FDI) in 2007. According to Unctad’s world investment report, released here on Tuesday, India’s ranking in inward FDI performance index has also improved to 113 in 2006 from 121 in 2005. China is the most preferred investment location, followed by India, the US, the Russian Federation and Brazil, the report said.

The share of India and China in total global FDI outflows has also risen. While both accounted for 10% of total FDI outflows in 2005 in the Asian region, it increased to 25% in 2007. While China’s outflows increased 32% to $16 billion in 2006, Indian outflows witnessed a four-time rise since 2004.

On the increased flow of FDI into India, the report pointed out that while foreign retailers such as Wal-Mart had started to enter the Indian market, a number of US companies such as General Motors and IBM are rapidly expanding their presence in the country. So are several large Japanese MNCs such as Toyota and Nissan. Global FDI inflows soared in 2006 to reach $1,306 billion, showing a growth of 38%.

Commenting on the rising outflow of FDI from the two countries, the report said both China and India are throwing up competition for countries like Hong Kong (China), the Republic of Korea, Singapore and Taiwan as the main sources of FDI in developing Asia.

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At long last…

After spending the last 29 hours on various planes and stuck inside airports, I finally
made it to Mumbai, India last night.

Let me tell you… it’s hot here. And I’m not talking about the weather. The
Bombay Stock Exchange hit a new all-time high last Thursday and has broken
through the 19,000 level. That’s almost double where it was this time last year.

Great news, you say. Well, yes and no. Although the country and stock market
is flourishing right now, the rapid growth is scaring many investors. And that’s why
I’m here. I’m leading an investment research trip, taking in the country’s hotspots, examining its rapidly emerging market, meeting with several companies, and separating the wheat from the chaff when it comes to India’s lucrative investment potential.

Here’s the scoop…

Dynamic and energetic - but in need of upgrades

India is a dynamic country. The place is teeming with life and energy. Foreign funds are pumping money into India at a record pace and stocks keep rising. There is almost certainly an economic miracle happening here.

But the country is also exploding at the seams. The roads are a mess. The power grid is a mess. Everything is a mess.

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Reuters - Opening a business in India usually involves navigating through mountains of red tape. A World Bank report ranks India 120th out of 178 countries in ease of doing business.

Here is a look at some key approvals required to start a business in India:

AUTOMATIC/FIPB ROUTE:

- The country’s central bank (Reserve Bank of India) gives an automatic approval based on the percent of the foreign direct investment (FDI) to a foreign company to start business in India, subject to the nature of business.

Otherwise there are some sectors in which foreign businesses can invest with prior approval from the Foreign Investment Promotion Board (FIPB) of the Ministry of Finance.

REGISTERING A COMPANY:

- Setting up a company in India requires incorporation with the regional registrar of companies (ROC). A public company would need a certificate to commence business.

- There are more than 12 approvals that are required if a foreign firms wants to own land and construct its own premises.
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Global investment in research and development is rapidly shifting from North America and Europe to Asian centres such as Bangalore, Hyderabad, Mumbai and Beijing, according to new research.

Researchers at the University of Sheffield and Aston Business School found that the shift was resulting in a small elite club of regions, in both the advanced and developing world, that are dominating the global knowledge economy.

The researchers found that companies in advanced regions such as Silicon Valley in the US, Cambridge in the UK, Ottawa in Canada and Helsinki in Finland, are increasingly establishing partnerships and networks with companies and universities in fast-developing Asian regions.

They found that of the US $50 billion invested by multinational companies in R&D projects around the world between 2002 and 2005, Asian economies received 58 per cent of this investment, with Europe receiving 22 per cent and North America 14 per cent. The research has been published in a report titled ‘Competing for Knowledge´.

The majority of the investment in Asia is concentrated in a very small number of locations such as Bangalore, Hyderabad, and Mumbai in India and Beijing, Guangzhou, Hangzhou and Shanghai in China.

While Asia was the dominant destination of R&D investment, North America was the primary source, accounting for 50 per cent R&D investment, followed by Europe with 28 per cent This resulted in North America having net R&D investment deficit of US$18 billion and Europe a deficit of US$3 billion.

According to report authors Robert Huggins, of the University of Sheffield´s Management School, and Hiro Izushi, of Aston Business School, the key impact of this global redistribution of knowledge is that many regions in North America and Europe were losing out and the competitiveness gap between these locations and the elite regions was becoming even wider.

The research also showed that companies in advanced economies were finding it increasingly difficult to create innovations resulting in market-leading goods and services.

For example, between 1996 and 2006 productivity growth resulting from innovation in the United States amounted to only 1.5 per cent per annum, considerably lower than that achieved in the 1950s or 1960s.

Huggins said: “As the knowledge required to produce innovations becomes more specialised and located in new locations around the world, companies are having to ensure that they are closely linked and aligned with these new sources wherever they may be.

“Since China is now the second highest research spender it is increasingly likely that it will feature more prominently as one of these new sources.”

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Source…..

Fixed Maturity Plans (FMPs) are finally being recognised as an important part of one’s portfolio. And there are good reasons for their sudden popularity. They allow the investors to have a fixed time frame in mind.

Another major plus is that they offer an indicative return, which are mostly met. And, they are cheap in comparison to mutual funds. That is, their expense ratios tend to be very low and they do not charge any entry or exit load (if you stay on for the entire tenure).

But we all know that none of these features are novel. So why are investors drawn to FMPs now though they have been in existence for years? Simply because the high interest rates are going up consistently.

And for those who think we are making a big deal out of nothing, here are a few statistics to drive home the point. In calendar year 2006, FMPs garnered Rs 89,647 crore. In the first four months of 2007, the collections have already touched Rs 71,607 crore. But if interest rates are wooing investors, then why not a good ol’ bank fixed deposit or a debt fund?

Why not a debt fund?
After all, the portfolios of both would be identical: bonds, corporate debt, government securities, fixed deposits and various money market instruments.

The similarity ends there Unlike debt funds, FMPs have a fixed maturity that can start as low as 15 days and go on to 12, 13 and 14 months. You will even get some with longer maturities but they are more an exception than the norm.

For investors who want to park money for short periods of time, this one makes a perfect fit. What’s more, it makes life easier for the fund manager.

All that he has to do is invest in instruments that have the same maturity period as that of the scheme. So a 10-month FMP’s portfolio will have instruments that have a 10-month maturity while a three-month FMP will have instruments of a three-month maturity. Accordingly, he can state his indicative return. Then sit back and wait for maturity.

Investors are now certain of the tenure and also have an indicative return, both of which are not possible in an open-ended debt fund.

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