Tagged: , , , ,

The year 2016 was one of the best years in recent times for initial public offering (‘IPO’) in India owing to stronger macroeconomics, pro-business political regime, continuing regulatory reforms and an overall positive investment climate.

Indian companies raised more than $4bn through IPOs in 2016, which is close to the aggregate equity raised over preceding four years from 2012-15.

The IPO pipeline for 2017 looks promising with some of the large companies expected to tap the equity markets including NSE, SBI Life, UTI Mutual Fund, Railways and Insurance public sector undertaking (PSU). Economic fundamentals are improving and the equity index performance is at a record high. India continues to be one of the top destinations for investments globally.

The Indian healthcare sector is riding the growth curve and emerging as a lucrative site for foreign investments, writes a healthcare analyst.

The Indian healthcare sector is one of the fastest growing sectors with high contribution not only in terms of revenue, but also employment. The Indian healthcare market is expected to rank amongst the top-three healthcare markets in terms of incremental growth by 2020.[1] The sector stood at approximately $113.9 billion in 2016 and is likely to grow at a compound annual growth rate (CAGR) of 11.6 per cent in the next five years to reach $195.6 billion.

A leading consultant analyses the factors that have made investing in India easier and a more rewarding experience as long as investors go in with a level of preparedness.

The International Monetary Fund (IMF) has recently altered its predicted growth rate for India slightly downward to 6.8 per cent, but this is still attractive compared to the sluggish rates of growth elsewhere in the world. Foreign investors’ confidence in India has also recently improved, making it the eighth most attractive destination for foreign direct investment (FDI). Meanwhile India’s ranking in the World Bank’s league table for ‘ease of doing business’ is rising, albeit at 130 the improvement isn’t over yet!

These changes have been strongly influenced by the government’s attempts to make India a more attractive market by, for example, implementing demonetisation in November 2016, increasing online transactions and the planned introduction of a common nationwide Goods and Services Tax (GST) in July.

It’s not a target but it remains an aspiration. Given the trajectory of the Indian economy, there’s every reason to be optimistic that this ambitious goal is within reach.

It is not an official target and no one in the government will speak about it on record. But in private, off-the-record conversations, they will admit that receiving $100 billion in annual foreign direct investment (FDI) inflows is an aspiration the Indian government is not giving up on.

That figure isn’t quite a mare’s nest. China consistently crossed that mark during the heady period when it was growing at 9-10 per cent per annum. And, to put things in perspective, India isn’t too far away from that mark.
Achievable ‘target’.

India can learn a lot from South Korea’s ascent from poverty in the 1950s to the ranks of the most technologically advanced societies especially in the fields of manufacturing, defence technology, electronics and skills development. And India can, in turn, help South Korea in areas like software and space technology that it excels in.

It is a warm and deepening economic and strategic partnership that could well become the template for India’s engagement with other geographically smaller but economically dynamic Asian Tigers.

South Korea has been in the news in India recently for three separate but loosely connected developments, all of them positive.

India’s power minister, Piyush Goyal, was on a European investment scouting mission recently and opened up a series of avenues for FDI into the power sector in Vienna and London.

India’s Minister for Power, Coal, New & Renewable Energy and Mines, Piyush Goyal, was on a European tour in early May to lure Austria and the UK to look at investing more in India.

At the Vienna Energy Forum, the discussion revolved around the world’s largest energy transformation programme which is currently being pioneered by India. Goyal asserted that no country can offer the kind of scale and speed that India has in terms of financing and technical capabilities. Goyal also urged the global community to link low-cost technology, renewable energy and sustainable lifestyles.

India’s solar power sector is growing at a fast clip, helped by robust foreign and domestic investor appetite for new projects and the country’s massive 750 GW solar power potential. But it also faces significant challenges from the infirm nature of solar energy and prices falling to levels that may impact financial viability.

India’s steroid-charged solar power capacity addition will take it past Japan as the world’s third largest solar market. India, which crossed 12 GW of solar power capacity in 2016-17, is expected to add about 15 GW more in the current fiscal.

Minister of State for Power, Renewable Energy and Coal told the Rajya Sabha, India’s Upper House of Parliament that the country would add 10,000 MW from largescale solar power projects and 5,000 MW from solar rooftop projects this year.

The month of May has been packed with a very wide range of developments, including the first-ever UK-India Awards organised by India Inc. in London on May 12. The event was preceded by the annual UK-India Conclave, this time on the theme of ‘A Global Partnership: A New Era in UK-India Relations’.

Both events became the focal point for senior Indian ministers on visits to the UK earlier this month to promote India as an attractive investment destination. We cover these in our special ‘From the Scene’ section as well as a ‘Face to Face’ feature tracking Indian Minister for Power, Coal and Renewable Energy Piyush Goyal’s success on his investment scouting mission and a ‘Special Report’ on Indian Minister for Roads Transport, Highways and Shipping Nitin Gadkari’s plans to work closely with the UK on India’s infrastructure challenge. Both ministers listed very crucial Masala Bonds on the London Stock Exchange, developments that we delve into as part of our coverage of their visits to Europe.

Some heavy hitting from the Finance Minister puts the Indian economy on a winning wicket, writes India Inc. CEO Manoj Ladwa.

After all the excitement over the Bharatiya Janata Party’s 4-1 sweep of the recently concluded Assembly elections, it is time once again to focus on the nuts of bolts of governance. In the latest issue of ‘India Investment Journal’, we turn our attention to India’s growth story and the man in charge of shepherding the country to greater economic heights.

Finance Minister Arun Jaitley, as our cover implies, has to bat both like Virender Sehwag and Rahul Dravid at the same time. I know cricket enthusiasts will pillory me for that statement because these two batsmen are as alike as the proverbial chalk and cheese, but let me explain.

As the election results proved once again, the ordinary Indian appreciates, among other things, the management of the economy by Prime Minister Narendra Modi and Jaitley and is willing to give them more time to make good on the promise of providing greater opportunities and more jobs.

In that sense, Jaitley, who is now wearing the additional hat of the country’s Defence Minister as well following Manohar Parrikar’s triumphant return to Goa as Chief Minister, has used the first two years of his tenure to “build his innings” a la Dravid. But with the next General Elections looming – they are due in a little over two years – Jaitley has already increased the tempo and stepped up the scoring rate as Sehwag was wont to do. And that is what we are focusing on in this issue.

The massive $90 billion he has allocated for infrastructure building in this Budget for 2017-18 is, in my opinion, like the proverbial volley of sixes that will take him closer to a winning score. This figure is quite close to the average investment (public and private) of $95 billion that fuelled the 2007-2011 boom. Yes, I know economists will cite inflation to argue that the present value of $95 billion from a decade ago is a lot higher than the nominal figure, but I would urge such people to look up another very important statistic.

Foreign direct investment (FDI) flows into India in the current year are at an estimated $53 billion.The target for 2017-18: $100 billion. And almost all of this figure will go into the generation of productive assets.

Taken together, I feel this massive dose of foreign and public investment can surely make up for the still poor investment rate of the Indian private sector and get the wheels of the economy rolling at a much higher velocity. Read about Jaitley’s growth gambit in our cover feature of this month’s ‘IIJ’.

Let me add a point that is not covered in that report. As I have written previously, I feel analysts and even Jaitley’s own government is erring on the side of caution while estimating the growth rate for the coming year.

Given the empirical evidence of how investments of about $100 billion per year over a three-four year period can send the growth velocity soaring, I feel Jaitley’s thrust on infrastructure building combined with the rising levels of FDI inflows into India will almost definitely take the annual GDP growth rate beyond 8 per cent in the coming year. You can hold me to that – a year and a bit from now.

Elsewhere in the latest edition, we have put together a Sector Focus package on the Indian defence aeronautical industry, which has both foreign defence contractors such as Lockheed, Boeing, Rolls Royce and SAAB, among others, as well as large Indian groups such as the Tatas, L&T, M&M and Reliance waiting eagerly for large orders to take forward the Make in India dream.

I would also like to draw your attention to our analysis on how the Jan Dhan scheme and demonetisation are coming together to take India closer its goal of becoming a digital (and largely cashless) economy.

Meanwhile, as Jaitley and the Modi government approach the final stretch of their five-year “Test match”, we could see some real heavy hitting from the Finance Minister to push the investment cycle into a faster trajectory.

Manoj Ladwa is the founder of India Inc. and chief executive of MLS Chase Group @manojladwa

Foreign investors often complain about India’s byzantine bureaucracy and demands for unaccounted cash to grease the system and speed up decision making.

Though ministers and senior bureaucrats in New Delhi no longer make such demands, there are reports that there has been little improvement in the lower bureaucracy and in some states.