With a control free economy, supported by expert banking facilities, the capital market of India offers a plethora of investment options. Foreign funds are flowing into India and also into some of the other emerging market economies as they have been among the few star performers when the global economy is struggling to emerge out of the meltdown.
With the Indian economy on a long-term growth curve, non-resident Indians (NRIs) can look at multiple investment options in India. Compared with the returns they may generate by investing in the US or European countries, the takings by investing in the Indian market will be considerably higher.
India has in recent times, been rated as the third most preferred investment destination globally. Liberalised reforms in foreign direct investment, both through direct automatic and approval routes and release of the revised FDI policy have eased and expedited the investment process in India. Other factors that work in favour of investment in India are its demographics, a suitable business climate, lower costs in terms of labour and availability of high-grade talent pool.
Investing in India is now one of the most acceptable norms all over the world with investors from foreign venture capital funds to overseas individual investors taking interest in investing in India. A recent report by a leading economist, Brent Ciliano, indicated that opportunities of investment in India are aplenty and investors from the US and UK should adopt bold investment strategies to invest in India by including the Indian market in their portfolios.
Opportunities of investing in India in healthcare, education, manufacturing, infrastructure and services sectors are growing steadily. The services sector has in fact, been garnering maximum FDI inflows consistently over past two years.
Of late, investment experts such as Stephen Dover, managing director and international chief investment officer for Franklin Templeton Investments’ Local Asset Management groups, have agreed that India’s favourable demographics provide boost in consumption.
- Investment in the Indian market: Among the European investors, investment in India is believed to be a good investment despite the political uncertainty, bureaucratic hassles, shortages of power and infrastructural deficiencies. India exhibits a vast potential for overseas investment and is actively encouraging the entrance of foreign players into the Indian market for investment. No company aspiring to be a global player can, for long ignore this country which is expected to become one of the top three emerging economies in the near future.
- Success in the Indian market by investing: Success in investing 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 and investing in India’s marketplace requires a well-designed plan backed by some serious thought and careful and extensive research. For those who take the time and look to India as an opportunity for long-term growth and not short-term profit, for them the investment in the Indian market will be well worth the effort.
- The market potential in India: India has a huge investing potential. India is the fifth largest economy in the world and has the third largest GDP in the whole of Asia. 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 businesses, yet, despite the practically unlimited possibilities in India for investing and 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.
- The lack of enthusiasm to invest in India among investors: After independence from British rule, India developed a highly protected, semi-socialist autarkic economy. Structural and bureaucratic impediments were vigorously fostered, along with a distrust of foreign business. Even today, the climate in India has seen a sea change, smashing barriers and actively seeking foreign investment in India; many companies still see investing in India as a difficult market. Foreign investors investing in India should be prepared to take it with all of its difficulties, contradictions and challenges.
Developing a basic understanding and potential of the Indian market; envisaging and developing a market entry strategy to invest in India and implementing these strategies when actually entering the Indian market to invest are three basic steps to make a successful entry into investing in India.
The Indian middle class population is huge and growing; wages are low; many workers are well educated and speak English; investors investing in India are optimistic and local stocks are up; despite political turmoil, the country presses on with economic reforms. However, there is still cause for worries:
- Infrastructural hassles: The rapid economic growth of the last few years has put heavy stress on India’s infrastructural facilities. Problems include power demand shortfall, port traffic capacity mismatch, poor road conditions etc.
- Indian Bureaucracy: Although the Indian government is well aware of the need for reform and is pushing ahead in this area, business still has to deal with an inefficient and sometimes still slow-moving bureaucracy.
- Diverse Market: The Indian market is widely diverse. The country has 17 official languages, 6 major religions and ethnic diversity as wide as all of Europe. Thus, tastes and preferences differ greatly among sections of consumers.
Therefore, it is advisable to develop a good understanding of the Indian market before investing and understand the overall economy before diving in. There are companies which can guide the foreign firm through the entry process for investing in India from the very beginning to end, performing the requisite research, assisting with configuration of the project, helping develop Indian partners and financing, finding the land or ready premises, and pushing through the paperwork required.
The general economic direction in India is toward liberalization and globalization. Before jumping into the market and investing in India, it is necessary to discover whether government policies exist relating to the particular area of business and if there are political concerns which should be taken into account.
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 and important steps to make a successful entry into investing in India.
UK Residents that have an OCI Visa
OCI stands for Overseas Citizenship of India and this status provides the holder of an OCI with the right of multiple-visits, multiple-entry visas into India and grants them the same status as citizens India in most regards.
Corona Virus 2020 update for E-Tourist Visas and OCI card holders
It is important to note that though we stated OCI holders have the same status as citizens in India in most regards – this is not entirely correct. As we have seen in the Media – the Corona virus has caused a Global Meltdown. The Government of India in response to this threat has now suspended all tourist visas and e-visas granted in some Countries in the EU on or before March 11 2020.
“All existing visas, except diplomatic, official, UN/international organizations, employment, project visas, stand suspended till 15th April 2020,” it said in the statement.
Source: Bloomberg
Speaking to the CEO of OCI Help Resouce guide in the UK, OCI-Help.com
“Interestingly they have also applied these strict rules to OCI Visa holders which is a shocking move. OCI holders were supposed to have the same rights as Indian citizens”
According to OCI-Help.com which is a resource for OCI Card and OCI visa holders in the UK and Abroad there are no limits to how long OCI holders can stay in India.
This means that investments made in India can be managed without requiring a business visa – the change of law today and the rashness of the decision has raised serious questions now.
Is India really open to foreign investors? If an OCI holder based in Italy had invested in India and was now barred from travelling to India, would this really go towards the spirit of openness afforded to National indians?
Benefits of OCI over an Indian Visa:
- An OCI card has a one-time application cost
- An OCI Visa provides Multiple-entry, life-long Visa entry to visit India
- OCI card holders are equal in terms of rights with Indian Citizens in economic, financial, and education fields;
- Oci Card Holders can not invest in plantation and agricultural properties.
- OCI holders have no need to report to authorities for any length of stay in India
Whatever happens from here, UK citizens, especially those with an OCI visa may wish to think twice about how secure their investments are in India. The OCI may well be classed as a glorified lifetime visa.
OCI card holders are already showing disccontent towards the fees imposed by VFS OCI in the UK and the need to constantly renew when a new passport is issued or when the OCI holder crosses the age of 50. So this is very interesting times ahead for India and how it handles foreign investment.