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India: The nucleus for FDIs

Foreign businesses often channelize their funds to reap the benefits of fast growing economy, cheap labor and wide scope of earning increased returns in India. To capture and relish such benefits, FDIs are superintended towards India in huge proportions by different countries around the world. 

What is FDI?
Foreign Direct Investment (FDI) is generally termed as an investment made by a firm or individual in one country into business interests located in another country. Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company.

India amidst top destinations for FDI
India ranks among the top 10 host economies for FDI, according to the United Nations Conference on Trade and Development (UNCTAD) 2018 World Investment Report. FDI inflows hit an all-time high of USD 44.5 billion in 2016, however, following the global downward trend, flows to India declined in 2017 to USD 39.9 billion.

In January 2018, the Indian government gave its approval to a number of major amendments aiming to further liberalise and simplify the national FDI policy. In the last three years, the government had already eased 87 FDI rules across 21 sectors. In 2018, India ranked 100th out of 190 countries in the Doing Business report published by the World Bank.

Russia contemplating investments in India
One such major step can be sighted by the Russian Direct Investment Fund (RDIF) moving towards investing in India eyeing to boost infrastructure funding. As mentioned by Kirill Dmitriev, CEO, RDIF in an interview that RDIF will sign two key deals at this annual summit on October 5, 2018:

  • Agreement with their partners in India to jointly invest in ports & logistics; and
  • Joint investment in mineral fertilisers, including the construction of production facilities and related infrastructure, as well as the introduction of advanced technologies in Russia and India. The agreement also provides for the supply of PhosAgro products to Indian partners on a long-term basis.

Growth spotted
The sectors attracting the greatest amounts of FDI in India include the services sector, followed by IT services and software, construction, the automobile industry and wholesale and retail trade.

FDI Equity Inflows by Country

Main Investing Countries 

 (January – March 2018)

%

 (April – June 2018)

%

Mauritius 34 33
Singapore 18 19
Netherlands 6 6
United States 6 6
Japan 7 7
Germany 3 3
United Kingdom 7 7
Cyprus 3 2
France 2 2
U.A.E. 2 2

Discerning the consistent and steady growth in the influx of FDIs, one can identify these to be a secure source of foreign funds entering in the economy subsequently. Thus, promoting all sectors in India.

Is it a lot to take in? Need some assistance or more information for investment in India, please click here.

Also, we can assist you in setting up your presence in India, company formation in India, statutory accounting and bookkeeping and other regulatory requirements.

Source:

  1. https://en.portal.santandertrade.com/establish-overseas/india/foreign-investment
  2. http://www.dipp.nic.in/fdi-publications

 

 

Financial investment solutions for NRIs

Over the years the opportunities to invest for Non Resident Indians (NRIs) in safe investment options has increased tremendously.
There was a time when NRIs found it safe to invest in real estate. But banks today also offer great number of financial solutions. If you are an NRI, it is suggested to invest in financial assets rather than real estate. Real estate is a popular option but comes with its own set of challenges which NRIs and even locals routinely underestimate, only to repent later.
Financial assets are much easier to handle from abroad and are free from legal issues, possession and maintenance issues, require lower time and effort from you, and of course, don’t require you to handle “black” money. Also, most transactions can be done online from wherever you are, giving you significant control. NRIs can also consider fixed deposits or mutual fund schemes. Mutual funds tend to be slightly risky investment as compared to some of the other instruments. Fixed deposits can be considered the best plan for financial investment in India.
It is important to remember for NRIs that some additional documentation maybe required. These include a passport photocopy with valid visa, overseas employment letter, PAN Card and a local address proof.
The length of your financial investment in Indiadepends upon you and your assets. However, these are the few commonly available options:
• Very short term – A few days/weeks/months:Bank Fixed deposits, Liquid/Ultra Short Term Funds
• Short Term – 1 to 3 years:Short Term Debt Funds
• Medium term – 4 to 7 Years:Combination of Debt and Equity Funds with Debt portion being higher
• Long Term – 8 to 14 Years:Combination of Debt and Equity Funds with Equity portion being higher
• Very Long Term – 15 years or more:Equity Funds
Always consider the taxation policy before investing in India. It should never be taken for granted that the tax policy of one country is same as the other. If you are new to the entire investment scenario, it is advised to seek professional help. Professional services will help you chalk out your entire investment plan. You can also learn about new methods of investment.
If you’re considering investing a significant portion of your hard earned money in India, do look for customised, honest and professional advice by engaging a qualified, fee-based financial planner/advisor in India.

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Investment solutions for NRIs

The Indian government provides great solutions for investment in India to lakhs of NRIs.
Despite the ongoing slowdown, India continues to offer numerous investment opportunities for foreign investors, who do not enjoy such high rates in their country of work. The current volatility has created attractive entry points for NRIs across a range of asset classes. If you are looking to invest in India, what are the options you should consider?

If you wish to invest in India, the first step is to open a savings bank account. There are three basic types of bank accounts for NRIs.

Go for a non-resident external (NRE) rupee account if you are looking to remit overseas earnings to India and hold them in rupees, as also transfer the proceeds of your investments back to your home country without any restrictions. An NRE account is completely tax-free and no tax is payable on the interest earned on the balance.
But you cannot put income from rent, salary and dividends in the NRE account. For that you need a non-resident ordinary (NRO) account. However, the interest earned on the NRO account is taxed at the marginal rate of 30% plus surcharge and cess. The balance in the account is also subject to wealth tax.

The advantage is that NRO accounts can be jointly opened with a resident Indian. If you do not wish to be exposed to exchange rate risk, you can instead open a foreign currency non-resident (FCNR) account with a local bank, where your funds are held in the foreign currency, and not converted to rupees.

In order to open an account, you can either visit the nearest branch of the Indian bank in your home country, if any, or send the completed application form (you can get it online) along with the documents to any of the branches in India (see box). Today, there are also multiple service providers who help you do investment in India. They not only handle the entire process but also offer viable solutions that ensure highest return on investments.

Before investing in India, it is necessary to be aware of the tax implications. Although there is not much difference between tax rates for residents and NRIs, it is important to know that for NRIs, the tax is deducted at the source.

For most NRIs, property is the primary choice of investment. The bulk of their money is directed towards real estate investments. However, some experts feel this is not the ideal route for all NRIs.

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Investment ideas suitable for Indian business

It is a very common belief that starting a business in India requires huge amount of investment. But not all businesses require too much investment. India is a land of opportunities and one can start a business with low investment or even no investment. You can start a business in India with a nominal amount of investment and grow your business. India has a rapidly growing economy and has a massive population. In this article we will discuss some ideas for business start-up in India.
• Home canteen: Running a home canteen requires low investment in business. Off late, the business of food supply has gained a lot of popularity. It is a profitable small-scale business. You can start a business in India with a nominal amount of investment and grow your business.
• Dance instructor:You can work as a dance instructor and this does not require a whole lot of money. You can open your own school or work as a freelance dance instructor. Since dance forms an integral part of Indian culture, many parents like their kids to learn dance from a very early age. Therefore, there are plenty of opportunities for a dance instructor to earn both fame and money.
• Fashion designing:If you are good at art and like fashion, then fashion designing is the best choice. In order to make the most sought-after outfits you will have to undergo training in this field.
• Data entry jobs:This job does not require huge investment. If you have a computer at home and internet connection, you can start a data entry company. Filling up forms online is a popular example of data entry jobs on the Internet.
• Homemade chocolates:Making chocolates in your home is a moneymaking business. You just have to get the ingredients that are essential to make chocolates at home. After preparing the chocolates, pack them with fancy wrappers to add creativity and make them more attractive.
• Event management:It is a cost-effective business for people who are interested in organising different types of events and functions.
• Wedding consultant: In India, weddings are big events and take a lot of time. You can work as a wedding consultant to make things simpler and manage them for people who just don’t have the time to do it for themselves.
Apart from this there are many small-scale businesses that require low investment. Business opportunities in India are tremendous.

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Investment opportunities for foreign nationals in India

The business sector in India is growing and expanding both in size and in terms of the level of investment. There has been a steady growth in the number of start-ups and SMEs (Small and Medium Enterprises). In the last five years, India’s GDP has grown at an average of 8.5 percent.
According to the World Survey, India was ranked as the fourth best place in the world for entrepreneurs to start a new venture. Also, according to the International Monetary Fund; India is set to become the third largest economy in the world by 2030.
The government of India is looking at creating a strong entrepreneurial culture and vibrant economy by easing the regulations for expats, NRIs or foreign nationals to start businesses in India. Investment in India is not an easy task. There are many clearances and permissions to be obtained from various boards. The time taken to incorporate business in India depends upon the nature of the business and a myriad of factors. Roughly it takes about 3 to 5 months for expats to setup a business in India.
Foreigners and expats can invest their capital in many different ways. We’ll take a look at three of the most popular ways foreign investment can happen in the Indian market.
• ADRs: ADRs (American Depositary Receipts) are the traditional way of investing in foreign companies. ADRs represent individual stocks and are traded on the New York Stock Exchange (NYSE), American Stock Exchange (AMEX) or the Nasdaq. There are three different types if ADRs.
• Exchange trade funds and mutual funds:Foreign Institutional Investors (FII), have had access to the Indian market for 10 years or more. There are several ETFs and mutual funds available, which cover a number of different sectors within the Indian economy.
• Qualified foreign investor:QFI status allows you to invest directly in Indian companies via the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE). You can also invest in Indian based mutual funds and corporate bonds.
There is no doubt that India offers exciting investment opportunities. But there are certain pitfalls. India is a developing country and therefore requires a huge amount of investment in infrastructure, before it can truly compete on the world stage. If this investment fails to take place, long term growth could be stagnated.
Apart from the above methods, foreign nationals can set up investment in India as a public limited company, project office, liaison office, branch office and joint venture. The routes for foreign investment are not limited.

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