The just concluded 13th Pravasi Bharatiya conclave in Gandhinagar, Gujarat, has substantially pushed up the scope for NRI/ foreign investment in India, particularly in real estate and infrastructure. The exposition of new government policies, life-time visas and voting rights to NRIs and the promised transparent governance and the new thrust in policies and planning can produce positive results. Let us have a look at the NRI’s role, both individually and through institutional support, in development and growth of Indian economy, especially during the last 10-15 years.
The support of NRIs in the Indian economic growth can be traced to the 1990s when the country was facing acute shortage of funds to meet the deficit in Balance of Payment (BOP). The India Development Bonds, initiated by the State Bank of India in 1991, was a grand success. The NRIs responded spontaneously to it and sent their savings to India for the medium and long term.
The RBI and the Government too relaxed remittance/ investment rules to allow NRIs to invest in India in housing, company shares, mutual funds etc. Industrialists like Lord Swraj Pal and Mittal had also invested in many ventures.
There are some significant areas where the scope is unlimited. Though IT and ITES are prominent investment vistas, pharmaceuticals, commercial real estate, retail sector where Foreign Direct Investment (FDI) stand liberalised from over a couple of years, the insurance sector now poised to have 49% FDI and telecommunications also offer vast scope. Railways are also opening up with new opportunities. The smart cities and economic zones will be other attractive sectors.
Many real estate and investment companies have already put in substantial funds in real estate and related segments. Some prominent investing arms/companies are:
Morgan Stanley Real Estate
Emmar Properties
Blackstone Group
U.S.-based Warburg Pincus
TransparencyThe Prime Minister has assured the NRIs that India will be an ideal investment destination and will continue to be so in the days to come. However, the grey area perceived by foreign investors is that Indian laws are poorly administered.
In this background, some of our legislations like Transfer of Property Act, Land Ceiling Act, Rent Control Act/s, Stamps and Registration Act/s, property tax rules and even the Foreign Exchange Regulation Act (FERA) may need a re-look.
The Gujarat conclave had the background of new policy initiatives from the Central Government. The long pending citizenship and voting issues have been more or less settled . Leaders from many governments participated in the deliberations. Some States too attended the programmes in order to showcase opportunities. The NRIs have now some clear road map for participation in India’s growth story. Infrastructure like highways have been flagged prominently in the addresses of the Prime Minister and Union Ministers.
The Prime Minister invited the NRIs to participate in ‘highways’ along with ‘i-ways’. Liberal ‘start up’ norms are also on offer. The liberalised land acquisition parameters have also been projected as a welcome development. The presence of the Prime Minister, the External Affairs Minister and the Union Home Minister, apart from the Urban Development Minister, underscored the confidence in NRIs and foreign investors. Similarly, the participation of the U.S. Secretary of State, Industry/Development in-charge Ministers from the U.K., Singapore and many other countries also made a vast difference from mere ‘interest’ to a possible translation of intent to investment.
