Financial services and infrastructure are potential hotspots.
Singapore and Mumbai 18 February 2005:
Massive investment in India is predicted in the next decade as it takes its rightful place on the global economic stage, according to Cross-border Transactions: Spotlight on India, an Ernst & Young report released today.
In Singapore for the inaugural Ernst & Young Entrepreneur World Summit, Rajiv Memani, CEO & Country Managing Partner of Ernst & Young India, says: “A new India is emerging – young, entrepreneurial, skilled and competitive. The last few months have seen significant activity in foreign investment. A very visible measure of this new confidence is that in the next 12 months we expect $15 billion worth of foreign investment, a three-fold increase on the previous year.”
According to V V Ranganathan, Country Leader and National Director, Entrepreneur Award, Ernst & Young India: “A robust entrepreneurial culture has strengthened India’s position in the world economy. As Indian businesses cross borders, they foster both wealth creation and generation of employment opportunities. Given the right impetus, there is very strong potential for more Indian businesses to become truly world class players”.
Opportunities abound – across sectors.
Foreign investors, both strategic and financial, are increasingly entering or expanding in the Indian market. And the big change, according to the report, is that they are not just coming for outsourcing and IT transactions. There is a far wider sectoral spread. The value of M&A activity in India reached over $9 billion in 2004 with 316 deals, more than double the value of 2003.
“Foreign investors are seeing huge opportunities in financial services in India after a reform in our regulatory procedures. There is also a renewed investment focus on major infrastructure projects whether they are in the telecoms, transport or utility sectors. As much as $200 billion worth of investment will be needed to be injected into the domestic power sector alone,” says Memani.
With opportunities like these across India it is hardly surprising that American and European Private Equity firms are flocking to the country.
Why is India such an attractive destination?
As well as the investment potential in the country, the report highlights that India has a great deal going for it as an attractive location for overseas investors. “We are a young country and a growing number of those young people are well educated. India has had annual average economic growth of 6% since the Millennium and disposable incomes are rising. When you combine that with an economy which has low inflation and low interest rates together with robust capital markets, a strong awareness of corporate governance, and well-established legal and accounting systems, you do have an appealing prospect for any company thinking of entering the Asian market for the first time,” says Ranganathan.
Ernst & Young Entrepreneur World Summit .
The world’s leading entrepreneurs convened in Singapore, on 15-19 February 2005, for the inaugural Ernst & Young Entrepreneur World Summit. Celebrating nearly 20 years of honoring excellence among entrepreneurs, it is designed exclusively for past and present Ernst & Young Entrepreneur award winners. It will provide a forum for top entrepreneurs to network – with guests from business, government, science, and academia.