Foreign investment in India

They just keep on keeping on

Against all the odds foreign investors continue to pile into India. Why?

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Readers' comments


Gautam Agrawal

Well managed firms with potential to grow such as Hindustan Unilever, ITC, Godrej Consumer Goods, Bata India, Titan will continue to prosper. They operate in high growth segments and have good product and service lines couple with high quality management.


The real deficits in supply are in infrastructure and agri-related sectors - where returns are long term. This makes it unattractive for portfolio investors for whom long term means next week or next month. For FDI investors, the glitches in approval processes delay projects - one due to legacy rules through multiple layers of govt and the other now because of environmental clearances and a wave of politicized opinion against the "big bad corporates" - even if they're just building a nice road. Most other sectors - consumer goods, telecom, real estate, automobiles etc are still in oversupply. The agri-related sectors also require a long term commitment to build what will be profitable business - but a combination of govt rules plus a reluctance on the part of the big players to invest that long.

Amar Harolikar

India Growth Story Intact - FII Invest $10B in 2012

FII investing $10B in Indian market is no coincidence. It is very similar to 2009 first quarter, when huge FII investments preceded an economic recovery. Consider this:-

India’s growth story is very much intact so far, even as IIP is posting stagnant YoY growth numbers. It won’t make a difference even if IIP posts negative YoY numbers for a few more months.

Refer to my analysis a few months back regarding the way looking at YoY numbers is not always the right way to interpret macro trends. The right way to look at the GDP and IIP numbers is to simply look at a chart of absolute IIP and GDP over time. Furthermore, one has to differentiate between a long term trend short term business cycles.

Refer my analysis of Dec 2011 (Macro-Technicals point to a possible bottom), where I pointed out the following four factors as pointing towards a possible bottom:-

- falling monthly inflation number
- falling commodity prices
- possible bottoming out in US 10 year yields
- bullish divergences in MACD histograms in weekly and daily charts of Nifty.

From Dec 2011 till now, inflation has consistently fallen, commmodity prices have fallen and US 10 year yields have bottomed out.

Even the stock markets have bottommed out since then and have been tracing a slow uptrend. I belive that the uptrend is likely to continue

Amar Harolikar
Unknown Insights


Not all investors think like economists. With the most attractive demographics in the world over the next generation, decent capital markets, and reasonably functioning society (unearthing and resolution of scams would not take place otherwise) - global investors have few destinations, if any, which are as attractive as India over the next few decades.

Zephyrstraint in reply to 4j4snceAr8

Despite China's ageing (future tense possibly?) population, it seems decades ahead of India for various indexes, most sharply contrasting with India in terms of infrastructure. I'd say investing there was a pretty good bet as well, and judging by the scores of Californian tots learning Mandarin, I'm not the only one thinking the same.

guest-isimsma in reply to Zephyrstraint

Good investments look for the possibility of growth. Being "decades ahead" places one closer to saturation. And being more opaque doesn't help. Lots of California tots were learning Russian a couple of decades ago. How useful did that indicator work out.


Over the past 5 years the US economy has grown by about 1% and the economies of developed countries would be showing a growth of not much more than 0%. During the same period, the developing economies have grown by almost 25% and India by 35%! So where should you have invested your money? And where would you invest it now? Would you invest in India or in the Eurozone? The answer to this question is the same reason why funds are pouring into India - conspiracy theories or not.


Coz 5% growth is better than 0.5% growth.

Coz chaotic democracy is more stable than apparently calm chinese princelingarchy.

Coz incumbent queen Sonia Gandhi gets operated for a tumor and no one even gets to know- while a probable chinese leader goes missing (jinping) and the world goes into a tizzy.

Yes, the Indian story is still alive.... watch the FDI and Fuel hikes not being rolled back.



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