India: A Favourable Investment Proposition

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 and FDI policy has eased and expedited the investment process in India. Other factors that work in favour of India are its demographics, a suitable business cimate, lower costs in terms of labour and availability of high-grade talent pool.

As per the advance estimates of GDP for 2009-10 released by the Central Statistical Organisation (CSO), the economy is expected to grow at 7.2 per cent in 2009-10, with the industrial and the service sectors growing at 8.2 and 8.7 per cent, respectively, while the Prime Minister on an encouraging note, has said that growth at about 9 per cent could be expected in this fiscal. India's gross domestic product (GDP) grew by 6 per cent during October to December 2009, over the corresponding quarter of the previous year, as per data released by the CSO.

Six core infrastructure industries grew at 4.5 per cent in February 2010 against 1.9 per cent during the corresponding month last year, primarily due to increased output in electricity.
Foreign institutional investors (FIIs) were net investors of US$ 4.37 billion in equity and US$ 2.09 billion in debt instruments in the month of March 2010, according to the data released by Securities and Exchange Board of India (SEBI). The number of registered FIIs was 1713 as on March 31, 2010 and the total FII inflow in equity during January to March 2010 was US$ 4.54 billion while it was US$ 4.71 billion in debt.

As on March 26, 2010, India's foreign exchange reserves totaled US$ 277.04 billion, an increase of US$ 24.71 billion over the same period last year, according to the Reserve Bank of India's Weekly Statistical Supplement.

Moreover, India has received FDI worth US$ 24.68 billion during the period April 2009 to Febuary 2010, while FDI inflow into India in Febuary 2010 alone was US$ 1.72 billion, according to the Department of Industrial Policy and Promotion. The six infrastructure sectors—crude, petroleum refinery products, coal, electricity, cement and finished steel—that constitute 26.68 per cent in IIP, recorded a growth of 5.3 per cent in the period April-February 2009-10, as against 2.9 per cent in the same period last year.

Of the more than 200 companies from over 50 countries that form part of the World Economic Forum's Global Growth Companies (GGC) Community, India today has the second largest representation, with a total of 18 GGCs. Indian GGCs come from every sector, with a strong representation in information technology and electronics, retail, consumer goods and banking.

Policy Framework
Various nodal agencies such as Departments and Ministries of the government, the Reserve Bank of India (RBI) and the Securities Exchange Board of India are involved in the policy making for various investment related issues in sectors. Significantly, the government recently released the revised compendium document of foreign direct investment (Consolidated FDI Policy).

Types of Investment Opportunities available
Several national priority level and state-specific projects are being implemented across the country. These offer lot of potential for investors willing to invest in India. The government is in fact, promoting public private partnerships in many projects opening up new vistas in sectors such as infrastructure, education, healthcare etc.