Softbank founder and CEO Masayoshi Son reaffirmed his belief in the Indian market by voicing plans of increasing investment in India. Last year, Son had announced that he would invest USD 10 billion in 10 years. “If I have said USD 10 billion in 10 years, I have already done USD 2 billion that is over pacing. I think we will seriously accelerate,” Son said at the Startup India policy event held in the capital on Saturday. Softbank is a Japanese telecom and media company.
Exuding enthusiasm for the Indian market, Son said that the 21st Century belongs to India. “Every time I visit India I get more excited, more convinced…India can be bigger in momentum than China in the next 10 years,” said Son adding that in the next one year there would be more startups popping up in India rather than witnessing consolidation. While mobile Internet will make the domestic Internet market “big enough”, Son cautioned that mobile broadband infrastructure and electricity were two areas that were still lacking in the country.
Softbank has pumped in capital in startups such as Snapdeal, Oyo Rooms and Housing.com among others. The venture also has plans of investing USD 20 billion in the solar projects in India. While divulging his thinking behind investing in potential startups, Son said that he looks at the investors’ eyes. “You don’t fall in love with a beautiful person just with logic,” said Son on a lighter vein adding that he backs entrepreneurs. “The captain of the ship has to make up his mind from day one that I will be the last guy to leave the ship. Whenever there is crisis, even if I will be the last guy, I will sail the ship back again. That strong mind makes people follow you. If you have that kind of leader, I like to bet on them,” said Son.
The new business models should have capability of analyzing big data using power of computing, create algorithms, and deep learning, said Son. “The Information revolution will be 100 times bigger than industrial revolution,” said Son. Asking entrepreneurs to retain passion to tide over crisis, Son also had a word of caution for young entrepreneurs. “Investors are coming with big cheques. (So) some times the entrepreneurs (think) that they have already become rich without delivering something. They should never misunderstand. They should keep the passion to grow the company,” said Son.
Speaking earlier at the event, Finance Minister Arun Jaitley promised startup friendly measures in the forthcoming Union Budget.
"Government will be a facilitator with negligible role in day-to-day interventions...Once the startup movement picks up, Indian entrepreneurship will enjoy eventual freedom from the state...Startup friendly tax measures to be announced in the Budget," he said.
Source- forbesindia
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Tuesday, 19 January 2016
Monday, 18 January 2016
Start-up investment in India to get capital gains tax exemption
In an effort to give a fillip to the start-up ecosystem in the country, the government on Saturday announced its intention to exempt capital gains tax on investments in start-ups and a Rs.10,000 crore fund to provide funding support to innovation driven enterprises.
Announcing the start-up action plan at the concluding session of the Startup India event, Prime Minister Narendra Modi said Indian youth need to be encouraged to be job creators rather than job seekers.
Exemption of the 20% capital gains tax has been a long pending demand of the overseas venture capital investors who have been claiming that government is forcing them to route their investments through Mauritius to get the capital gains tax. At present, most investments in Indian start-ups are routed through Mauritius as capital gains tax on investments from that country is waived due to a provision in Double Tax Avoidance Treaty.
However, the waiver of capital gains tax will only come into effect after a formal proposal in the upcoming budget next month is approved by the Parliament.
In order to provide funding support to start-ups, the government will set up a fund with an initial corpus of Rs.2,500 crore and a total corpus of Rs.10,000 crore over a period of four years. “The fund will be in the nature of Fund of Funds (FoF), which means that it will not invest directly into startups, but shall participate in the capital of SEBI (Securities and Exchange Board of India) registered venture funds,” the action plan said.
The Life Insurance Corp. of India will be an investor in the FoF and it will be managed by a board with private professionals drawn from industry bodies, academia and successful startups. The FoF will support a mix of sectors such as manufacturing, agriculture, health, education among others.
Modi also announced profits from start-ups will be exempted from income tax for three years to address their working capital requirements. “The exemption shall be available subject to non-distribution of dividend by the startup,” the action plan said.
To encourage seed-capital investment, the government also exempted tax above fair market value for incubators in start-ups, which is currently only available to venture capital funds. “In the context of startups, where the idea is at a conceptualization or development stage, it is often difficult to determine the FMV of such shares. In majority of the cases, FMV is also significantly lower than the value at which the capital investment is made,” it added.
The government also defined a start-up for the purpose of government schemes as one registered in India within the last five years and has annual turnover not exceeding Rs.25 crore.
With the intention of reducing regulatory burden on start-ups so that they can focus on their core business, they have been exempted from six labour laws and three environmental laws for a period of three years. Start-ups will also be provided free legal support in filing intellectual property rights (IPR) and their patent applications will be fast tracked at lower costs. Mint first reported this on Thursday.
To create a single point of contact for the entire start-up ecosystem and enable knowledge exchange and access of funding a Startup India hub will be created.
Starting April, start-ups can register themselves as a company in a simple procedure using an app.
To provide equal platform to startups in government procurements, the criteria of prior experience or turnover will be exempted without any relaxation in quality standards or technical parameters. At present, central government, state government and public sector units have to mandatorily procure at least 20% from the micro, small and medium enterprises in which now start ups can also participate.
The government will also create a policy framework for setting up of incubators across the country in public private partnership, build innovation centres at national institutes and set up seven new research parks.
Anurav Rane, chief executive officer of PlanMyMedicalTrip.com said while the entire summit was aimed at promoting start-ups, our expectations were limited to motivating the youngsters in taking initiatives for doing something they believe in. “However, we truly feel that this summit has been worthwhile after listening to the announcements made by the PM. Policies like No Capital gains tax, no taxes for 3 years and most importantly the Startup Fest will allow us to build a healthy collaborative environment with an aim to grow in this competitive world,” he added.
Rajiv Srivatsa, founder, chief operating officer at Urban Ladder said it is encouraging to see the kind of attention the start-up community is getting from the central government. “It re-instills faith in the path many of us (entrepreneurs) have chosen. I’m confident the government will play a significant role to support the ecosystem, and help us build truly world class ‘Made in India’ companies. With introduction of self certification compliance and easier patent laws, entrepreneurs will be able to spend more mind-space on innovation. The move to make exits simpler is also encouraging and will encourage more risk taking and hence, disruption,” he added.
“It is a phenomenal move by the government which gives a strong message... as far as the action plans are concerned, the impact and timing will be clear once the fine print is released,” said Aashish Bhinde, executive director (Digital Media & Tech) at Avendus Capital, an investment bank.
“The government has acted like a disruptive start up. The policies around cleaning the license raj will be a huge booster for Startup community while both setting up and dissolving a company. Other initiatives such as tax benefits, easy IPR regulations, and government academia will go a long way in making India’s start up ecosystem super successful,” said Radhika Aggarwal, co-founder and chief business officer, Shopclues, an online marketplace.
“It is incredible what the government has done for the startup ecosystem. I can say it is a populist start-up budget on steroids. They have given more than what has been asked for; it touches so many points right from reducing the patent fee to registering the company faster and even the events to promote start-ups in schools and colleges. This will help start-up jobs become as popular as MNC jobs are during campus placements,” said Vijay Shekhar Sharma, founder One97 Communications Pvt. Ltd that runs payments platform Paytm.
Source-livemint.com
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Wednesday, 13 January 2016
‘It’s now the best time to invest in India’
India’s consul general and over a dozen professional experts underscored the need for optimum utilization of the vast investment opportunities available in several key sectors in the country. They were speaking at an event with the theme of “India: Emerging economy with emerging opportunities” held at the consulate conference hall to mark the 14th Pravasi Bharatiya Divas (PBD) on Saturday.
More than 100 Indian professionals and Saudi figures attended the event, organized by the Indian Consulate General in association with the Saudi Indian Business Network (SIBN). Prominent Indian community leaders Rafiudin Fazulbhoy and Dr. M.S. Karimuddin, who are recipients of Pravasi Bharatiya Samman Award, were felicitated on the occasion.
Inaugurating the event, Consul General B.S. Mubarak has said that India is emerging as one of the fastest growing economies and manufacturing hubs in the world. “With the slowing down of the Chinese economy, it’s now India’s time. There has never been a better time than now to make in India as well as to invest in India,” he said.
In the keynote speech, Mubarak highlighted the major initiatives taken by the government of India to strengthen the investment climate in the country and to make it one of the strongest economies in the world. “India has become one of the 10 major foreign direct investment (FDI) destinations in the world and an emerging hub for manufacturing. By taking advantage of this, several global powers including France, Germany, Japan, and Russia have come to invest in India with pumping billions of dollars.”
The consul general said India has the big potential for investment, thanks to its advantages of having abundant skilled manpower, booming middle class, economic and political stability, and a much liberalized FDI policy.”
Mubarak said that 25 sectors have been identified as key sectors for investment as well as to materialize the Modi government’s slogan of ‘Make in India.’ “Defense, electronics and aviation are foremost among them, as the government pursues a policy of import substitution through manufacturing products in the country itself. Textiles and leather are other very significant sectors,” he said, adding that India is abundant with the raw materials for becoming a manufacturing hub.
He cited the example of leather in this respect. “India exports 50 percent of raw leather to the world while India’s stake in finished leather products stood at merely three percent. China, which manufactures 30 percent of finished leather products, imports raw leather mainly from India.”
He also highlighted the business friendly reforms being carried out by the government of India where by many new business opportunities have been emerged. Mubarak drew attention to the vast opportunities in mega projects such as industrial corridors, and smart cities.
Thirteen Indian professionals who are experts in various fields had their presentations on various topics on the occasion. Danish Abdul Ghafoor from Drive Dentsu spoke about the role of social media in business development. Mohammed Muzammil Riyaz, working at Islamic Development Bank, gave a presentation on opportunities in Startups. The presentation of Mohammed Hyder from Etisalat Mobily, on innovation and change, was highly thought provoking. Asim Zeeshan of Saudi Arabian Drug Stores Company presented emerging trends of Indian pharmaceutical industry. The presentation of Vijay Soni, treasurer of SIBN who works at Saudi Arabian Glass Co. was about the challenges and opportunities in the changing oil economy.
Mohammed Sheriff, working for Arabian Technical Trading Est., unveiled in his presentation the opportunities in pollution monitoring in the Kingdom. Naveen Kumar from Growth Consulting presented emerging talents and opportunities available to young entrepreneurs. Majeedul Hasan, who works at AIC, presented potential opportunities in renewable energy. Mohammed N. Al Qureshi from Saudi Digital Marketing spoke about emerging digital marketing trends. Suresh Kumar from Skitnet spoke about his initiatives with Make in India. The presentation of Anindya from Saudi Binladen Holding was about the opportunities in the field of construction industry in the Kingdom. Gazanfar Ali Zaki, executive secretary of SIBN, shared enormous opportunities in the field of education while Javid Ahamed from Quartz spoke about creative leadership.
The program was compered by SIBN’s General Secretary Majeedul Hasan and Asim Zeeshan, event management coordinator. The event was supported by the commercial section of the Indian Consulate headed by S.R.H. Fahmi, consul (commerce & CW)/HOC along with Amjad Shareef, MRA. Zakaria Biladi from Marketing Support Services had made necessary logistical arrangement.
Source- saudigazette.com.sa
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Tuesday, 12 January 2016
Strong growth outlook to attract foreign investments to India
The strong economic growth outlook of India built on efficient fiscal and monetary management and a progressive reform agenda is expected to attract both foreign direct investment (FDI) and foreign portfolio investments (FPI) starting this year, Vikas Gautam, CEO, Aditya Birla Sun Life Asset Management Company Pte. Ltd told Gulf News in a recent interview.
“The government has been able to build a strong foundation for change which is quiet visible on the ground. Though a lot of reforms the government had envisaged have not gone through till now, but at the same time the foundation has been laid, and the result of that foundation will be visible in the next 12 to 18 months,” said Gautam. In its latest report, ‘Global Economic Prospects’, The World Bank has projected that India would remain comfortably the fastest growing large economy in 2016, at a rate more than a percentage point higher than China. The World Bank has projected the Indian economy to grow at 7.8 per cent in 2016 and China’s to grow at a more modest 6.7 per cent while the world economy as a whole would grow at 2.9 per cent.
Though the rupee depreciated last year compared to 2014, it largely managed to hold its ground compared to most other emerging market currencies. It is unlikely the rupee will face a massive depreciation as happened in 2013 when it slipped in excess of 20 per cent. Over the last two years, the RBI has been successful in curbing extreme speculative volatility out of the market.
“FDI and foreign portfolio allocations are expected to increase this year. There has been a lot of positive impact following the improved ratings as well as a number of countries from around the world are signing bilateral agreements with India to support infrastructure developments. Once infrastructure developments start, the ripple effects of that will get reflected on the capital markets for the simple reason the execution of infrastructure projects is going to be done by local companies,” said Gautam.
Unlike other emerging markets, the impact of future US interest rate hikes on capital flows out of India will be muted. The US is hiking rates because the economy is recovering. Historical data for the two decades show good growth in the US has meant strong growth prospects for India.
While future rate hikes are expected to have some immediate ripple effects, it is not likely to result in capital flight from India. On the contrary strong macroeconomic fundamentals are likely to attract more investors to India.
India is one of the few emerging markets where some of the largest pension funds either have allocated in the range of $5 billion (Dh18.36 billion) to $10 billion over the past 12 months.
“Looking from their perspective yields are negative or zero in most developed markets. They have to match liabilities for 30 to 40 years and there aren’t many markets that can give these funds yields in the range of 7 to 10 per cent for such longer period,” said Gautam.
In the past, India was part of tactical allocations for most institutional investors, but now it is increasingly becoming part of their core allocation strategies.
Box:
Middle East investments to surge
Dubai: India is expected to receive strong flow of investments from the Middle East as institutional investors, private offices and sovereign investors compare opportunities with other emerging markets said Vikas Gautam, CEO, Aditya Birla Sun Life Asset Management Company (ABSLAMC).
ABSLAMC has a 100 per cent wholly-owned subsidiary in Dubai called ABSLAMC Dubai that is regulated by the Dubai Financial Services Authority (DFSA). ABSLAMC Dubai services clients across the Middle East through its Dubai office.
“We have a very strong investor base in the Middle East, especially in the GCC. Investors are aware of the opportunities and we intend to offer products and services that suit the requirements of regional investors,” Gautam said.
The company offers investment options on both public markets including equities, fixed income and opportunities in alternate space too. Keeping up with the growing demand for exposure to India investments from investors in the Middle East, Asia and Canada, the company is planning to launch a couple of new funds. First will be a fund focused on Middle East and Asia investors, a 100 per cent India dedicated high growth fund that will focus on small and mid-cap sectors. Additionally the company is also launching this month an open-ended balance fund for Canadian investors with 60:40 equity bond composition.
With the growing FDI inflow and infrastructure investments, the Indian corporate sector is expected to benefit in terms of earnings. “As a consequence of this, corporate earnings will get rerated in India which will reflect on valuations on the capital markets,” said Gautam.
Source- gulfnews.com
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Friday, 8 January 2016
Five-investment-mistakes-you-must-avoid
Sitting in my cabin today at work, I could see my team all relaxed and excited. Excited to celebrate the newyear with zeal, they were all busy planning for the fun filled evening. For once I deiced to let them be and take time off, considering most of the year they are busy servicing others.
Just as I was busy sorting out my party plans I got a call from a good friend, wishing me season’s greetings. Delving in a deep engaging conversation, we somehow started discussing finances. That is how I got to know that this friend of mine was making the common investment mistakes which many of us make!
While it is not possible for anyone to predict definite returns when investing, it sure is possible to avoid some common mistakes which can help you from losing your money. Encapsulated below are some mistakes that you sure must avoid starting in 2016:
1.Overinvesting in one asset class: Like Warren Buffett rightly said “Don’t put all your eggs in one basket”, it is always advisable to manage your financial portfolio by the way of diversification. Diversification is when one chooses to put his money in more than one investment platform than just one, for example having the right balance of equities and debt funds in your portfolio. Most Indians have a poor exposure in equities which is not advisable; to make profits a right amount of equity investment is proposed. It should be noted that fixed deposits, real estate and gold are almost similar in nature, as over a long period of time all three asset classes perform at par with inflation.
2. Postponing investment decisions: Most people are too busy to invest; they just wait for the right time to invest. May be for a next promotion, a better salary or also a good raise. It should be noted that investment decisions should not be postponed. You can start as early as 20 years of age; you can save from your pocket money itself. Imagine your money resting in your savings bank account where it will earn only an interest of 4%, whereas when invested wisely it can earn you anything from 14% to 16%.
3. Constantly looking for “What is New” syndrome: Anyone who makes systematic investment decisions can easily say that the Indian equity market has performed 14-16% over the period of 10-20 years. An individual can easily keep adding more to it systematically to gain on their investments. However, people are more bothered about the “What is new” craze and unknowingly over diversify or what we call it as diworsefy.
4. Periodic review: Reviewing and analyzing ones wealth pie is very important, most individuals skip the process, in turn losing money. A holistic view of the assets one has and taking corrective measures at the right time is what is required to keep the investments healthy. It is imperative to note that reviewing your investments once a year is advisable, as this helps you to keep a check on what asset classes are performing and which are giving a negative return. If you notice negative returns you may want to switch your investments.
5. Being affected by “Get Rich Quick” syndrome: In the hurry to get rich most individuals do not want to give time, often falling prey to fast trading and quick losses. They buy expensive stocks and the moment the stocks start depreciating they sell them, as they get scared of losing money. The result is, instead of making money they end up incurring a loss. The worrying aspect of this syndrome is that both first time and experienced investors are affected by this. The ideal thing to do is to buy slow but steady, in this process you should ignore the highs and the lows. For stable returns one needs to stay invested for a considerable amount of time. Seek professional help as and when you need. Summing up, I would like to add that it’s a pleasure to see your money go up, but it can be devastating to see your money going away. The idea is to avoid the above mistakes and stay safe. One just needs to stay focused.
Source- moneycontrol.com
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Thursday, 7 January 2016
India becomes China's new hot investment destination
More and more Chinese enterprises are choosing India as a destination for investment, as the country is becoming more open to foreign capital.
In a keynote speech at the China-India Business Forum in Shanghai, made during his visit to China in May, Indian Prime Minister Narendra Modi expressed his welcome towards foreign investment to his country.
"We do believe that foreign direct investment is important and it will not come in the country without a globally competitive business environment. Therefore, we have rationalized a number of issues which were bothering the investors. Now India is ready for business. You must be sensing the winds of change in India."
Since then, a number of Chinese entrepreneurs including Jack Ma, founder of Alibaba, as well as Wang Jianlin, chairman of Wanda Group, have all visited India to investigate the possibilities for future investment.
Figures show that business visas for Chinese enterprises visiting India have increased by over 30 percent during the first nine months of 2015.
Xiao Taiyuan, an entrepreneur who invested in India's smartphone market, said that the booming market in India is attracting more Chinese firms' investment.
"In India, the entire market is boosting rapidly in spite of the fierce competition. The market might become stable by the year of 2017. This has brought many opportunities to Chinese companies."
For his part, Jin Fuxing from Haier Group, a major Chinese domestic electrical appliance manufacturer, suggested that products from Chinese firms should aim to meet the local demands in India.
He gave an example of one of their refrigerator products' successful development in the country.
"Since many Indian people are vegetarians, they grab food much more frequently from refrigerating compartment, storing fruit and vegetables, than they do from freezer compartments, which store meat. In this way, we develop a new product with the two compartments' positions exchanged, which is contrary to their traditional products. Customers needn't bend down as the new product's refrigerating compartment is set above the freezer one."
However, Chinese enterprises also face a variety of risks by investing, including high implicit costs, disputes between employer and employees, as well as different tax mechanisms.
Li Jian, CEO of a consultancy on investment in India, said that Chinese firms could avoid those risks with the help of relevant professional facilitating agencies.
"Chinese firms should recognize the value of those professional facilitating agencies, no matter whether they focus on tax, laws, labor services or public relations. We should listen to their advice instead of judging our plans simply via our previous experiences in China or other countries."
Source- english.chinamil.com
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Wednesday, 6 January 2016
Investment in an Indian start-up every 8 hours
Indian start-ups raised $5.5 billion (Rs 36,000 crore) from venture capital (VC) firms and angel investors in 1,096 deals during 2015, as they looked to participate in the country’s economic growth story, according to VCC Edge, the research arm of online publisher VCCircle that tracks start-up funding.
Nearly two-thirds of the investments or 632 deals were made by angel and seed investors, pitching in with small funding in the initial stage of the start-ups. Angel and seed investors funded $313 million in 2015. VC investments stood at $5.18 billion in 464 deals, said the study reported on techcircle.in. In fact, there was an investment in an Indian start-up every eight hours. The share of private investments contributed by angel and VC firms in India rose to 25.4 per cent in 2015, compared to 17.2 per cent during 2014. Private equity investments in India clocked in at $11.8 billion, lower than its peak of $12.5 billion in 2012.
A higher-than-ever number of Indian start-ups raised money for the first time in 2015 — 695 deals involving companies that had never raised capital before were completed this year, compared to 374 deals in 2014. Even more interesting is the growth of the number and total deal value for follow-on investments in 2015. There were 66 deals worth $189 million in the year, compared to 15 deals worth $15 million in 2014, signifying that the gap between funding rounds raised by start-ups is getting closer. Follow-on investments are those made within a year of a company raising its initial seed capital.
The news of healthy growth on the investment front in the Indian startup space comes despite a funding crunch in the market, fuelled by investors cracking the whip on startups that were burning cash to grab eyeballs.
In October, Nikesh Arora, vice-chairman of Japese VC firm SoftBank which has made some of the most big ticket investments in Indian startups, warned Indian startups that they should focus on building good products rather than funding their own growth.
Source- business-standard
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Foreign Direct Investment: myths and realities
Foreign direct investment (FDI) is perhaps one of the most ambiguous and the least understood concepts in international economics. Common debate on FDI is confounded by several myths regarding its nature and impact on capital accumulation, technological progress, industrialization and growth in emerging and developing economies.
It is often portrayed as a long term, stable, cross-border flow of capital that adds to productive capacity, helps meet balance-of-payments shortfalls, transfers technology and management skills, and links domestic firms with wider global markets.
However, none of these is an intrinsic quality of FDI. First, FDI is more about transfer and exercise of control than movement of capital. Contrary to widespread perception, it does not always involve flows of financial capital (movements of funds through foreign exchange markets) or real capital (imports of machinery and equipment for the installation of productive capacity). A large proportion of FDI does not entail cross-border capital flows but is financed from incomes generated on the existing stock of investment in host countries. Equity and loans from parent companies account for a relatively small part of recorded FDI and even a smaller part of total foreign assets controlled by transnational corporations.
Second, only the so-called greenfield investment makes a direct contribution to productive capacity and involves cross-border movement of capital goods. But it is not easy to identify from reported statistics what proportion of FDI consists of such investment as opposed to transfer of ownership of existing firms (mergers and acquisitions). Furthermore, even when FDI is in bricks and mortar, it may not add to aggregate gross fixed capital formation because it may crowd out domestic investors.
Third, what is commonly known and reported as FDI may contain speculative components and creates destabilizing impulses, including those due to the operation of transnational banks in host countries, which need to be controlled and managed as any other form of international capital flows.
Fourth, the immediate contribution of FDI to balance-of-payments may be positive, since it is only partly absorbed by imports of capital goods required to install production capacity. But its longer-term impact is often negative because of high import content of foreign firms and profit remittances. This is true even in countries highly successful in attracting export-oriented FDI.
Finally, superior technology and management skills of transnational corporations create an opportunity for the diffusion of technology and ideas. However, the competitive advantage these firms have over newcomers in developing countries can also drive them out of business. They can help integrate developing countries into global production networks, but participation in such networks also carries the risk of getting locked into low value-added activities.
These do not mean that FDI does not offer any benefits to developing and emerging countries. Rather, policy in host countries plays a key role in determining the impact of FDI in these areas. A laissez-faire approach could not yield much benefit. It may in fact do more harm than good.
Successful examples are found not necessarily among countries that attracted more FDI, but among those which used it in the context of national industrial policy designed to shape the evolution of specific industries through interventions. This means that developing countries need adequate policy space vis-Ã -vis FDI and transnational corporations if they are to benefit from it.
Still, the past two decades have seen a rapid liberalization of FDI regimes and erosion of policy space in emerging and developing countries vis-Ã -vis transnational corporations. This is partly due to the commitments undertaken in the World Trade Organization as part of the Agreement on Trade-Related Investment Measures.
However, many of the more serious constraints are in practice self-inflicted through unilateral liberalization or bilateral investment treaties signed with more advanced economies – a process that appears to be going ahead with full force, with the universe of investment agreements reaching 3,262 at the end of 2014.
Unlike earlier bilateral treaties, recent agreements give significant leverage to international investors. They often include rights to establishment, the national treatment and the most favored-nation clauses, broad definitions of investment and investors, fair and equitable treatment, protection from expropriation, free transfers of capital and prohibition of performance requirements.
Furthermore, the reach of bilateral investment treaties has extended rapidly thanks to the use of the so-called Special Purpose Entities which allow transnational corporations from countries without a bilateral treaty with the destination country to make the investment through an affiliate incorporated in a third-party state with a bilateral treaty with the destination country.
Many bilateral investment treaties include provisions that free foreign investors from the obligation of having to exhaust local legal remedies in disputes with host countries before seeking international arbitration. This, together with lack of clarity in treaty provisions, has resulted in the emergence of arbitral tribunals as lawmakers in international investment which tend to provide expansive interpretations of investment provisions in favor of investors, thereby constraining policy further and inflicting costs on host countries.
Only a few developing countries signing such bilateral treaties with advanced countries have significant outward FDI.
Therefore, in the large majority of cases there is no reciprocity in deriving benefits from the rights and protection granted to foreign investors. Rather, most developing countries sign them on expectations that they would attract more FDI by providing foreign investors guarantees and protection, thereby accelerating growth and development. However, there is no clear evidence that bilateral investment treaties have a strong impact on the direction of FDI inflows.
Source-bilaterals.org
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Tuesday, 29 December 2015
Creating Your Investment Dashboard
Navigating the financial markets can be difficult in this volatile environment we’ve experienced in recent years, which is why it is more important than ever to have a financial dashboard to ensure you do not drive off a cliff. If investors do not have the time or focus to drive their financial future, then perhaps for the safety of themselves and others, they may consider riding a bus or hiring a chauffeur. For those committed to handling their own finances, the road may become rocky, so here are some important factors to monitor on your financial dashboard:
1) Fundamental Direction: Before you decide on an investment destination, it is important to know whether trends are accelerating (speeding up) or deteriorating (slowing down) – see also Forecasting – Trend Analysis. There is a broadly diversified global menu of investment options and asset classes, and if your hands are on the wheel, you need to determine which roads (investments) are providing the best driving conditions. If your investments are out of control, you may get lost or end up in a ditch.
2) Are You Going the Speed limit? Nobody wants to get a costly speeding ticket, therefore assessing valuation metrics (i.e., risk) on your dashboard is a requirement. If you are speeding along the highway at a 100 miles per hour in an expensive stock (e.g., trading at a 50x+ Price/Earnings multiple), then there is little room for error. When traveling that fast the price of a speeding ticket becomes irrelevant, because hitting a pothole at those speeds (valuation) can be much more costly to your portfolio…irreparable damage.
3) Temperature Outside: There’s a huge difference between driving in the icy-cold snow and 100 degree heat. Each environment provides its own challenges. The same principle applies to the financial markets. On occasion, sentiment can become red hot, forcing heightened caution, whereas during other periods, chilling fear can scare everyone else off the roads, leaving clear sailing ahead. Correctly understanding the emotional temperature of financial markets is paramount.
4) Optimal Tire Pressure: Low pressure or bald tires can lead to treacherous driving conditions. A company with healthy cash flow generation relative to its market capitalization can make your investment ride a lot more stable (see also Cash Flow Register). Remember, dividends and share buybacks are not generated out of thin air – they are a byproduct of healthy and stable cash flows. Earnings on the other hand are an accounting measurement that can easily be manipulated and distorted (see also Accounting Tricks up Corporate Sleeves).
5) Driver Skill Level: People generally believe they are better than average drivers, however statistics tell a different and more truthful story. By definition, half of all drivers must be below average, but overconfidence skews investors’ self-perception. If you are going to put your life’s retirement assets into a specific manager, you might as well select seasoned managers or companies with proven track records. On the other hand, if you are going to do the driving yourself, develop a systematic, disciplined process that can accommodate your shortcomings and also account for risk control.
Many investors drive blindly without relying on a dashboard. In the investment world, visibility is not very clear. Often, weather conditions in the financial markets become rainy, dark, and/or foggy. If you don’t want your portfolio to crash, it makes sense to build a reliable investment dashboard to navigate through the hazardous financial road conditions.
Source- valuewalk
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Monday, 28 December 2015
Over $1 Billion PE Investment Recorded In India’s Renewable Energy Sector In 2015
Global investors and renewable energy project developers have responded with optimism to the change in regulatory and financial environment in India.
International private equity investors poured in over $1 billion in renewable energy companies in India in 2015. Just the top 5 deals in the renewable energy sector crossed a cumulative volume of $1 billion. The investments poured in as the Indian government announced ambitious capacity addition targets for 2022.
By 2022, India aims to have 100 GW of solar power, 60 GW of wind energy, and 15 GW of other renewable energy capacity. This means that over the next 7 years around 140 GW capacities needs to be added across the country.
The largest investment deal involved GE Energy Financial Services and Welspun Renewables Energy. GE Energy Financial Services acquired an undisclosed equity stake in the company. Welspun Renewables Energy, part of the Welspun Group, is one of the leading private sector renewable energy development companies in India; it operates India’s largest solar power project.
ReNew Power Ventures, another private sector renewable energy project developer, and raised $265 million from various investors. The company roped in a new investor – Abu Dhabi Investment Authority – which poured in $200 million. The balance investment was made by Goldman Sachs and Global Environment Fund. After these investments, the total private equity investment in ReNew Power increased to $655 million.
The Singapore government’s investment arm, GIC, signed an agreement with Greenko Group Plc for the $253 million acquisition of Greenko Mauritius, believed to be the direct owner and developer of several renewable energy and power assets in India. Greenko owns several power plants in India based on wind, hydro, biomass, and natural gas power technologies, with its largest footprint in the wind energy sector. The company operates over 800 MW power capacity, including 5 wind energy projects across multiple states in India.
Another wind energy project developer, Ostro Energy, raised $230 million from Actis Advisors Limited. Ostro Energy is looking to significantly increase its footprint in India’s wind energy market, and the company plans to add 800 MW capacities over the next few years.
Orient Green Power Limited managed to raise $153 million from Forefront Capital Management Limited. The company is looking to retire debt and possibly expand its operational base across various renewable energy technologies.
Source-cleantechnica
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“Make in India’ looks at $120-bn investment from 10 companies”
The government is expecting its ‘Make in India’ programme to be a major success, with a report by the Department of Industrial Policy and Promotion (DIPP) revealing that 10 companies have either committed or indicated investments worth $120 billion, mostly over a period of five to 10 years.
Asked how much of the investments committed could actually translate into reality, DIPP Secretary Amitabh Kant said: “We are confident that these committed investments will actually flow in.” Prime Minister Narendra Modi will inaugurate the Make in India Week in Mumbai on February 13. The event will focus on innovation, design and sustainability, and is expected to witness the participation of over a 1,000 companies and delegates from over 60 countries, he added.
According to the list prepared by DIPP, Reliance Industries, under the Digital India campaign launched on July 1, has pledged an investment of $42 billion, which is expected to create 500,000 direct and indirect jobs. However, the timeframe for such investments isn’t revealed in the list. RIL, under the Reliance Jio brand, has also committed to roll out internet protocol-based wireless broadband infrastructure across the country, and is also expected to set up a nationwide distribution network for small vendors to sell and service devices.
Similarly, SBG Cleantech Consortium (SoftBank Corp, together with Bharti Enterprises and Foxconn) will invest about $20 billion over the next 10 years to generate 20 gig watt (GW) of solar power and manufacture solar power equipment in India. The consortium SBG Cleantech Ltd would scout for project land in Andhra Pradesh and Rajasthan. The new company intends to participate in the 2015-16 round of solar power plant tenders under the National Solar Mission (NSM) as well as state-specific solar ventures. Foxconn would help with solar equipment for the projects.
Bharti Enterprises has also committed to invest $16.7 billion in the next five years. The funds will be invested in creating infrastructure in rural and urban areas and setting up an eco-system to enable usage of e-health and e-education facilities. The company also plans to manufacture a range of affordable electronics products in India through collaboration with various manufacturers around the world. Dalian Wanda Group has decided to invest $10 billion over the next five years and has been considering a few sites to develop integrated industrial townships and theme parks. Idea cellular has indicated investments $7 billion by 2020 for network and broadband deployment.
Other notable companies that have either indicated or committed investments are Sterlite Technologies, Adani Group, Foxconn Technology, JSW Steel, Reliance ADAG, IKEA, Airbus, CISCO, Bombardier, Siemens, General Motors and Uber Technologies.
Source-financialexpress
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Tuesday, 22 December 2015
India one of the most preferred real estate markets in Asia Pacific, says report
Among Indian cities, Bengaluru emerges as the most preferred real estate investment destination, overtaking Mumbai, New Delhi in previous years
The Indian real estate market has won back favor among foreign investors to become one of the most preferred destinations in the Asia Pacific, according to a report by PricewaterhouseCoopers (PwC) India.
Overseas funds accounted for more than 50% of all investment activity in India in the last one year, compared with just 26% for the whole of 2013, the consultancy firm said in a report titled Emerging Trends in Real Estate Asia Pacific 2016 released on Wednesday.
“Flows of foreign capital to India began increasing dramatically at the end of 2014, with the amount invested growing almost 200% year-on-year by the middle of 2015,” the report said, citing data by Real Capital Analytics that provides information on commercial property.
PwC attributed the growing interest among foreign investors into the Indian real estate market to some of the liberalization measures adopted by the government in the recent past.
For instance, reducing the minimum size of built-up areas in foreign direct investment (FDI)-linked real estate projects to 20,000 sq. m from its earlier requirement of 50,000 sq. m has led to “increasing confidence among institutional investors they can find an exit”, it said.
“From a deal structure perspective, while mezzanine financing continues, a shift in the favor of equity structures has occurred, especially in big-ticket transactions in commercial assets such as business parks and IT parks,” said Abhishek Goenka, partner, PwC India.
Foreign private equity funds are now some of the biggest corporate real estate owners in India, after starting from scratch in 2011-12, the report pointed out.
Among the Indian cities, Bengaluru has emerged as the most preferred real estate investment destination, overtaking Mumbai and New Delhi in the previous years.
The report attributes the surge in Bengaluru’s rankings to its technology industry and the availability of a large pool of skilled labour that is necessary to ramp up venture capital-backed start-ups.
A huge amount of upcoming supply of commercial office inventory in Bengaluru is not perceived to be a cause of concern, as it is expected to be matched by an equally high absorption rate, the report said
Source-livemint.com
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'Make in India' has tremendous impact on investments
Government's 'Make in India' campaign aims at transforming the country into a global manufacturing hub and has already made a "tremendous" impact on the investment climate as evidenced by the growth in FDI, Parliament was informed today.
"The Make in India initiative of the government has made a tremendous impact on the investment climate of the country, as shown by significant growth of the overall foreign direct investment (FDI)", Commerce & Industry Minister Nirmala Sitharaman said in a written reply to the Rajya Sabha.
The flagship program of the Modi government aims at developing the country as a global hub for manufacturing, innovation and design for both domestic and foreign markets.
The initiative was launched in September last year by the Centre to focus on invigorating the country's manufacturing sector.
India received $32.87 billion FDI during October 2014 to September this year
Source-economictimes.indiatimes.com
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Tuesday, 15 December 2015
Tips on making India the most investment-friendly country
Job creation has been one of Narendra Modi's key initiatives ever since he took oath as the Prime Minister of India in 2014. During his campaign Modi promised to create 3 million new jobs for India's youth and in July he set the wheels in motion with the launch of the National Career Counseling Portal. Modi, with help from the central banker Raghuram Rajan, is aggressively reshaping India's business economy to help prepare it for potential future growth.
It's exciting to see Modi taking action to create more opportunities for the newest members of the workforce. While his efforts to-date has created good momentum, I have an idea for accelerating that progress. If Modi is wondering where he can find room for the 3 million new jobs he's hoping to create, I have one suggestion: Startups.
Small businesses have created two-thirds of new jobs in the US since the 1970s, according to the US Small Business Administration. India could easily experience such growth with the amount of energy Modi and his administration is putting into Digital India. In fact, Indian startups could employ a majority of the 2 million new youth that join the workforce every month, effectively employing the next generation. The only missing ingredient in this recipe for success? An environment conducive to funding.
Indians startups don't miss out on funding due to a lack of money. There is plenty of venture capital in the global economy to go around. The problem is Indian policy makes it incredibly difficult for startups in India to receive venture money. Plenty of people want to invest in the country's future, but few care enough to deal with ambiguous taxes, the endless paperwork and legal headaches. Understandably.
There are a couple actions the government should take to make way for the money and establish India as the most investment-friendly country in the world. As a start, the government should base its decisions on two principles. First, adopting best practices and policies creates a stable, predictable and transparent environment for investors to place their money. Second, benchmarking against other countries can help reduce transaction costs. Below are specific tactics the government can use to execute on these principles, which will create an environment amenable to investors both local and international.
1) Modify Tax Policies to Make India the #1 Investment Destinations
If one seeks a weather vane for the economy or a gauge that will predict tomorrow's business climate, they need only review the current tax policy. The government's attitude toward investment greatly influences whether the money is staying or leaving. India has an ambiguous tax code that scares investors away. In a recent ABA survey, attorneys said they were more hesitant to work with Indian companies than Chinese, US or U.K. businesses because of the regulatory environment. The best way to make India the No. 1 investment destination is by clarifying rules and taxes. If India really wants to open the spigot on capital they can reduce the capital gains rate to zero for a period of, say, 20 years. At the very least, the government should make the capital gains rate flat and predictable. Firms have already found a path through Mauritius. Why not roll out the red carpet directly?
The effectiveness of a zero-capital-gains-rate policy was proven in the US during the 70s and 80s. Profits from exits were a key driver for Silicon Valley's rise, as investors recycled funds from exits to back more companies. Moreover, India already has a zero capital gains rate for stock market floor transactions. Why not extend it to private markets as well? The income tax money created by new jobs will fill the government's coffers and, ultimately, less than 1 percent of tax revenue comes from capital gains anyhow.
The above modification in the tax policy will barely affect the budget, while offering massive benefits, both PR-wise and GDP growth-wise, for the Indian government. I estimate this change would produce a 1-2 percent increase in the GDP growth rate.
2). Simplify Exits to Increase the Velocity of Capital Flow
In order for the startup ecosystem to function, businesses must be able go through every stage of the lifecycle without hassle. Investors and entrepreneurs must be able to exit through acquisition or IPO if the company succeeds or a swift bankruptcy process if it fails. Making exits easier is key to attracting and maintaining more capital in India.
Every investor dreams of taking a company public. It's the ultimate proof of concept when a business is able to stand on its own. Once a startup reaches IPO, the investor may feel it's time to move on to his or her next venture. Unfortunately India's Companies Act of 2013 puts serious restrictions on investors and entrepreneurs in what would otherwise be an enviable scenario.
Source- economictimes.indiatimes.com
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