Modi’s deliberations on foreign investment start paying dividends

| December 19 2014 10 : 15 IST | Business Line

DDPs said FPI queries from countries such as Japan, the US, Australia and Myanmar were coming in.

Prime Minister Narendra Modi’s hard-sell to invest in India seems to be getting some traction.

Designated depository participants (DDP), the entities responsible for registering foreign portfolio investors (FPI), are seeing significant improvement in sign-ups and enquiries from foreign countries.

‘Positive sentiment’

Prasanth Prabhakaran, President, India Infoline, a DDP, said: “Flows, which practically stagnated in the last couple of years, have turned for the better due to positive sentiment.”

According to data provided by depositories, foreign portfolio investors held assets worth over ₹21.71 lakh crore in Indian equities and fixed income securities till October. Of this, over ₹19 lakh crore was in equity and the remaining in debt.

DDPs said FPI queries from countries such as Japan, the US, Australia and Myanmar were coming in.

Atul Gupta, MD, Orbis Financial Corporation, said: “Sign-ups and enquiries from category II (banks and financial institutions) and category III (HNIs, retail, family offices, trusts and the like) FPIs are increasing. We have done over 10 conversions and received about 25 enquiries in the last few days from clients/prospects from Australia, China, West Asia, Europe and the US, including individuals.”

Tejesh Chitlangi, Partner at law firm IC Legal, said demand from category III FPIs has certainly gone up, and so have enquiries and fund-raising for alternate investment funds. “Earlier, one in 10 AIFs could raise the required amount, now it is about four in 10.

“Many fund houses also doing brisk advisory for overseas clients are willing to invest in listed debt and equity,” he said.

Need for further easing

Experts said there should be further easing of restrictions on NRIs investing through portfolio investment schemes to boost capital inflows.

“NRIs are subject to short-term capital gains tax and are not allowed to trade in derivatives, whereas FPIs are subject to end of the year taxation, friendly repatriation norms and are permitted to trade in derivatives,” said the CEO of another DDP, who did not wish to be named.

    Media Kit

    IIFL, serving more than 3.5 million customers

    Looking for a product?