India has announced plans to hold roadshows next week in five Gulf countries in a bid to attract sovereign funds and other investors to help revive faltering Asia’s third largest economy.
The Indian economy was rapidly expanding at more than 9% per annum before the 2008 global financial crisis. However, the pace slowed down to just 5.3% during Q1 this year, the weakest in nine years. Finance Minister Pranab Mukherjee said he hopes to attract foreign direct investment from Gulf states particularly in the country’s infrastructure.
Manmohan Singh administration recently introduced rules to allowed foreign retail investors to invest in mutual funds, stocks and corporate bonds.
“A lot of people are ill-informed about India’s potential. We want to tell investors, look, it is a robust economy with high savings, demand and investment opportunities,” R. Gopalan, economic affairs secretary, told reporters on Thursday.
The top economic official will lead the team from the finance ministry, the Reserve Bank of India, the market regulator and stock exchanges on the trip to Saudi Arabia, the United Arab Emirates, Oman, Bahrain and Kuwait.
The delegation is on a mission to seek investment including via corporate bonds and infrastructure debt funds. India aims to invest up to $1 trillion in infrastructure over the five years through March 2017, of which it hopes to attract half from the private sector.
Abheek Barua, chief economist at HDFC Bank, said it made sense to tap the Middle East.
“If you look at NRI (non-resident Indian) flows for the past few months, a large part of it has come from the Middle East,” he said.
Last week’s GDP data forced many economists to slash their growth forecasts for India’s current fiscal year, many as low as 6%.
Critics say Congress-led coalition has been unable to push through major reforms in recent years. Many economists expect declining commodity prices and policy measures will ease pressure on a yawning fiscal deficit.
According to official data, foreign direct investment into India rose 88% to a record $36.5 billion in the fiscal year that ended in March, despite a series of scandals that slowed policymaking and scared off many investors.
“We plan to hold such road shows in major cities in the US and other countries once we get a positive response in the Gulf,” Thomas Mathew, a finance ministry official, said.