India expected to lead the next wave of global investments

We are at the beginning of a global transformation that is characterised by the convergence of digital and physical technologies. Every business has an aspiration to grow in a global environment, but it is important to understand the intricacies of the international markets and where they are heading. Global FDI flows jumped 36 per cent in 2015 to an estimated $1.7 trillion, their highest level since the global economic and financial crisis of 2008-2009, according to Global Investment Trends Monitor, UNCTAD, January 2016.

The overall growth has been cautious since then, and India is amongst the few countries currently showing strong signs of improvement. It can be said that the global economy currently is at its tipping point with new economic powers at an ascendant and emerging inter-regional relationships. Changing currents in demographics, technology, resources and social activities are already bringing about significant impact to mainstream businesses, capital markets, society, politics, etc. These mega trends are set to reshape the future of the investment industry considerably, with Asian countries or emerging markets taking centre stage.

India replaced China as the leading recipient of capital investment in Asia-Pacific with announced FDI of $63 billion in 2015, according to The fDi Report 2016 by fDi Intelligence. A total of 697 FDI projects have been in India, indicating that government's effort to improve ease of doing business and relaxation in FDI norms is yielding results. India, ranked 39th in competitiveness, (The Global Competitiveness Report 2016-2017, World Economic Forum, significantly increased its pace of positive economic momentum over the last few years and is aggressively working towards further improving its global rankings in the Global Competitiveness Index, and so are other countries in the Middle East region like Qatar.

As per the fDi Report 2016, for the past few years, Indian companies have been investing heavily worldwide - 302 FDI projects have led from Indian companies in 2015 alone, with a total of nearly $15 billion. There has been a perceptible shift in overseas investment destinations in the past decade. While in the first half, they were directed to resource rich countries like Australia, UAE, and Sudan, in the latter half, investments were channelled into countries providing higher tax benefits like Mauritius, Singapore, British Virgin Islands and the Netherlands.

UK recently announced that India has become the third largest source of FDI for them as investments increased by 65 per cent in 2015 leading to over 9,000 new jobs. As per the FDI consulting firm WAVTEQ, Indian companies like Zomato, Larsen & Toubro, Voltas, Shapoorji Pallonji, TCS, ICICI Bank, and Wipro, amongst others have been active in Qatar and have invested around $450 million over the past seven years. Cipla plans to invest $89 million in South Africa and has recently acquired two US-based generic drug makers, InvaGen Pharmaceuticals and Exelan Pharmaceuticals, for $550 million. Tech Mahindra has agreed to acquire UK-based Target Group for $163 million. Lupin has completed the acquisition of US-based GAVIS Pharmaceuticals for $880 million. Automobile giants too have announced expansion plans like, Ashok Leyland is investing $ 10 million in its unit in Ras Al Khaimah, in the UAE; and Tata Motors launched their assembly operations for light commercial vehicles in Tunisia in addition to opening the Gulf's largest automobile showroom in Saudi Arabia.

There has been a steady expansion across all sectors especially retail, automobile, technology and infrastructure and there is a huge opportunity for Indian companies to grow regionally. Indian companies looking at expanding internationally tend to gravitate to Middle East and North Africa (MENA) due to historical and cultural reasons, and they also present numerous opportunities. For instance, Qatar, with its strong macroeconomic background, has a hospitable environment and stands at 18th position, in the global competitiveness; followed by Saudi Arabia 29th, and Bahrain 48th as per The Global Competitiveness Report 2016-2017, World Economic Forum. This region presents a huge investment opportunity for other countries in the region such as India, which has several conglomerates and a vibrant service sector hungry with global ambitions. While the United Arab Emirates has traditionally been driving innovation from a trade and investments perspective, countries like Qatar are offering a highly efficient goods and services market coupled with access to exceptional finance and technology, making it a rapidly evolving regional investment hub.

Creating a business environment in a highly competitive realm to attract foreign investments, countries need to provide special benefits and tax breaks to investors. Moreover, these benefits need to be promoted aggressively across the extended Asian region. On the other hand, businesses will have to align their value proposition with the impending digital transformation and countries like India are rapidly moving in this direction. With the world markets completely integrated, businesses that focus on leveraging a technology-driven ecosystem that is fundamentally designed to be investor friendly, will be able to multiply growth.

India in particular is at the epicentre of a positive momentum. To capitalise on this, Indian enterprises should look out for new avenues that enable them to propel regional and international growth - platforms that provide a conducive regulatory, fiscal and market environment and facilitate rapid business expansion and pay rich dividends in the long-term. While the past 25 years marked India's liberalisation and attracted huge foreign investments, the next 25 years could well be India's turn to become a leading foreign investor overseas fuelling the region's growth on the global stage.

The writer is Chief Strategy and Business Development Officer, QFC Authority