India should build investor confidence: DBS chief
Singapore's DBS Bank chief executive officer Piyush Gupta on Friday said, "The opportunity of the Indian market is undeniably backed by the massive consuming middle class, a strong entrepreneur class and businessmen, companies and corporations which are increasingly scaling up to be world-class."
India needs to work more towards building investor confidence to attract investment for its massive infrastructure development and boost economic growth, Singapore's DBS Bank chief executive officer Piyush Gupta said on Friday. “I think India has to do a lot more to bring this confidence (to the investors) and be able to demonstrate that the country has the capacity to take positive actions,” Gupta said in an interview with PTI.
The opportunity of the Indian market is undeniably backed by the massive consuming middle class, a strong entrepreneur class and businessmen, companies and corporations which are increasingly scaling up to be world-class, he said, giving his perspective of Indian economy and investments.
But Gupta also expressed concern on matters like disruption of Parliamentary proceedings and the "weakness" of Indian institutions in managing the resources and economic affairs.
He said India was not realising its full potential and capacity. "The fact that the last Parliament session went through without any business, the world sees this and says if your political apparatus and infrastructure is not capable of conducting a single regular business session...what are the chances that you will be able to actually put in place everything that is needed for India's future. “...the country's leadership has still not demonstrating an ability to take a series of conclusive and decisive policy actions which will create confidence in the entire system,” he said.
Gupta heads DBS, one of Asia's largest banks with Rs 30,000 crore balance sheet built in India within 15 years of its banking operation.
“The policy flip-flopping...created a crisis of confidence. And investors do not invest for lack of confidence in the system,” he said. He cited issues related to land acquisition, mining sector and telecommunication licensing. He said among states Gujarat had a progressive system where investors were willing to invest and share the risks, and saw the possibility of similar approach by other states.
“There is a lot of money in the world, both short-term portfolio money as well as Foreign Direct Investment (FDI). There is a lot of money sitting on the sidelines and the opportunities in the world are limited," said Gupta in reference to India's investment requirements.
On the positive side, he recalled the recent inflow of investments in the Indian stock market and approval of FDIs in retail as well as announced partnerships of Jet-Etihad, Tata-Air Asia and investment commitments by Unilever and Ikea, among others.
The government has also started making positive decisions, especially the recent approval by Cabinet Committee on
investment for 25 oil and gas projects worth USD 6 billion, Gupta said.
But Gupta stressed on the urgent need for FDI to support India's massive infrastructure development, requiring over USD 1 trillion. Gupta observed that such huge investment would be challenging, given the Indian banks' annual capacity of project financing of about USD 50 billion, which would just be USD 500 billion in 10 years. Having managed some of the high-profile Indian corporations bond and fund-raising in Singapore, he said institutional investors and private wealth investors were now more confident of investing in Indian businesses.
“A number of Indian companies are beginning to come to Singapore financial market to do bond issues. And interesting thing is that the investors, not just institutional investors but private wealth investors, are beginning to get comfortable with the Indian names and the Indian risks,” he said.
The Indian companies have also embraced India's "Look East" policy and have set up operations in Singapore for making investments and doing business with China, Indonesia and Vietnam.
“I am very, very encouraged with the number of Indian companies are coming to Singapore. In the last year or two, there has been a very noticeable momentum in the business connectivity and exchange between Singapore and India. Indian companies in Singapore are growing exponentially," he said. About 5,000 Indian companies have set up offices in Singapore, making them the largest single business community in the city state, well ahead of the Americans, Chinese, Indonesians and others.
A large part of Corporate India’s Euro Commercial Borrowings were being booked in Singapore, according to Gupta. Indian companies, along with businesses from Hong Kong and China, were using Singapore's financial institutions to raise funds and issue bonds.
DBS, he said, has played an important role in developing its business in India and Indian businesses overseas. He said DBS was awaiting Reserve Bank of India's guidelines on the liberalisation of banking sector in the country. “...We will seriously take a look at our options because we to want to expand and build a larger branch, system and network.
“We are quite clear that we are playing the game for the long-term. The opportunity (in India) is too big to immense to ignore it. You have to go in and deal with the ups and downs and the (economic) cycles... Therefore, for us we will continue to invest to grow in India,” said Gupta. “Our commitment to India is to be a deep entrenched bank.
We have the willingness and capacity to build what it takes to get into those (Indian) businesses,” Gupta added.