Citigroup expects India to attract $100 billion in foreign investment
The Indian government aims to attract $110 billion in foreign direct investment annually over the next seven years, attracting investors looking to diversify their activities outside China.
By Jeanette Rodrigues, Saikat Das and Preeti Singh
Foreign investors are likely to pour as much as $100 billion into India this fiscal year, a banker at Citigroup Inc. said, focusing their investments on high-tech manufacturing, infrastructure and climate change projects in the world’s most populous country.
Companies that help India achieve its net zero targets will benefit from foreign capital flows, said K Balasubramanian, head of corporate banking for Southeast Asia and the Indian subcontinent.
“The climate transition is happening on a large scale and is likely to lead to a wave of foreign money inflows,” Balasubramanian, better known as Bala, said in an interview in Mumbai.
The Indian government aims to attract $110 billion a year in foreign direct investment over the next seven years, as the South Asian country lures investors looking to diversify away from China. That compares with an annual average of more than $70 billion over the past five years.
Bala said capital is flowing into sustainable energy creation strategies such as solar, hydrogen and ammonia. On the energy consumption side, electric vehicles are the “real big story,” he said.
“Every major company is planning to introduce the next generation of electric mobility,” Bala said.
Prime Minister Narendra Modi has positioned himself as a climate champion, and India has invested significantly in clean energy, adding more than 100 gigawatts of capacity in the past 10 years. The country has pledged to install 500 GW of non-fossil fuel energy by the end of the decade and aims to secure $1 trillion in solar investment to meet its 2070 net-zero pledge.
India has a Rs 18,100 crore ($2.2 billion) incentive program to produce batteries for electric vehicles in the country. Reliance Industries Ltd., JSW Neo Energy Ltd. and Ola Electric Mobility Pvt. are among the companies selected to produce battery capacity and benefit from incentives under the program.
Besides the climate transition, India’s forays into electronics and infrastructure-related manufacturing are also becoming increasingly popular with overseas investors, Bala said.
“Capital will come where there is opportunity in terms of cost advantage in production,” Bala said. “Then skills and value added will be the main drivers for such investments.”
“In Japan itself, 1,600 companies have plans to operate in India as distributors or suppliers to large companies,” Bala said.
The New York-based bank has expanded its relationships to become the “first port of call” for foreign investment, Bala said. These include the U.S.-India corridor, where it does a majority of its business, he said. The bank also has strong presence in Germany, France and the Nordic region, and spends a lot of time in Taiwan, Bala said.
First print: Jul 19, 2024 | 07:21 AM IST