Indian companies commit fresh investments bracing past political certainty

Most of the mid-to-large sized Indian corporates plan to increase their investment by 10 per cent in the next two years regardless of political uncertainties, global law firm Baker McKenzie said Tuesday. "Despite some political uncertainty, a pulse survey of 100 C-suite executives in India found more than three-quarters of mid-to-large sized Indian companies still plan to increase domestic investment by at least 10 per cent over the next two years," Baker McKenzie said here at a media roundtable.

The credit for the positive sentiment goes to improvement in ease of doing business, Prime Minister Narendra Modi at the helm of affairs of the country and implementation of GST and Insolvency and Bankruptcy Code (IBC), according to the law firm. "The outbound investment is very much measured. On the inbound side, we have seen quite a bullish interest from international multinationals willing to invest in India. Generally speaking, most of the investors mark India and China as the most important investment markets.

"Over the last four-five years, there has been increasing in interest (for investment) for various reasons -- Modi and ease of doing business. And also there is GST, there is IBC...and obviously India's growth rate compared to most markets is relatively high," said Ashok Lalwani, Global Head of Baker McKenzie's India Practice. The survey showed that business leaders were nearly as bullish about investing internationally, with almost two-thirds looking to increase their offshore investments by 10 per cent or more, and another quarter planning to increase their international investment by up to 10 per cent.

This is all the more positive in the face of currency pressure and geopolitical tensions. In terms of merger and acquisition (M&A) involving Indian buyers, dealmaking will continue to rise, with 7 in 10 Indian business leaders expecting a significant increase in M&A in their industry, it said.

The survey showed that most Indian businesses are looking to acquire and invest in the domestic market and South East Asia comes to a close second in the preference. "The strong run of dealmaking and international expansion that has emerged in India in recent years is set to continue. We see some really interesting and ambitious business strategies developing among our Indian clients, as they look to grow, invest and raise capital in various markets around the world," Lalwani said.

As per the survey, the US was the number one destination for Indian companies looking for M&A and other investment opportunities outside of Asia (44 per cent of Indian business leaders say the US is a top target), while Europe rounded out the top four. "Increasingly, Indian companies are finding South East Asia a new land of opportunity. We have seen transactions in sectors including healthcare, insurance, consumer and industrials between Indian companies and counterparties in markets such as Malaysia, Indonesia and Thailand," he said.

However, intra-Asian deal sizes are still usually smaller than those in Western markets, and the firm expects to see more megadeals involving Indian companies in the US and Europe making headlines, the firm added. The survey also showed that the business leaders were far less positive regarding the UK, which had until very recently been a key target country for Indian buyers.

(With inputs from agencies.)