15 Nov, 2006 TIMES NEWS NETWORK
MUMBAI: It can now be confirmed that India has been the most attractive investment destination for foreign investors. Private external inflows to India has been the highest in the last three to four years, compared to other emerging countries.
The booming capital markets have greatly enhanced foreign investor's interest in FCCBs, ADRs and GDRs issued by Indian companies. India with inflows of $19.3 billion in 2005, was third after China and South Korea.
The average inflows for India through bonds, equities and loans during 2003-2005 has risen by 158.4% as against 40.3% for other emerging markets, states the report, "Funding Corporate India Opportunities in International Financial Markets" by Economist's intelligence unit and Bank of America. This is largely driven by Indian companies raising funds in global markets.
Increasingly, corporates have been tapping international market largely because of the interest rate differential, hedging benefits, less documentation, faster approvals, greater flexibility and greater visibility, the report said.
This flow has increased after Indian banks have been permitted to raise funds through issuance of innovative debt — perpetual debt and debt capital in foreign currency.
Banking analysts say this pipeline will remain robust as large banks like State Bank of India and ICICI Bank are planning to raise funds through this route shortly.
Funds raised through loan syndication by Indian entities grew at an annual rate of 66% during 2001-2005, compared with a mere 9% for the region. External financing through bond issues and inflows into India have registered a growth of as high as 244% per year for the period under review.