India Roars Back to Davos to Seek Investment Overseas

Finance Minister Arun Jaitley and other dignitaries during the session of Asia’s Era of Infrastructure at the Annual Meeting 2016 of the World Economic Forum in Davos, Switzerland on Friday. (Photo: PTI)

Colourful lions adorn a salon on the main street of Davos, inviting visiting business leaders to “Make in India”.

Optimism about the world’s fastest growing economy contrasts with the economic gloom facing other emerging markets. Prime Minister Narendra Modi’s mantra encapsulates a renewed confidence among Indian business and political leaders at the 2016 World Economic Forum.

This year’s Davos push, led by Finance Minister Arun Jaitley, has stirred memories of the ill-fated and extravagant 2006 “India Everywhere” marketing campaign that had aimed to showcase a resurgent India as a destination for foreign investment to rival China.

But the ruling party was routed soon after elections and subsequent years laid bare India’s frailties. Its woeful infrastructure, inability to deliver reforms and a huge balance of payments deficit put it in the Fragile Five group of emerging markets seen at most risk of financial crisis.

That has all changed and the 140-plus strong India contingent at Davos is confident that the turnaround this time is for real, driven by efforts at reform and falling oil import costs.

<p>India will be a shining star, the I in the BRICs constellation is giving hope to the rest of the world that we won’t fall in the same trap that most of the world is in, that of slow growth.</p>

Sunil Bharti Mittal, Indian Telecommunications Tycoon

Indeed, the other BRIC emerging economies – Brazil, Russia, India and China – are wrestling with problems. The first two are in the second year of recession while this week China posted its weakest growth in 25 years.

Finance Minister Arun Jaitley speaks during the session of Asia’s Era of Infrastructure at the Annual Meeting 2016 of the World Economic Forum in Davos, Switzerland on Friday. (Photo: PTI)

India has finally taken on the mantle of the world’s fastest growing big economy; its equities and bonds are favourites with emerging market investors who are betting that growth will accelerate further.

What’s more, direct bricks-and-mortar foreign investment flows into India jumped 75 percent over 2015, according to a report this week from United Nations trade body UNCTAD.

Davos regulars feel India may actually have something to crow about. A PWC survey of more than 1,400 global CEOs found India to be the rare bright spot among big economies, with rising confidence in short-term sales growth.

<p>I think they (India) are doing it (Davos) more quietly this time, I think that’s good. Let China take all the heat and just keep your head down.</p>

<b>Martin Gilbert, CEO of Aberdeen Asset Management</b>

Yet India has plenty to worry about. Key reforms on land and tax remain elusive. Latest data, showing a 15 percent year-on-year decline in exports, is proof enough that India cannot escape the fallout of a global slowdown stemming from China.

But in today’s bleak emerging markets, Western businesses may have little choice but to gravitate towards India with its 7 percent growth and billion-plus eager consumers.

<p>There is increased opportunity in India, while (reform) progress has been slow we are seeing progress and that’s the key.</p>

<b>John Veihmeyer, KPMG</b>

He also added that India was the consultancy’s fastest-growing market.

(Sujata Rao is an investment correspondent for Reuters. This story has been published in arrangement with Reuters.)