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Alternative Market Briefing

Indian authorities open up market to qualified foreign investors

Wednesday, January 11, 2012

Deepak Lalwani
By Beverly Chandler, Opalesque London:

Deepak Lalwani OBE, Lalcap founder, director and consultant to hedge and other funds interested in investing in India, explains that the Indian government’s recent initiative to open up their investment markets will apply to Qualified Foreign Investors defined as including "individuals, groups or associations, resident in a foreign country which is compliant with FATF and that is a signatory to IOSCO’s multilateral MoU. QFIs do not include FII/sub-accounts".

Lalwani said: "The move is to encourage more stable money coming in. They need to open up to increase capital flows."

The change in policy allows Qualified Foreign Investors (QFIs) to invest directly in the Indian equity market in order to widen the class of investors, attract more foreign funds, and reduce market volatility and to deepen the Indian capital market.

While inflows of foreign capital have increased in India over recent years, Lalwani explains that there is increasingly a discrepancy between institutional and private investment. "Will this move lead to a surge in foreign capital inflows that the country badly needs?" he asks. "In the short run, no as the Indian markets still face headwinds at a time also of global headwinds which have increased risk aversion for shares globally" he says.

However, over the medium to long term, maybe some one to three year time ......................

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