From Financialexpress · Ajit Dayal · · 2m
Why 36-year market veteran warns of Indian economic dismay
Ajit Dayal, India's 36-year market veteran warns FPIs face US$25bn annual redemptions due to governance issues and tax policies.
In brief
Ajit Dayal, India's 36-year market veteran warns FPIs face US$25bn annual redemptions due to governance issues and tax policies. India's foreign portfolio investors are redeeming US$25 billion yearly instead of investing US$100 billion due to poor governance and tax policies. Originally reported by Financialexpress.
India's economic journey
India's journey from a closed economy to a global investment hub has faced rising dismay among Foreign Portfolio Investors due to governance issues, taxation policies, and lack of ease in doing business.
36 years of FPI engagement
Ajit Dayal, founder of Quantum Advisors, has 36 years of interaction with FPIs and states they have never seen such dismay and irritation with India.
FPI investment growth
The number of registered FPIs has surged 24x from 500 to 12,000 in the past twenty-five years with investments reaching usd800 billion.
Market capitalisation growth
India's market capitalisation has surged 70 times in 36 years from usd60 billion to usd4 trillion while GDP has surged 12x to usd4 trillion.
BSE-30 Index growth
The BSE-30 Index has delivered 150x growth in INR and a 25x dollar increase after adjusting for the rupee's 80% decline since 1991.
FPIs' growing dismay
Despite India's economic growth, FPIs report increasing dismay and irritation due to governance issues and tax policies rather than cyclical factors.
Historical context
In 1991, India was a novelty as a large economy willing to accept foreign capital with fpi investments reaching usd10 billion by 1994.
Global crises and resilience
India weathered global crises including the 1997 asian crisis, 2000 tech bubble burst, 2001 9/11 attacks, 2003 sars pandemic, and 2020 covid pandemic.
Current FPI concerns
FPIs are increasingly concerned about poor governance in India and the lack of ease of doing business despite economic growth.
Tax policy impact
Pension funds face capital gains tax when moving investments from international markets to emerging market buckets in india.
AI and governance concerns
The lack of an ai story in india and questionable governance are major concerns for fpi investors.
FPI redemptions
Fpi investors are redeeming usd25 billion yearly instead of investing usd100 billion annually due to india's governance issues.
What it means
India's foreign portfolio investors are redeeming US$25 billion yearly instead of investing US$100 billion due to poor governance and tax policies.
