Monday, January 29, 2007: In the highly competitive and booming
market, even countries are poised to lure global investors with
attractive options. A recent study by Merrill
Lynch Global Private Client has revealed India
as the first choice for foreign investors. The study even cites
the example of non-institutional and retail investors eyeing India
as a more rewarding market than China, and has called for more
investor-friendly initiatives from the government.
But, what makes India score over China?
For one, India has a very pulsating capital market, not driven
entirely by the government, as in the case of China. While planned
activity from the government has created infrastructure, much
of it is underutilized, and often perceived by experts as exhibitionism
by the Communist regime.
India on the other hand, has hardly invested in infrastructure,
but a hectic pace in this direction is visible now, shared equally
by the public and private sector.
Secondly, in the knowledge industry, India is light years ahead
of China. India has superior higher education facilities. The
IT, pharmaceutical and engineering industries in India score far
above China. Indians are also more market-savvy, with a world
class media and advertising sector. In China, everything is a
commodity, and an imitation of technology the practice. India
has a mature services industry - comprising 50% of India's GDP.
Thirdly, India's banking and monetary system is far more sound
vis-à-vis China's. As against 50% of China's loans in the
bad debts category, India's non-performing loans are only 3.5%.
India also has an active corporate and government bond market,
with interest rates being market determined, unlike China.
In India, entrepreneurship is nurtured, having the second highest
number of entrepreneurs per capita after Thailand. Given its population,
it has the highest number of entrepreneurs in the world.
India's advantage over China also lies in its relatively low
dependence on exports. As against India's exports forming only
10% of its economy, China's depends 40-50% on international trade.
India also has an active stock market, with the BSE over 130
years old. China's fledgling share market has still miles to go.
With the economy growing at 8-9%, the Merrill Lynch even recommends
playing on India's favorable factors with the right strategies
to streamline foreign and NRI
investment.
