India on cusp of FDI flood, Bajaj Finserv Chair says in Davos

Bajaj Finserv

15/01/2024 14:41

By Una Galani and Antoni Slodkowski
    DAVOS, Switzerland, Jan 15 (Reuters) - Another five years of
a majority government in India could usher in a flood of foreign
direct investment (FDI), Bajaj Finserv  BJFS.NS  Chair and
Managing Director Sanjiv Bajaj told Reuters at the World
Economic Forum annual meeting on Monday.
    "Ten years of this growth we have seen, at least another
five years of a strong majority government will end up
institutionalising those policies to a fair extent," Bajaj said
in an interview in Davos, Switzerland.
    "It doesn't mean someone can't reverse those things but not
easy to do when you have 15 years under your belt, so I think
that makes a big difference", Bajaj added.
    Bajaj Finserv is one of India's leading diversified
financial services companies and has helped to reshape the
business of consumer finance in the country. It is part of the
autos to insurance Bajaj Group, one of India's oldest family
conglomerates, and has a $32 billion market value.
    "For the last 10 years, we've had a single party running the
government, that just brings in significant amount of alignment
and continuity in policy", Bajaj said.
    Prior to Prime Minister Narendra Modi's Bhartiya Janata
Party government coming to power in 2014 India was led by a
coalition government.
    India is forecasting annual growth of 7.3% in the fiscal
year ending in March ahead of the national elections scheduled
to be held before May.
     
    FDI FLOOD
    "The next three or four quarters are going to be very
important for India to get a larger perspective on foreign
direct investment. Are we seeing a flood or a trickle? I believe
it is going to be a flood", Bajaj said, referring to a recent
slowdown in inflows.
    Companies and investors need time to liquidate investments
elsewhere to redirect their cash to markets like India, he said,
adding they may be waiting for the outcome of elections.
    FDI into India was $71.4 billion in 2022-23, 16% lower
year-on-year, official statistics show. The global FDI pot is
also shrinking on higher U.S. interest rates and tighter
liquidity.
    India can at times be slow to get started but companies in
the electronics sector are starting to show impressive scale
after barely existing a decade ago, he said noting the impact of
Modi's efforts to boost manufacturing.
    Bajaj is the largest financier for mobile phones in the
country, he said. Many of India's lower to middle classes use
small loans to buy gadgets.
    "For every one Apple that does production in India, it gives
tremendous confidence to the next 10, and then next 50," he
said, adding: "If Tesla comes in, in the next year or two,
again, this will create additional confidence as well."
As India tries to boost domestic manufacturing and electric
vehicle (EV) adoption, U.S. carmaker Tesla is proposing to set
up an Indian factory, but is demanding lower EV import taxes.
      
    GROWING PAINS
In November, the Reserve Bank of India applied curbs to a small
part of the company's lending business, which Bajaj said the
company is in the process of complying with.
    "It is important because if you're slipping up somewhere
small, tomorrow it could be somewhere big, so we have to make
sure that we get stronger and stronger on our compliance side as
well, as we're growing as a business", he added.
    "Fortunately, we have 40 different product lines. So if two
or three slow down, we have many others that are doing well."

(Reporting by Una Galani and Antoni Slodkowski; Editing by
Alexander Smith)
((mailto:una.galani@thomsonreuters.com;))