Global financial consultants forecast an increased level of business activity in India despite nagging fears about corruption and infrastructure
NEW YORK — Almost 60 percent of global business executives expect to increase their level of business activity in India in the coming year, according to a new online survey of more than 200 global financial consultants conducted by Merrill DataSite®, the leading virtual data room (VDR) solution for business communication and information management. Additionally, half of the respondents in the survey added that they expect the greatest perceived risk of doing business in India to be potential corruption within the country.
“While companies across the globe are eager to conduct business in India, it is clear that the country has a lot of growing to do before this becomes a reality,” said Richard A. Martin Jr., senior director of marketing for Merrill DataSite. “Despite genuine fears about corruption and the country’s need to improve its infrastructure, businesses are still investing in India beyond its outsourcing capabilities.”
The survey also revealed that almost one-third (29 percent) of respondents thought another significant risk of doing business in India is their inability to conduct proper due diligence there. Despite this, 72 percent of those polled expect the dealmaking environment in India to get stronger over the next 12 to 18 months.
“The rise of the middle class has been a huge source of growth for India,” said Kirtee Kapoor, partner at Davis Polk & Wardwell LLP, and a panelist at the webinar during which the online survey was conducted. “The confidence among this new demographic has created a great amount of domestic demand, which is further growing the Indian economy.”
Almost half (47.7 percent) of the same respondents believe that over the next 12 to 18 months, construction and infrastructure will experience the highest levels of growth in India, with one-third (33 percent) of respondents expecting the technology, media and telecom sectors to grow significantly.
“In recent years, there has been a significant increase in the level of infrastructure activities occurring within India and I expect this to only grow stronger in the coming years,” said webinar panelist Cyril Shroff, managing partner at Amarchand & Mangaldas & Suresh A. Shroff and Co. “These activities have been an underlying driver behind the strong amount of inbound and outbound M&A activity in India.”
“We are seeing great growth potential in the manufacturing sector in India, as well,” said webinar panelist Julian Schroeder, co-founder and principal of Credit Renaissance Partners LLC. “This will be a huge source of revenue for India in the coming years.”
“As India continues to grow, so does its need for long-term debt capital to fund the projects that will create more opportunity for the country,” said Akbar Khan, director of Investment Banking at DSP Merrill Lynch (part of Bank of America Merrill Lynch). “This funding needs to match the rate at which India is executing on such infrastructure projects that will ultimately boost its economy.”
Responses were drawn from survey questions posed during a worldwide webinar on June 29, 2011 called, “Opportunity India: Mega Market in the Subcontinent.”
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