India’s investment in overseas takes a hit
Bad news creeps-in for foreign companies as Indians step back from remittances and investment in overseas. Going by RBI data, a sum of only USD 75 millions has been spent in shares, education, property transactions and gifts for people living abroad. The amount generated is three times lower than the average monthly outflow of USD 115 million.
The Reserve Bank of India, in a move to strengthen the falling rupee, rolled out all the big guns. It has stiffened the limit for investment in overseas by single entities and companies. No investment can be made without the permission of RBI and in addition to it, import of gold coins along with medallions are banned.
Property purchase takes a dip
According to property consultants, a number of Indians prefer to invest in international real estate to fix a steady flow of rental revenue for their families overseas. Some make such investments to secure an accommodation for future use. Certain destinations such as London, Asia and Singapore have been the preferred areas for international real estate investment, however, with RBI ban such investments have gone for a toss.
Property transactions by Indians have sunk down significantly in foreign countries by 65% and stood at USD 3 million from average USD 8-10 million in April-July. Donations and gifts have shrunk down by 40% and stood at USD 17 million. In a move to stabilize the falling rupee, RBI has limited the amount to be remitted from abroad by individuals from USD 200000 to USD 75000.
Permanent or temporary?
As per some wealth managers, affluent investors are still optimistic about overseas investments and have only paused just to re-assess the opportunities. Although the recent step taken by RBI has a knee-jerk effect on all kinds of property transactions, HNIs will not put a tab on money transfer to foreign nations for education, investment or maintenance of relatives purpose.
Buying into foreign debt and equity is still accessible by HNIs and this avenue has found a number of takers in recent times. The US markets have given a 23% return in the last year in comparison to 9% return of the Sensex. In addition to it, HNIs can also step into the investment horizon via international funds with the help of a feeder route to make the most of opportunity in different markets.
