Corporate Treasury, Banking & FX in India

Commentary

Is India the next China? 

In our recent Expert Perspectives series on India, [view it here], DBS Bank stated they believe it is. 

• Except for COVID, GDP growth is consistently above 5% [source: World Bank] 
• The government is making efforts to streamline the bureaucracy which has always been a challenge, and move it online.
• Manufacturing is being encouraged – India has long been a big provider of services. This requires an investment in infrastructure.
• Following COVID, there has been a big move towards a cashless society, with an advanced electronic banking system.
• There is comparatively little movement in FX: exchange controls remain in place. However, most transactions can be executed, including cross border loans and hedging – though cross border cash pooling is still very much forbidden. However, there is still a significant administrative burden.
• As part of the opening up, India has established a form of free trade zone, Gift City.

So – does this match our peers’ experiences?

• We will get into the detail below: the full report [14 pages - available to premium subscribers] contains a lot of useful experiences. But, in big picture terms:
• All peers view India as a major source of growth: some are investing in manufacturing. While no-one is considering scaling back in China, India has generally been earmarked for the next big investment, where it has not already happened.
• Some peers have entities which are still losing ...