indian stock market
There is a raging debate on FDI in retail but, guess what, it's already here - and it has failed big time.
FDI in financial services retail has been here since 1993 and it has been a disaster for the consumer.
Consider this: in 1992 the only mutual funds available to local Indians were run by the Unit Trust of India and a handful of other PSUs like SBI Mutual Fund and Canbank Mutual Fund. At that time UTI alone owned 10% of the value of all listed Indian shares. This means that local Indian investors, via their ownership of the units of UTI, owned 10% of the Indian stock market.
Then, in 1993, we allowed FDI in the retail mutual funds business.
Under the FDI rules, if a foreign fund house wanted to own 100% of the mutual fund business in India, it needed to bring in USD 50 millionas equity in the company. If the foreign fund house wanted to own 76% (but less than 100%), it had to bring in USD 25 million as equity. And, if the foreign fund house wanted to own 51% (but less than 76%), it needed to bring in USD 5 million as equity in the mutual fund business.
Foreign mutual funds dominate, retail presence wilts
The policy was a success.
To continue reading, please click here...
Investing in India: First Comes the Pain, Then Come the Gains
As investments go, India has really great long-term prospects. No doubt about it.
Indeed, India has enjoyed very decent growth rates for the last decade, pulling many of its people out of poverty in the process.
But investing in India can be tricky.
Allow me to show you why.
For our forecast for the India stock market, please read on...