Mumbai goes to Davos, hardsells its IFC dream

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Amid all the talk of the global financial crisis, its impact on the rest of the world and India, the Indian contingent made a major global pitch Thursday, pegging Mumbai as a possible International Financial Centre of the future. One man got about his task in a business-like fashion early in the morning, making his case at a breakfast session hosted by Citi. Maharashtra chief minister Vilasrao Deshmukh, armed with the support of his central government colleague, aviation minister Praful Patel (widely hailed at Davos as one of the stars of the present Indian government) and telecom czar Sunil Bharti Mittal, went about the rather challenging task of convincing the global business community that infrastructure bottlenecks, a moribund debt market and inward-looking banking regulations were not roadblocks in the road to making the capital of his state a true-blue IFC on the lines of London, New York, or even Dubai.

Citi India CEO Sanjay Nayar struck the right balance between optimism and realism, laying down the work done and the challenges which remained to be overcome before Mumbai could truly emerge as an IFC.

Nayar put forward some relevant figures: leaps from $105 billion in 1991-92 to over $237 billion in 2001-02 to a rapid $700 billion in 2005-06 speaks volumes on the two way flows on the balance of payment transactions that the country has witnessed, he pointed out. External flows were 47 % of GDP in 1992-93 and leaped to 91% of GDP in 2005-06.

With current spend of $13 billion by Indian households on financial products, it is estimated that by 2015, $48 billion would be the spend. If India has to look at maintaining the current 9% growth, the spend has to go up to $80 billion. With a hefty $80 billion raised in overseas equity currently and $100 billion in M&A, the trend clearly paves way for India to be an attractive IFC, Nayar pointed out.

On his part Deshmukh put up a stout defence why the capital of his state, is the best bet to become an IFC. Referring to the Percy Mistry committee report, he said Mumbai is the only place in India that could facilitate transactions by being an International Financial Centre.