The government has asked Citigroup to chalk out a strategy to attract at least $5 billion in investment from cash-rich countries belonging to the Gulf Cooperation Council (GCC). The Centre is looking to huge investments from countries like Saudi Arabia and Qatar in crucial sectors like oil and gas, power, ports, telecom, real estate and hotels. Commissioning the Citigroup study comes in the backdrop of India?s plans to adopt a country-specific strategy, as well as a unified and coordinated approach to tap investments.
Investment into India from the Gulf has been miniscule and spread across various sectors, despite a huge Indian population in the region. Government data shows that foreign direct investment (FDI) from the region was a paltry $0.5 billion from 1991-2007. Last year, the government received a $2-billion proposal from the Emaar Group to set up a real estate venture with Delhi-based MGF Group.
The Citigroup study would focus on the overall economic scenario of the country with particular thrust on certain key sectors and their potential to attract investments from Gulf countries. The government has been working on a number of strategies to attract investment into India. Consultancy firm Ernst &Young recently submitted a report on investments in the real estate sector to the department of industrial policy & promotion. The report highlighted the importance of intensive marketing efforts and the concerns of investors.
The government has also decided to set up specific infrastructure equity funds for each major investing country. The strategy to attract funds from the GCC countries has to be country specific, given their sensitivity to the issue of investments.
In 2006-07, India got the most FDI from Mauritius at $6.36 billion, followed by the UK at $1.87 billion. The US brought in $856 million in the last fiscal. The other major foreign investors during the year were the Netherlands with $644 million, Japan ($85 million) and Germany ($23 million).