China is still preferred as a lead destination by the foreign investors and private equity players to park their surpluses, according to the CFOs present at the CFO Roundtable Conference organised by Assocham.
According to N Subramaniam, chairman, Venture Capital Association of India (VCAI), China will remain at number one position in terms of private equity and foreign direct investments because China has 10% growth rate. India?s growth rate is less than 7% at present.
?The foreign investors and equity players still prefer China to India because China is one country which has a growth rate in double digits. India ranks third in the eyes of the major foreign investors in
Asian countries because its growth rate has fallen in comparison to the last year,? said Kalpana Jain, senior director, Deloitte Touche Thohmatsu India Pvt Ltd.
According to Jain, China is rated high because it provides for infrastructure that attracts industrial development while India has everything but lacks the main thing which is infrastructure that forms a very important part of investments which is the main reason for it coming after China.
Expressing optimism in India?s growth, Munesh Khanna, managing director, Centrum Capital Ltd said in the long-term India will outshine China because by then India will have developed infrastructure and would be in a position to absorb large volumes of foreign direct investments along with investments from private equity players.
Khanna is of the view that in the next five years, the economy of China will have matured and saturated while India will have large scope for infrastructure in its country side. He further said the large population base of India has been responsible for keeping India partially out of the adverse impact of global meltdown because it is one country in which consumers still have the power to make purchases and that is why the demand is still there in this country.
According to DS Rawat, secretary general, Assocham, ? There are countries where demand has been virtually halted because there is no production and the buyers are hardly available.?
Rawat further said the foreign investors and the private equity players who have long-term prospective have earmarked their portfolios for India because it will have potential for demand creation.
Assocham is of the view that one of the most important steps that should be taken up by the government is regarding the goods and services tax (GST) and central sales tax (CST). According to Assocham, the government should lay out a clear roadmap for the goods and services tax because it is now impossible to put GST in place from April 1, 2010. At the same time, there is a need to have a new roadmap that has provisions for the abolition of central sales tax because CST and GST are directly linked.
According to the chamber, by putting GST in place, the tax GDP ratio will increase by minimum 2%.
Rawat said that chamber has been constantly asking the government to put GST in place and the government should try and do this in the next two years.
He further said India needs to have tax reforms and until they do not come in place, India will not have investments.
