A Citigroup Inc. banker predicts that foreign investors will invest up to $100 billion in India this fiscal year, drawn to high-tech manufacturing, infrastructure, and climate-change initiatives in the world's most populous country. Companies that assist India achieve its net-zero goals will benefit from the foreign capital flows, according to K Balasubramanian, Head of Corporate Banking for Southeast Asia and the Indian subcontinent.
"Climate transition is playing out in a big way, likely triggering a bout of foreign fund inflows," Balasubramanian, or Bala, said in an interview in Mumbai.
India's government hopes to attract $110 billion in foreign direct investment over the next seven years as investors seek to diversify away from China. This contrasts to an annual average of more than $70 billion over the previous five years. According to Bala, cash is moving into sustainable energy strategies such as solar, hydrogen, and ammonia. In terms of energy use, electric vehicles are the "real big story," he said.
"Every formidable company is nurturing plans to enter the next generation iteration on electric mobility," according to Bala.
Prime Minister Narendra Modi has positioned himself as a climate advocate, and India has made major investments in clean energy, adding more than 100 gigawatts of capacity over the last decade. The country has vowed to install 500 GW of non-fossil fuel energy by the end of the decade, and it hopes to obtain $1 trillion in solar power investments to reach its 2070 net-zero goal.
India has an incentive package worth Rs 18,100 crore ($2.2 billion) to produce electric vehicle batteries in the nation. Reliance Industries Ltd., JSW Neo Energy Ltd., and Ola Electric Mobility Pvt. Ltd. are among the companies chosen to create battery capacity and get incentives under the initiative. Aside from climate transition, India's forays into electronics and infrastructure production are gaining traction with foreign investors, according to Bala.
Furthermore, as per Bala, "Capital will come to wherever there are pockets of opportunity in terms of production cost advantage. Then skill and value addition will be the key drivers for such investments."
"In Japan itself, 1,600 companies have identified plans of getting into India, as distributors or suppliers to large companies," according to Bala.
According to Bala, the New York-based bank has been strengthening its contacts in order to become the "first port of call" for international investment. These include the US-India route, where it receives the majority of its business, he explained. According to Bala, the bank has a significant presence in Germany, France, and the Nordic region, and it spends a lot of time in Taiwan.
