A group of investors, including unnamed private equity firms, has committed to invest at least $250 million in India-based projects over the next six to 12 months, according to a statement from the US India Political Action Committee (USINPAC).
The commitment comes after a 12-member trade mission, organised by the USINPAC, attended an economic convention in Delhi hosted by the Bharatiya Janata Party's prime ministerial candidate for India’s general election this year, Narendra Modi.
The members were large US investors in sectors including infrastructure, power and energy, engineering, manufacturing and private equity.
“This delegation is indeed a very satisfying outcome of our efforts to promote economic diplomacy between the US and India and should lead to substantial FDI into these sectors along with technology,” Robinder Sachdev, director of India affairs at USINPAC, said in a statement.
As well as the $250 million committed, the delegation agreed to potentially invest a further $500 million in India over the next 12 months, depending on project availability.
At the forum, Modi highlighted his economic agenda, hoping to give investors more understanding of the investment climate in India, according to USINPAC.
Key concerns for investors in India range from clarity of procedures, to predictability of decision-making and red tape and Modi has promised to bring major improvements in the investment environment.
Foreign and domestic investors are closely watching the Indian general election, which will happen in May this year.
“Post mid-May, investors – particularly Western investors – will be looking at India very differently to how they have over the past three years,” Sanjeev Krishan, head of private equity and transaction services at PricewaterhouseCoopers in India, told Private Equity International.
He explains that the need for foreign direct investment in India is recognised regardless of the outcome of the elections and already foreign investors have improved their outlook on India in anticipation.
However, Krishan adds that while this won’t lead to an immediate influx of foreign private equity capital, GPs will still benefit from an exit perspective.
“As you move into the second round of private equity investing in India, everybody is thinking about exits before they’re thinking about entry,” he said.
“That strategic investors are going to be returning to India is great news for private equity investors because it gives them the opportunity to exit some of their no-so-great investments, maybe not at [high] valuations, but at decent valuations and this encourages them to raise funds for the next round. If they can actually show some decent returns on the exits they’ll hopefully make, it will be encouraging for fundraising in India.”