New Delhi: Economic and policy uncertainties could cost India annual investments of up to $3 billion from private equity funds and venture capitalists, according to investors’ grouping IVCA.
Indicating that foreign investors are “cautious” about investing in the country, the Indian Venture Capital and Private Equity Association (IVCA) has said the “wait and see” approach cannot go on for a long period. The comments from the IVCA, which represents more than 100 PE and VC firms including Warburg Pincus India and Temasek, come at a time when the country is witnessing slow growth and uncertainties over proposed FDI policies.
“Things are tough and are getting tougher. Also, we know that there will be sort of uncertainty in policy making due to looming elections. Because of the (economic) uncertainty, India will lose anywhere between $8-10 billion in the next couple of years. India tend to lose $2-3 billion every year if things don’t really (improve),” IVCA president Mahendra Swarup said.
IVCA members are estimated to be managing about assets worth about $45 billion. Acknowledging that investments by PEs and VCs have significantly slowed in recent years, he said that there should not be long delays in implementing policy decisions.
“I think the government is making the right kind of moves. I think where the problem arises is between the policy announcement and the intent and before it is executed, the time gap is so much that lot of debates happen. Once the cabinet makes up the mind that we have to execute, it (the decisions) should be implemented and not give chance for diverse views,” he said.
Many of the proposals including FDI in insurance and multi-brand retail sectors are facing stiff opposition.           
After Posco, Mittal, Ispat mulls pullout
Close on the heels of Posco and ArcelorMittal pulling out of $18 billion projects last week, domestic steel firm Monnet Ispat and Energy is actively considering scrapping its proposed 1.5 million tonnes plant in Jharkhand.
The city-based sponge iron and power producer has proposed 1.5 million tonnes per annum (mtpa) greenfield steel plant in Jharkhand.
It is now considering withdrawing the plans for want of raw material, water and land — the same reasons cited by both ArcelorMittal and Posco as well.
“Yes, it is correct that we are seriously considering to withdraw from the Jharkhand greenfield project,” said Amitabh Mudgal, senior vice president (marketing and corporate affairs), Monnet Ispat and Energy.       
Ease land acquisitions: Tata
India needs to simplify its processes for land acquisition, allocation of mines as well as granting environment and forest clearances to lend certainty to execution of big projects, Tata Steel has said.
The management comments in Tata Steel annual report, 2012-13 amid top global steel makers Posco and ArcelorMittal scrapping projects worth $18 billion in India last week because of inordinate delays on various fronts.
While Posco decided to exit $5.3 billion project in Karnataka, ArcelorMittal scrapped its $12 billion project in Odisha, for not being able to secure land, iron ore mine and other regulatory clearances. ArcelorMittal’s project was one of the biggest foreign direct investments that India had attracted.
“Simplification of the process of land acquisition, expediting the process of environmental clearances and putting in place a mechanism for mining allocations, in our view, will give the required impetus to steel investment plans,” Tata Steel management said .