Foreign investments moving out of China are not directly flowing into India as anticipated earlier, according to Mark Matthews, head of Asia research at Julius Baer.
Equity investors looking at the region have picked Japan as their preferred destination. India won't do badly in terms of foreign equity investment, but it will not fare as well as Japan, Matthews said.
He pointed out that there was a theory around six months ago that the reluctance of people to put much money into China would benefit India. "What we're seeing clearly is that it didn't hurt India, but it didn't help that much either," Matthews said. "The market it really has helped is Japan."
Globally, investors like hearing the India story, but they don't tend to follow through due to lack of firsthand exposure to the market. Japan offers globally renowned big brands along with certain compelling arguments for the market to rise, Matthews said.
Apple Will Make India Unavoidable
India has managed to gain substantial interest on the foreign direct investment front even as equity investors remain sceptic, Matthews said. "There's a lot of multinational companies visiting India, scouting out India and figuring out how can we come into India."
He said a key player in India's FDI story would be Apple Inc. "The most important thing for India actually will be what Apple does," Matthews said. "And if Apple really does what they say they're going to do, that'll put India on the map in a way that'll make it unavoidable."
Apple opened its first two stores in India in April. The tech giant is planning to upscale manufacturing operations in the country as well.
"To take the production of iPhones from 2-million units to 25-million units. for example, over the next five years... would require creating a big ecosystem in India," he said. "That I think would be totally redefining the perception that people have globally toward India."
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