October 3, 2005

Expats ready to rock with Indian bulls

By Srikala Bhashyam and R.Raghavendra/TNN

Bangalore: The individuals, FIIs (foreign institutional investor), domestic FIs, brokers, almost every one is having a party on Dalal Street. With the sensex hitting a century faster than most Indian cricketers, few investors are complaining in the current Indian capital market. But for some, the domestic stock market is still out of reach despite their huge cash balances.
   A number of foreign professionals, working in various Indian companies, have been forced to be mere spectators of this great bull run. The Indian government does not allow expatriates to invest either directly in equities or through mutual funds. A capital market source says though the Indian government’s policy is on par with most other nations, the current status of the Indian economy calls for a change in the policy.
   According to sources in the IT sector, foreign professionals now account for a good chunk of the work force for many Indian companies. “As the India story continues to evince interest in rest of the world, there will always be more people who would want to be part of this growth. If you take TCS, Wipro and Infosys, about 1% of their overall Indian work force are expats. This number could be as high as 2-3% for several bigger IT companies, especially at the mid or entry level,’’ says G C Jayaprakash, principal consultant, Stantonchase International, a global executive search firm.
   For many expats, it is a case of being very near yet so far. Says an expatriate from South Korea, employed with a multinational. “India, right now, is in a growth phase and offers tremendous investment potential. I would love to invest in the Indian stock market’’. The only way for him is to invest through a Korean Mutual fund which has an India specific fund. “That is a tough route as it involves lot of procedures like sending the money from here to a bank account in Korea,’’ he complains.
   However, some senior management expats have found a way out, say broking houses sources. These professionals have taken the FII route by opening a sub-account with them and invest in the stock market,’’ says a source.
   That also probably shows the need for a change in guidelines. A source in the mutual fund industry argues that government could allow the domestic funds to launch a product targeting the foreign professionals. “One of the concerns in the past has been the ability to track the source of funds of expatriates. With a mutual fund, the task could be easier,’’ says a senior professional of a leading mutual fund. Will the government make the move because expats on their part, are ready to invest.

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