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Opportunities of
investment in India
FINANCIAL PROPOSAL
FOR PEACH S.A.
+34 917 234 980
Peach@gmail.com
Spain
Madrid, 28020
PEACH S.A.
2. www.peach.com
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Peach S.A. is a new telecommunication multinational firm based in Madrid (Spain). It is an operator
of mobile telephony, fixed telephony, broadband and digital television that aims to develop brand
new projects worldwide through accessible, effective and sustainable offers.
This multinational corporation is already expanded through almost all Europe (France, Belgium,
United Kingdom, Italy…). Now that the firm is improving, Foreign Direct Investment is the best
way of expanding.
According to the 2030 Agenda and the Sustainable Development Goals, Emerging Markets are
getting better every day so this proposal tries to prove why FDI in India may be a good option.
INDIA
India is part of the well-known BRICS, what means it might be full
of new opportunities. In terms of economics, India was the
fastest-growing economy (+7.4%) among the G-20 in 2018,
clearly above China (+6.6%). Growth strengthened over the past
five years, helped by better management of macroeconomic
policies and clearer policy direction.
Prudent fiscal and monetary policies helped debt stabilization
(70% of GDP), and reduced inflation (below +5% in 2018 against
an average of +10% p.a. over 2009-2014) and external imbalances
(current account deficit stabilized below -3% GDP).
Clearer policy direction after the elections will allow better planning for corporates. And favorable
macro-policies, namely a rise in public capex in infrastructure and an accommodative monetary
policy, will support the rise in investment.
The business environment has also improved, as evidenced by India’s progress in the World Bank’s
Doing Business survey (+53 ranks over the last two years).
Furthermore, Rajendra Srivastava, Professor in the Indian School of Business explains better in this
video why is a good idea to invest in India: https://www.youtube.com/watch?v=SLsI1ZYNAuY
In the Ranking of Top 5 products imported by India, Telecommunication and sound recording
apparatus occupies the 4th place, with a 6% of the total. What means, that there is a need in Indian
population for achieving this service so the opportunity of being a pioneer in the area is essential.
For instance, it is believed that the telecommunication sector is booming.
3. www.peach.com
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Before taking any further decision it is necessary to keep in mind the possible risks of investing in
India. What is surprising is that the level of risk is low according to Euler Hermes as this graphic
shows.
Nevertheless, there are many weaknesses to take into account as
the vulnerability to natural disasters(including tsunami, droughts, floods and
earthquakes),
The Kashmir region as a source of potential conflict
A political system that tends to engender coalition governments that lack the ability
to push through economic reforms
Pervasive poverty and uneven income distribution.
Structural weaknesses including inadequate infrastructure, current and fiscal account
deficits and state involvement crowds out private sector initiatives in some sectors
Weak structural business environment
After all this information in mind, it is necessary to decide if it’s better to make foreign direct
investment in Greenfield or brownfields instead. As the foreign investment is limited and the
infrastructures are generally weak, Greenfield investment may be too risky to apply. On the other
hand, even if it will be expensive to balance the company’s level of technology with the available
infrastructures, Brownfield investment may be a better option.
ESG Investment principles
Environmental, social, and governance (ESG) issues can affect the performance of investment
portfolios (to varying degrees across companies, sectors, regions, asset classes and through time).
In order to integrate this principles our portfolio should include environmental analysis in order to
measure the impact of greenhouse gases or pollution as a whole if we do invest in a project of
telecommunication.
Also, the social impact should be considered, but theoretically in the long-run, the Indian
population will be benefited by the facilities provided by Peach and once the project developed,
the services will be cheaper than when they were imported.
4. www.peach.com
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Finally, the governance may be a relevant issue to consider when deciding whether to invest or not
due to the level of corruption in India, which makes more difficult to assure stability because of
uncertainty. Political stability is not completely assured and currency devaluation is especially high
if it elects to build an entirely new facility.
Because of this reason, there is a need of mitigate these risks by using tools such as the WBG’s
MIGA political risk insurance, or seek local currency financing and currency hedging through the
WBG’s IFC.
In conclusion, India as one of the BRICS is very promising and investing in it will probably be a good
idea but further analysis is needed for the decision-making process in order to make clear how to
mitigate the possible risks.
BIBLIOGRAPHY
1. «Brownfield Investment - Definition, Advantages and Disadvantages».
https://corporatefinanceinstitute.com/resources/knowledge/strategy/brownfield-
investment/ (8 de julio de 2019).
2. «download.pdf». https://www.unpri.org/download?ac=4336 (8 de julio de 2019).
3. «Greenfield Investment - Definition, Advantages and Disadvantages».
https://corporatefinanceinstitute.com/resources/knowledge/strategy/greenfield-
investment/ (8 de julio de 2019).
4. «India». https://www.eulerhermes.com/en_global/economic-research/country-
reports/India.html#link_internal_4 (8 de julio de 2019).
5. «India Economy, Politics and GDP Growth Summary - The Economist Intelligence
Unit». https://country.eiu.com/india# (8 de julio de 2019).
6. «Inversión extranjera en la India - Santandertrade.com».
https://es.portal.santandertrade.com/establecerse-extranjero/india/inversion-
extranjera (8 de julio de 2019).
7. «South Asia :: India — The World Factbook - Central Intelligence Agency».
https://www.cia.gov/library/publications/the-world-factbook/geos/in.html (8 de julio
de 2019).
8. https://country.eiu.com/india# (8 de julio de 2019).
