While the global economy is in turmoil after Brexit, the outlook for India remains positive. A flurry of reforms, including the passage of the Bankruptcy Code, Real Estate Bill, UDAY power reforms, Indradhanush banking reforms and easing of FDI rules, are being factored in by foreign investors. Speaking to Bloomberg TV India , Edelweiss Group Chairman and CEO Rashesh Shah says foreign investors, including pension and insurance funds, are willing to invest more in India.

Given all the news flow from Europe, what do you expect? Has the pain ended or are you expecting more?

I think the pain will be there because the global economy is still in a bad shape. Events such as Brexit, US elections and global events will keep creating volatility. And unfortunately, our market is also linked to the global markets. So we are part of the global volatility. But as all things are happening in the global market, I think on a long-term basis, India looks stronger and stronger because these global events are resulting in slow down in the global growth, which brings down oil prices and interest rates.

The UK central bank immediately cut interest rates after Brexit. As India imports capital and oil, as long as the oil prices come down and as long as the cost of capital comes down, on a structural basis, it is good for India. But on a short-term basis, as FIIs funds flow out, it can create market volatility for us.

What do you make of foreign flows into India in the current context? Do you see the pace flow continuing or, perhaps, moving into the more risk-averse zone?

We are very confident; I think getting $25-35 billion from FIIs every year is more or less on the cards. A lot of global investors have started looking in India after 2014. And they take about 2-4 years to finalise their asset allocation strategies. I think a lot of these institutional investors, pension funds and superannuation funds, which have still not started investing in India, will come here. But what is also more exciting is that we are seeing a lot of money in India flowing into equities. We are expecting the mutual funds to collect ₹80,0000-1,00,000 crore a year in equity funds. Then, if you add the insurance companies and all of that, we have seen a significant equity flow from Indian investors.

What’s the perception when you speak to foreign investors? Have things changed? What’s the mood like?

Hugely positive. In fact, now, for the first time, I’m seeing that a lot of foreign investors are starting to connect the dots. They are starting to see a lot of the reforms that have been happening in India.

The recent opening up of FDI in more sectors and the passage of Bankruptcy Code, the Real Estate Bill, and hopefully with the GST happening, there is a lot of ‘positiveness’. Since these reforms are not born out of a crisis, there is no big bang reform. But slowly and steadily, step by step, a lot of structural things are falling in place for India.

Are you expecting faster, or perhaps, bigger reforms?

I personally think the Bankruptcy Code is a big game changer for not just the financial services in India, but for India Inc as a whole. The Indian business ethos will change a lot as the result of the Bankruptcy Code. I think it is as big as the GST. And even the Real Estate Bill is going to have a huge impact on housing in India.

It will take its own time to be implemented because real estate is also a State subject. But I think in a year or so, that will also happen.

I think the UDAY power reforms, the Indradhanush banking reforms, the FDI limit hike in insurance, the recent opening of FDI including 100 per cent FDI in defence — all these are very big steps. And if inflation remains low, oil price remains low, I think there is hardly anything that can hold back India.

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