NRIs in Gulf favour full convertibilty for better businesses

Dubai, Sept 9 (UNI) India's planned move towards full rupee convertibility is a decisive step towards deriving the best from the enterprise of Indians living overseas, experts and NRIs have said.

This will facilitate cross-border movement of capital, much of which could flow into the Gulf Cooperation Council's (GCC) property and capital markets, they said.

''The removal of all controls on the movement of capital is in the right direction provided it is implemented in the right spirit,'' said head of research at Kuwait's Global Investment House Shailesh Dash.

The free float would allow Indian individuals or companies to invest or acquire assets outside India or foreigners to remit funds for investment or acquisition of assets.

With the real estate and stock markets opening up to foreign investment in the Gulf states, cash-rich Indians could divert funds here, Mr Dash told Gulf News.

''Essentially, full convertibility would lead to an exit of capital from India as well as attracting capital into India,'' said Chief Executive of the Financial Services Division P Krishnamurthy of the Al Rostamani Group.

With full convertibility, India could suck in liquidity in the six-nation GCC countries. On the other hand, Indian mutual funds will seek opportunities in the West Asia among other markets. ''So there could be inflows into the capital markets here,'' he said.

Moreover, due to tax benefits, new laws and investor-friendly regulations, the Gulf's property sector would seem a magnet for Indians.

''The Gulf, particularly the UAE, is the first point of destination abroad for many Indians, especially in recent years, due to higher taxation and strict scrutiny in the West,'' said Mr Krishnamurthy.

The Gulf's property market may seem an attractive proposition for many Indians especially businessmen but there is the need for more clarity on the laws relating to leasehold or freehold, said Programme Manager N Janardhan, GCC and Asia at the Gulf Research Centre.

Even if investments pour into the property sector here they might be speculative investments, not for the long term, he added.

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