Foreign companies are waiting for the outcome or results of the elections to invest their significant dollars in our country, India, despite the improved sentiment on India.

World Economic Forum’s annual meeting held in Davos was attended by global investors and experts who felt and said that foreign companies should wait for the results or outcomes of the elections to be had just after a few months in India, as the new government will be formed before making investment decisions about India. The investors and experts said that they have listened to the lectures of senior ministers of India with a keen interest in a fractured mandate in the upcoming elections and political instability, which worries them and lets them think about their investment decisions.

John Rice, vice chairman of GE, said that elections shouldn’t matter, but they do. “Today people are waiting to see whether India will have a strong government or a fractured government. There are decisions being held back to see which party and which leadership comes to power,”

Mark Otty, managing partner of EY, said uncertainty is unsuitable for business. So, if India gets a stable government in the upcoming elections, there will be a significant rise in foreign direct investment.

According to Mark Otty, “Business in whatever market dislikes uncertainty and the period around an election in any country is always a challenging one from an investment point of view,” He also said, “That said, we believe the macroeconomic conditions have improved in the last 12 months in India and the policy environment is favourable. Post-election, given a stable government, we expect a significant pickup in FDI.”

EY released the survey at the beginning of this week, which said that India figures prominently in investors’ emerging market strategies. The survey was done on more than half of the 500 international investors. The survey showed that they were planning to enter India and are interested in creating and expanding their presence in the next 1 year/ 12 months. Of the investors or experts not planning for any investment in India, 60 per cent said they didn’t have any overseas investment plans.

India will face very tough or strong competition from more dynamic countries compared with 11 per cent, as believed by only 5 per cent of the respondents, known from the survey conducted in the year 2012. A World Economic Forum official agreed with Otty’s assessment. “There is a lot of optimism about India. But investors are waiting for elections to be completed and a new government to come in before they finalise their India plans,” said Alex Wong, senior director of the World Economic Forum.

As we all know, the government plays a vital role in clearing investment and business projects and in the infrastructure and social sectors, so it indicates that the investors are interested in seeing the new govt., as it will affect their investment decisions in the future.

Sanjay Nayar, CEO of KKR India, a leading private equity firm, said, “A lot of issues that are confronting India are supply-side issues that require strong government action. Political instability is a matter of concern for foreign investors and the sense we get from them is that they are closely watching the outcome of elections,” Steve Pagluica, managing partner at Bain Capital, said investors are waiting to see what happens. He also said, “I think people are on the sidelines right now. Can the new government put transparent policies (in place) and boost business process for dispute resolution?”

 “If that happens there will be an investment boom in India.” said the Godrej Consumer Products chairman, Adi Godrej. According to him, there are good chances for international investment in India if the election results are positive. He also said, “Why just international business? Even Indian business is awaiting the elections”.

 Kotak Mahindra Bank vice chairman Uday Kotak said Friday’s massive currency sell-off will again shadow emerging markets. “Till the elections, India must improve its financial health and fundamentals. Political stability after the polls will help,” he said.