For the fourth straight year, India has narrowly edged out China to emerge as the world’s top recipient of officially recorded remittances.
Financial Services Sector in India
The Financial services sector comprising banking, capital markets, legal, accounting, insurance,
private equity, stock markets, is a vibrant and dynamic sector in India. This is a growing sector
providing a lot of opportunities to overseas investors.
Since the early 1990s, a series of radical economic reforms has significantly reduced tariffs and
removed many of the licensing and other barriers, which used to impede business. Some sectors
of British business still face protectionist obstacles but the irreversible trend is towards
liberalisation. This is as much in India’s own interests as in those of its trading partners.
For the fourth straight year, India has narrowly edged out China to emerge as the world’s top
recipient of officially recorded remittances. According to the latest issue of the World Bank’s
Migration and Development Brief on estimates for 2011 remittances, India was expected to
receive $58 billion this year, followed by $57 billion flowing to China, and $24 billion to
Mexico. This means that FDI in India is growing.
Standard Chartered have forecast that India’s per capita income will increase over the next two
decades from US $1,164 in 2010 to US $7,780 in 2030. Alongside this, they also expect a
significant increase in urbanisation and a rapidly expanding middle class. These changes will
drive demand for different sorts of goods and services, which are likely to further play to the
strengths of the UK.
ξ The Indian economy has posted excellent growth during the last decade and has
demonstrated the resilience to withstand the recent global crisis
ξ The young and growing population and rising income levels are drivers of consumption
for almost every product or service one can think of from low volume to luxury.
ξ It is estimated that by 2015, financial savings will amount to around 296 bn USD out of
which the net inflow into insurance will be approximately 67 bn USD. This gives us a
glimpse of the latent opportunity that lies ahead for the Indian life insurance industry at
the current savings rate.
ξ India’s bankable population has witnessed rapid strides in previous decade due to the
growing demand for consumer loans, housing loans and credit cards. In the retail loans
segment, mortgages have grown from 1.5% of banks’ advances to 10% of advances over
the last ten years. The Boston Consulting Group estimates that outstanding mortgages
will increase 8 fold from Rs. 5 trillion in 2011 to Rs. 40 trillion by 2020. Further, there
will be a requirement of at least 40,000–50,000 additional bank branches and 160,000–
190,000 additional ATMs in this decade. This will be 3 times more than the branches and
ATMs launched in the last decade.
ξ Infrastructure is a priority for a growing economy and hence there will be a lot of
opportunities for Infrastructure financing in roads, ports, railways, and airports.
Latest export opportunities in Financial and Professional Services sector
Latest export opportunities in India
Getting into the market
Foreign direct investment is permitted to the extent of 26% in the insurance sector
Foreign lawyers are not allowed to practise in India. However this has not stopped foreign law
firms from working with Indian corporates expanding overseas. Foreign law firms also have
forged referral arrangements with a lot of Indian law firms and continue to do business in India.
The financing requirement in India for infrastructure for the 5 years (12th Five Year Plan) from
2012 to 2017 is estimated at US$ 1 trillion. The Finance Minister, in his budget speech for 2011-
12, had announced the introduction of Infrastructure Debt Funds (“IDFs”). The objective of
setting up IDFs was to channelize the inflow of Long Term Debt in infrastructure projects. IDFs
are aimed at attracting and providing long – term low cost debt for infrastructure projects by
tapping into resources like Insurance, Pension Funds, Sovereign Wealth Funds, Endowments,
Foundations, Multilateral Financial Institutions, Other financial Institutions, etc
New overseas entrants in the Indian banking space will be asked by the Reserve Bank of India
(RBI) to locally incorporate themselves while existing players will be encouraged to go in for
local incorporation and act as subsidiaries of foreign parents and not their branches; If they do
chose to incorporate they will " be treated virtually on a par with their domestic peers in terms of
branch expansion" up to a cap of 15% market share.
More about doing business in India
Market intelligence is critical when doing business overseas, and UKTI can provide bespoke
market research and support during overseas visits though our chargeable Overseas Market
Introduction Service (OMIS).
To commission research or for general advice about the market, get in touch with our specialists
in country - or contact your local international trade team.
ξ Sheela Kulkarni, UKTI India, Tel: +91 (0)22 66502258 or email:
Contact your local international trade team
UKTI runs a range of events for exporters, including seminars in the UK, trade missions to
overseas markets and support for attendance at overseas trade shows.
Latest events in Financial and Professional services
Latest events: India
None at present.
More about OMIS and other UKTI services for exporters