A clever investor will therefore see this as the golden opportunity that it really is and invest in the Indian economy because the returns are going to be nothing short of phenomenal. Even a decade ago, foreign investors were not being welcomed into the Indian market, but things have changed quite a bit since then because of the phenomenon of rapid globalization.

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Government Incentives

The long term capital gains for foreign companies have been reduced to twenty percent! Previously, there used to be a ban against the use of foreign trademarks and brand names. But this has been removed. Now foreign trademarks can be used within the country freely. Moreover, the Indian budget has been steadily lowering the tax rates for foreign companies over the years. Both types of firms – Indian as well as foreign – have been exempted from paying export earnings!

In short, the government is making up for all the lost time it spent in driving away foreign investors and doing everything it can to invite them. The Securities Exchange Board of India (SEBI) has recently come up with guidelines which are nothing, if not encouraging toward foreign brokers. With the help of this, Foreign Brokers can now choose to set up Rupee or foreign currency denominated accounts to credit fees, brokerages and other expenditure of similar nature; indirectly facilitating online investing in India easy.

India has a very bright future ahead because of the fast paced development that the country has been going through. Another reason why foreign investors should invest in the country is the sheer size. It has a GDP of 1.3 trillion US dollars currently and that is saying something! This makes it the eighth largest economy in the world.

If the Low cost base is taken into account, then the GDP actually trebles, making it about 3.8 trillion US dollars. And it is soon set to be among the top three economies in the world – after the US and China, considering these PPP terms.

Economy and Population

The fast growth in India’s economy, despite the recession is another reason why foreign investors find it so attractive. It is growing at a steady rate of 8.75% and this growth rate is set to increase by 9 to 10% every year for the next decade or so. These figures are really impressive because India is showing a great resilience in the face of global recession which has hit the top economies of the world.

The Indian economy also offers high savings. The average rate is about 37% of the GDP which is quite a lot. The domestic savings meets most of India’s investment requirements and just about 20% of India’s total public debt is sourced from foreign borrowing!

India is also a relatively young country with an average age of just twenty five years. Investing in a thriving, bustling economy like this, full of young blood is sure to bring back sizeable returns. Over the next two decades, India’s working age population is set to reach an all time high of two hundred and forty million. The workforce is an extremely talented one, with a high degree of morals, integrity, skills in English and of course entrepreneurial skills. So if you are looking to invest, invest in India!

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1. Auto

With the seventh largest auto industry in the world, and fourth largest auto manufacturer in Asia, India is poised to become a top contender for world class auto manufacturing status.  Since government restriction was relaxed in 1991, Indian car manufacturing has experienced phenomenal growth.  Japanese automakers like Honda and Toyota are outsourcing their labor force to India, creating a skilled community of auto manufacturers.

India-based car companies should not be overlooked.  Companies like Tata Motors have become very proficient at producing fuel efficient, economy sized cars. As demand for economical cars increases in the United States, a new potential market for Indian imports is created.

2. Power

Over the next twenty years, the Indian government intends on dramatically increasing the power sector of the economy and opening up opportunities for privatized power companies.  Rural India is becoming more developed with each passing year, and power companies are vying for the opportunity to provide quality service to these areas.  Building a modern electric power grid is a top slated project for the next decade, and government funding has already been allocated to this endeavor.

Several Indian companies are beginning to research renewable energy resources.  These will likely provide a unique opportunity for investment in the coming years.

3. Telecom

The telecommunications field in India is booming and analysts predict that the trend will continue well into the next five years.  Wireless subscriptions now number in the hundreds of millions.  As technology becomes more readily available in rural sectors, this number will only continue to increase.

Bio: Alexis Bonari is a freelance writer and blog junkie. She spends much of her days blogging about Education and CollegeScholarships. In her spare time, she enjoys square-foot gardening, swimming, and avoiding her laptop.

Please note that Certificates of Deposits (CD) and commercial paper are money market instruments, and not bonds.

Again, while stocks and bonds are both securities, there is a major distinction between them. A stockholder owns a part of the company whereas bondholders are lenders to the issuers. In addition, bonds have a fixed time period, in other words they have a maturity period whereas stocks may be indefinite. A consol bond however is an exception having a period of perpetuity. The whole bond investment could be a little complex for a new comer or a beginner who is starting in the stock market, thus it is advised that he must learn how to trade bonds or takes proper bond education before trading such bonds.

Issuing bonds:

Public authorities, credit institutions, companies and supranational institutions in the primary market issue bonds. Underwriting is the most common form of issuing bonds. In underwriting, one or more securities’ firms or banks (forming a syndicate) buy from an issuer an entire issue of bonds and re-sell the same to interested investors. Contrarily, Government bonds are auctioned.

How bonds trade:

Having no specific arena for trade, bonds can be traded anywhere and everywhere. Market for bonds is known as ‘over-the-counter’ market. Bonds are, generally, not traded on exchanges. However, there are exceptions to this general feature. Some US corporate bonds are listed on the US exchange. Similarly bond futures and bond options are traded on exchange.

Bond dealers:

Bonds are mostly traded with bond dealers occupying the center of attention in the vast sphere of interested investors connected to one another via telephone and computer. Bond dealers “make a market” for bonds i.e. they have people who are expected to know the price of the bond so as to quicken the process of buy and sell. The dealer’s role is to provide liquidity to bond investors permitting them to buy/sell bonds more quickly at a concession price. Dealers also buy/sell bonds amongst themselves either directly or anonymously through bond brokers. This is the main way that bond dealers make (or lose) money.

Bond investors:

Financial institutions, pension funds, mutual funds and governments are the major bond investors across the globe. The institutional market is comprised of these traders along with the dealers. The size of trades is usually $1m. Please note that there is no size limit or size restriction. Trades of value up to $500m – $1b can take place at a time.

A few good bonds in the world today are the US treasury bonds and the India’s RBI Government Bonds (specifically for NRIs – non resident Indians). However before investing into bonds, one should seek advise of a professional financial adviser.

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