Shifting political sands in America and Europe, especially after the 9/11 terror attack and concerns of a probable slowdown in developed economies are encouraging Islamic investors to turn their focus into growth economies like India and China.
Although there has always been a talk of Islamic investors shifting their investment focus to emerging economies, the real trend of investing in India caught up in 2007.
If one goes by numbers, the first real ‘all-Islamic’ finance deal materialised in October 2006 when Bahrain-based Gulf Finance House and the Maharashtra government joined hands to take up the Energy City India project.
Gulf Finance House promised to invest close to $2,000 million for the project. Since then, there has been four major Islamic private equity investments in India, all in 2007.
According to Islamic Finance Information Service (IFIS), National Bank of Dubai along with Velcan Energy Holdings (Dubai) are investing close to $140 million for the Velcan Hydro Power Plant in Arunachal Pradesh.
Saudi Economic and Development Company (Sedco) and Bearys Group have come together to invest $20 million for the Bearys Global Research Triangle in Bangalore. HSBC Amanah will invest $50 million in Srei Projects while Gulf Finance House will invest $10,000 million for the Indian Economic Zone in Mumbai.
“Robust growth, requirement for huge investment in areas like infrastructure and strong legal framework (which protects foreign investors) are some of the reasons why Islamic investors are flocking into India. This number is expected to jump by 100% in 2008. We are expecting investments in the range of 10 to 15% this year,” said Bearys Amanah Investment CEO, Shariq Nisar, who is also an expert in Islamic finance.