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World business community wants Indo-Pak tensions to ease

Even as tensions further mounted on the Indo-Pak border and the Bombay Stock Exchange's 30-share benchmark index, the Sensex, plunged again today, the International Finance Corporation today expressed hope that the situation would ease soon to enable healthy business environment in the region.

''Private investors do not want to see tensions on the border. I hope the situation would not get worse,'' said Rashad Kaldany, director (south and southeast Asia), the IFC, while announcing its latest investment tie-up in New Delhi.

Things were looking up for the IFC and other multilateral funding agencies after a year-long impact of the nuclear-related sanctions was beginning to wither away.

''Things were really looking up in India,'' Kaldany said, adding that the positive outlook for the country from the foreign institutional investors was not misplaced either.

Foreign funds have taken a positive perception about India in the context of investment opportunities worldwide.

As valuation of stocks went up in other markets, the foreign funds found Indian stocks still available at attractive prices. Finally, there are many opportunities in specific sectors, Kaldany pointed out.

The IFC would be closing the year 1998-99 fiscal next month with $ 70 million investment in India. This would be much less than the average inflows of $ 150 per year. Kaldany attributed the slow IFC investment to the Pokhran blasts related sanctions on India.

With the IFC board now clearing three private sector projects, the impact of those sanctions has completely withered away. These projects have come about since February this year.

In the latest deal, the IFC, the World Bank group company, has agreed to invest $ 25 million in Moser Baer India Limited, the largest manufacturer and exporter of floppy disks in India.

The financing comprises an equity investment of $ 8 million and a loan of euro 16.75 million for IFC's own account.

Kaldany said IFC's investment in India would come back to the past average of $ 150 to 200 million from 1999-2000, provided the region remains free from border clashes.

It has investment portfolios in the power, financial services and telecommunication sector. It would commit further investments in the power sector if the state electricity boards were reformed and independent regulatory authorities established.

IFC is also looking into investing in the information technology sector. The investments could be sourced through the venture capital or direct route. The company is at an advanced stage of negotiations with a few entrepreneurs, Kaldany said.

The World Bank's private sector financing arm is also negotiating with a few Indian promoters for funding the insurance ventures as and when the policy framework is announced by the government.

UNI

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