In a survey of CEOs by industry body Assocham, majority said India could optimally receive about $25-26 billion of FDIs in 2008-09 fiscal against the targeted volume of $35 billion.

Other factors that may hinder the investment flow includes, adverse sentiments in the stock market, bottlenecks on infrastructure, no initiatives on disinvestments, rising interest rates, it said.

The target of FDI in the last fiscal was USD 30 billion, of which the total investment received were about $25 billion.

About 300 CEOs opined that like last fiscal, sectors like services, computer software and hardware, construction, real estate and telecom would lead in getting FDI in 2008-09, Assocham President Sajjan Jindal said.

During January to June, India received FDI to an extent of $22 billion only. During this period, FDI flow from the US towards India stood at $1.3 billion, which is only 6.11% of total FDI of $22 billion received by India during the period.

Out of 400 CEOs interviewed, 280 said stock market would continue to remain in dampen mood as large number of investors have shifted their investments to traditional source of savings channels.

The New Delhi-based company said in its yearly report for a shareholders meeting on Sept. 30 it estimated to complete the share sale within 1 year of getting shareholder consent.

“This is just an enabling resolution so that we can raise the money when we require,” a DLF spokesman said.

DLF had raised $2.25 billion in its initial share sale previous year. In July, the company said it would spend up to eleven billion rupees to buy back up to 22 million shares following a stock market slide.

The stock has fallen nearly 55% this year, compared with about 29 % drop in the main BSE index.

Insecurity in world equity markets has enforced the company to shelve a planned $1.5 billion initial public offer for its property trust in Singapore.

According to sources in the department of industrial policy and promotion (Dipp), the government is concerned about Indian residents parking money in the island nations to route them back for investments. There are also mounting fears of money being used for terror funding and laundering activities.

Investments in the nations do not get reported as the island countries maintain banking secrecy and do not reveal the nature of investments.

Intelligence agencies have expressed fears that funds from such places were flowing into the stock market through participatory notes issued by foreign institutional investors.

“We need to crack down on such investments. Intelligence authorities and National Security Council (NSC) would assist in tracking such investments,” a government source said, adding that most such funds flow into the real estate sector.

According to estimates, funds from such nations flowing into the real estate sector totaled $150 million. Although the money through the route may be a paltry amount compared to $2-billion FDI in 2007-08, the government fears this is just the beginning of an impending influx.

Red Fort Capital is preparing to invest Rs 3,500 crore, mainly on budget hotels, while Starwood is committing Rs 800 crore to Chennai-based Shriram Properties. Deutsche Bank will help Suncity Projects raise Rs 1,500 crore, and the Blackstone Group has said it would invest around $18 million (around Rs 73 crore) in Synergy Property Development Services. Kuldeep Chawla, director, Red Fort Capital, said, “We will focus on developing a chain of budget hotels by associating with local developers. About 400 budget hotels with 60,000 hotel rooms are expected to come up in India. We will look at investing in a diversified portfolio of properties.”

In 2006, Markets regulator Sebi opened up the real estate market to PE investments. The first year was a learning period. “The following year saw a real correction in the market, with large incremental growth rather than dramatic growth, where stock market money went into special purpose vehicle-level investments,” says Arun Natarajan, founder & CEO, Venture Intelligence India, which tracks the PE segment.

Balaji Rao, managing director, Starwood Capital said, “We are strategic partners with Chennai-based Shriram Properties to develop a three hundred acres township in Kolkata, which requires an investment of five thousand crore rupees. Apart from Starwood Capital, Shriram Properties is also looking at raising funds from Walton Street Capital. Likewise, following its partnership with Synergy, Blackstone Real Estate is eyeing further opportunities here.

Experts say that in calendar 2007 alone, PE players would have invested five billion dollar in the Indian real estate sector. But there is need for investments of up to $18-20 billion, which are expected in FY09 and FY10, they say. Says Jayesh Kariya, partner, Deloitte Haskins & Sells, “Investments of one thousand four hundred billion dollar are being made by Real Estate Investment Trusts globally. Hence, more global investors will start looking at Indian realty.”

Since India eased rules on inward investment in the construction industry in early 2005, foreign investors have earmarked an estimated $20 billion for the booming property market. But government figures show only about $2 billion has actually been spent in the last three years.

Funds used to complain that Indian developers slapped inflated price tags on themselves, their land, and projects.

But a fall in company valuations, and prospects of a drop in overheated land prices, has cheered private equity investors while making life tougher for developers.

Mr. Parry Singh, managing director of Red Fort Capital, which runs a $300 million fund that includes sovereign wealth fund money, said, “It’s brutal”.

Some foremost developers based in the region say it is becoming more and more complicated for them to sell flats at launch stage due to lack of interest from speculators. This reflects on the inherent demand structure in the real estate market.

Developers attribute this to stability in prices as against the past where prices were shooting up on a monthly basis. They add that the difficulty in booking flats may delay projects and reduce their pricing power, “A year ago, if we were selling over 100 flats in a month at launch stage, we now sell only 30-40 per month. Speculators, who would earlier frenetically book flats at the pre-launch stage only, have now disappeared,” said a senior executive of a real estate firm.

Till mid-2007, speculators made quick money by booking multiple flats at the launch of a project and exiting within a few weeks or months. But now, Omaxe executive director Vipin Aggarwal says, “The property prices have stabilised with little scope for speculators to make such big gains in the short term, leading to their retreat.”

“We have got remarks from market players. I would say that in the timetable, that will be later than the stock lending scheme and currency futures,” the stock market regulator’s chairman C. B. Bhave told an investment conference in Singapore via teleconference.
SEBI in December released draft guidelines on setting up REITs in India, which would pave the way for wider participation by retail investors in the country’s booming real estate sector.

Regulators are also mulling over the introduction of currency futures to help investors hedge foreign exchange risks, and a new system for the borrowing and lending of securities.

Finance minister has been awarded as the Politician of the year award by a private TV channel. After being awarded, finance minister answered the queries. Mr. Chidambaram also said, “I know that politics is a very different and difficult vocation. Yet if so many are (there) in politics, it is because at the end of the day, we believe that something can be achieved through politics”. Further he said, “Politics is not about individual achievements or collective achievements, politics is about bringing everything together so that we can make a great country”. Mr. Chidambaram expressed his feeling and said, “I am quite proud to be in politics and proud to be called a politician”.

Answering the question about volatility in the stock market, Mr. Chidambaram said, “I am not worried about market going up and down.” Replying the query about service tax on lawyers, Mr. Chidambaram said, “no one believes that lawyers render any services. So there cannot be any service tax on lawyers.”

Indian real-estate sector is on boom. Stock-market values have risen. DLF shares have more than double in value. Its shares are giving it a market capitalization of about $49 billion on the Bombay Stock Exchange and India’s National Stock Exchange.

New office complexes with indoor “green” zones and condominiums with back-up power supplies, swimming pools and even private fire brigades are springing up. In most of the cases, the developments are sold before they get finished.

According to reliable industry wide data, says DLF and its rivals combined promised to build about 10 times what they have built so far. DLF plans to list a REIT valued at more than $2 billion in Singapore soon and will invest in the trust itself.

On the other hand, some industry analysts worry that even DLF faces risks from the size of its plans. They fear that DLF and other developers might not be able to deliver projects on time and on budget. Adding to these concerns is a tight market for skilled labor and rising raw-material costs. Mr. Rajiv Singh, DLF Vice Chairman acknowledges that DLF’s growth plans are a challenge, but in an interview he said “we are quite confident this will be done.” He says DLF’s national network of management teams and its relationships with contractors and consultants, in some cases affiliated concerns, can support the planned expansion. In early 2006, for example, DLF concluded a 50-50 joint venture with British construction group Laing O’Rourke PLC to undertake building projects in India and possibly elsewhere.