A high-powered expert committee has come out with a report on how Mumbai can join the league of New York and London in the export of International Financial Services.
A summary of the report:
http://finmin.nic.in/press_room/2007/gist_of_report.pdf
It is a well-known fact that India has the basic ingredients for Mumbai to emerge as a world-class IFC. Technologically advanced stock exchanges, intellectual capital, a growing domestic economy, and its strong and independent institutions (market regulation, democracy, judiciary, and the press).
However, the report cites inadequate liquidity in the debt, currency, and related derivatives markets as a major hindrance. The debt for the recent large M&A deals announced by Indian companies were raised abroad. Apart from foreign debt being cheaper, the Indian market does not have the liquidity to manage such deal sizes.
The Reserve Bank of India is uncomfortable with speculative positions on currency. It allows taking positions only for hedging balance sheet exposure. The committee has recommended full capital convertibility (removal of all restrictions on currency transactions).
The report also urges the government to act to bring Mumbai upto world standards in urban infrastructure and governance, so that it attracts immigrants from all over the world.
In a lighter vein, if Mumbai does indeed become an IFC, inbound immigration service could become a great money spinner sooner than later.
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