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Overseas diversification is being wholeheartedly welcomed by Indian family businesses, experts said at the second edition of Moneycontrol’s Indian Family Business Awards 2022 on August 19.
Speaking at a panel discussion on succession planning in family-owned businesses, Rishabh Shroff, Managing Partner, Cyril Amarchand Mangaldas said more and more families are opening offices overseas despite their businesses being diverse in India.
“No matter how diverse your portfolio in India is, you’re still exposed to an India risk. So, we have a number of family businesses that are now looking overseas to have more or less an India hedge,” said Shroff.
Among the preferred countries, he said Dubai has now surpassed Singapore as the top pick for families to diversify their businesses overseas. He added that GIFT cities have also begun to see some traction recently.
“The reason why Dubai or Singapore are the preferred countries is that the ecosystem is conducive to Indian families setting up base over there. They are quite welcoming of Indian capital. They have a good ecosystem of advisors there, who are savvy with the Indian ecosystem as well,” Shroff said.
“Dubai more than others has upped its game in making it easier to open structures to have a sophisticated ecosystem built around them. Compared Singapore, Dubai is more welcoming of Indian money than Chinese money,” he said.
Soumya Rajan, Founder and CEO of Waterfield Advisors, said an interesting new space which the government has introduced now is the Family Investment Fund. “Under this, the government is allowing clients to have exposure overseas so as to diversify their investment portfolio. However, it is currently at a very nascent stage and we are yet to see a family investment fund getting approved,” she said.
“But the fact that there was such a regulation which was even put in place seems to suggest that there is a tiny provision to allow families to look at diversifying their investment portfolios,” Rajan said.
Shroff also highlighted how after the new Overseas Direct Investment (ODI) guidelines, there was a flood of money finding its way out if India for businesses to diversify. “But the government or the RBI maybe woke up a little too late in the situation and decided to get some the money back to India or at least slow down the capital flowing outside the country,” he said.
The Indian Family Business Awards ceremony, which brought together a power-packed list of India’s illustrious leaders of family-owned businesses, celebrated the persevering spirit of enterprises which are contributing significantly toward positioning the nation on the $5 trillion economy map globally.
The prestigious event brought into the limelight the role of India’s leading family businesses that have been playing a key role in nation building and wealth creation. Aspiring family business, spread across 17 categories, were lauded and acknowledged for their excellence.
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