Foreign funds flag Kashmir dispute, religious conflicts as 'risks' to India investments

A number of large foreign funds, managing trillions of dollars of investor assets globally, have flagged 'persisting religious conflicts' and 'Kashmir dispute' as potential risks to their investments in India, saying such "tensions" could destabilise the Indian economy.

JPMorgan, one of the largest wealth managers in the world with asset under management of over $1.7 trillion, alone has flagged these "religious and border disputes" regarding investments in India in at least eight regulatory filings made by its various funds so far this month.

Besides, a number of other funds, including the India Fund managed by Aberdeen Asset Management which has over $380 billion of assets under management, have listed similar "risks" in their regulatory filings made with the US Securities and Exchange Commission (SEC).

Other such funds include Eaton Vance Greater India Fund, Mathews International Funds, Alps Funds (Financial Investors Trust), Franklin Templeton International Trust, Global X Funds and iShares Trust (managed by BlackRock Fund Advisors).

Besides, Wasatch Funds Trust, Arthur J Gallagher & Co and Causeway Capital Management Trust have also flagged similar concerns.

Similar concerns have been flagged by a few funds regarding Pakistan also.

When contacted, senior officials at some of these funds and other experts said such 'risk factors' follow a generic pattern in regulatory filings by various companies and investors and not much should be read into them, but they admitted that religious conflicts and Kashmir dispute remain an overhang.

They refused to be named citing regulatory issues and due to "sensitivities" involved in such matters.

While cross-border tension continues in Kashmir region, the Indian government has been trying to send across a positive message to the world and some saw hosting of the GST Council meeting in Srinagar last week as a step in that direction.

In a filing made by JPMorgan Trust II on May 18, the fund said, "Political and economic structures in India are undergoing significant evolution and rapid development, and may lack the social, political and economic stability characteristic of the US."

It further said, "Religious and border disputes persist in India. Moreover, India has from time to time experienced civil unrest and hostilities with neighbouring countries such as Pakistan. The Indian government has confronted separatist movements in several Indian states.

"The longstanding dispute with Pakistan over the bordering Indian state of Jammu and Kashmir, a majority of whose population is Muslim, remains unresolved. If the Indian government is unable to control the violence and disruption associated with these tensions, the results could destabilise the economy and consequently, adversely affect the Fund's investments."

Similar filings have been made this month by funds like JPMorgan Trust I, JP Morgan Exchange Traded Fund Trust, JP Morgan Mutual Fund Investment Trust and JP Morgan Insurance Trust.

A few US-listed Indian and India-focussed companies have also made similar observations in their filings during 2017.

These include HDFC Bank, Cognizant, Cancer Genetics, WNS Holdings, Genpact and MoneyOnMobile Inc.