India still world’s top remittance target
29 Nov 2014 9:51 PM GMT
Money makes the mare go, goes the old saying. Money energising the horsepower of the Indian consumer lifestyle machine is reflected in the massive incoming remittances being sent in by its busybee workers from different parts of the world. India is the world leader in receiving remittances at an estimated $71 billion in 2013, according to the World Bank report. China ($60 billion), the Philippines ($25 billion), Mexico ($22 billion), Nigeria ($21 billion), Egypt ($17 billion), Pakistan ($15 billion), Bangladesh ($14 billion), Vietnam ($11 billion) and Ukraine ($10 billion), rounded up the Top 10 remittance recipient nations.
Western Union is emphasising its key role in facilitating the flow of this money into India from around the world, according to a survey conducted by Western Union with Nielsen, a leading global provider of consumer information and insights.
The survey, conducted jointly with India Post across seven states including Gujarat, Maharashtra, Kerala, West Bengal, Punjab, Tamil Nadu and Uttar Pradesh, found that migration from India is predominantly to the Middle East, UK and USA, and also focused on these remittances impact on parameters like lifestyle, health, medical facilities, education, household expenditure, savings, investment etc.
Kiran Shetty, Regional Vice-President and Managing Director, India and South Asia, Western Union, said the key findings of the study revealed that average annual remittance in India per family is Rs 2.30 lakh. It has been found that 56 per cent of people migrated outside India for better jobs while 41 per cent did so to overcome financial challenges; remittances were used mainly for daily needs (72 per cent), medical expenses (62 per cent) and education (58 per cent). While Gujarat, Punjab and Uttar Pradesh are top states with average annual remittances of over Rs 2.50 lakh, UP and Bihar are among the largest remittances-receiving (5 to 6 times yearly) states in the North, though the South continued to lead with 8 times yearly remittances, according to the study which covered about 3,000 respondents in age group of between 22 to 64 years in direct interviews across 38 towns and cities. Around 63 per cent persons said remittances had uplifted their lifestyle, consumer durable purchases, while 67 per cent said it led to better health and access to medical facilities. 50 per cent of people highlighted increased savings and investments, and 63 per cent noted its usage for better schooling and higher education, Shetty said while noting that 60 per cent-70 per cent of Western Union’s business was in rural India and the company had expanded into 6,000 towns and villages in the country.
Pointing out that remittances to India kept increasing every year, he said India is the leader today and also in future — where remittances are concerned— due to people’s improvement in skills and opportunities pushing money transfers. ‘India is an important and largest market for Western Union and as the industry evolves, we are putting products in place while also leading in innovation efforts. Remittances and rupee currency fluctuations are directly related and — for the survey — we picked states where we could see strong remittances activity,’ Shetty added.
Pradipta Kumar Bisoi, Chief Postmaster General, Maharashtra Circle, Department of Post, noted that India has the largest Postal Network in the world with 1,55,015 Post Offices with 89.76 per cent being in the rural areas. Indian Post had grown from starting ‘money order’ in 1880 to the present ‘e-money order,’ instant money orders and mobile money transfer, besides carrying out 1.6 million transactions for Western Union, tying up with commerce companies and also arranging railway ticket booking.
‘We are spending Rs 5,000 crore into modernising India Post where about 1.55 lakh village post offices will be modernised,’ he added.
Meanwhile, there are numerous avenues to invest your money and Indians are eyeing the lucrative foreign concerns that carry big brand names and marry business with pleasure in their offerings of consumables and non-consumables. India-based Sundaram Mutual recently announced the launch of its ‘Sundaram Mutual Brand Fund’ – a five-year closed-end equity scheme – which aims to invest 65 per cent to 100 per cent of this scheme’s assets under management (AUMs) in equity securities listed on overseas stock exchanges around the world. The equity securities of the world’s strong brands and those with the potential to become globally-recognised brands will be targeted for investments under this scheme. For investment in international securities, Sundaram Asset Management Company (AMC) has entered into an agreement with Sundaram AMC Singapore to act as Investment Advisors.
Sunil Subramaniam, Deputy CEO, Sundaram Mutual said the performance of the scheme will be benchmarked against MSCI ACWI Index. ‘Six years ago, we were partners with BNP Paribas and then realised the potential of investment in the global market. So we set up a Mutual Fund outside India in Singapore which is a stiff regulator (AAA-rated country and gilt-edged location). Today we are the third biggest in India after UTI and SBI. We wanted to have a long-term wealth creation/diversification option for investors and whether Bull/Bear markets or international markets are doing well or not, this fund will decide decent returns for investors through investment in world brands. We don’t need to do monitoring – financial or brand element of the fund except for ‘corporate governance.’
‘Obsession with perfection has made companies unique brands that span borders, and categories that sell across geographies, sustain pricing power across economic cycles, build a competitive moat, and generate durable cash flows and high returns on capital. A strong brand has competitive advantage and improved earnings. It took 19 years for one company to break even in Japan, and today Google, apple, AmEx, UPS, NIKE are some of these companies which are a great investment for us. This is a good time to add foreign brands to one’s Indian portfolio (so that if the Indian companies are not doing well, the companies abroad will be doing well). Rising urbanisation will lead to rise in demand for aspirational brands. GDP levels in Brazil and Russia are nearly three times higher than India among the BRICs countries, while Google revenue from India crossed Rs 3,000 crore in March 2014 (Up by 47 per cent from previous year and targeting Rs 6,000 crore for March 2015).’
To a question that at a time when FIIs are in investment mode in India, how will you convince them to invest in companies and brands abroad? He said ‘We are putting this money into companies that are getting capital from many other countries in the world and FIIs put money into companies that do well. However, one cannot predict currency fluctuations and the Indian currency will depreciate over a five-year period, but over the next 10 years, India will add another 65 million people to its labour force. We have strength of conviction that will lead to strength of flows,’ he said.
Western Union is emphasising its key role in facilitating the flow of this money into India from around the world, according to a survey conducted by Western Union with Nielsen, a leading global provider of consumer information and insights.
The survey, conducted jointly with India Post across seven states including Gujarat, Maharashtra, Kerala, West Bengal, Punjab, Tamil Nadu and Uttar Pradesh, found that migration from India is predominantly to the Middle East, UK and USA, and also focused on these remittances impact on parameters like lifestyle, health, medical facilities, education, household expenditure, savings, investment etc.
Kiran Shetty, Regional Vice-President and Managing Director, India and South Asia, Western Union, said the key findings of the study revealed that average annual remittance in India per family is Rs 2.30 lakh. It has been found that 56 per cent of people migrated outside India for better jobs while 41 per cent did so to overcome financial challenges; remittances were used mainly for daily needs (72 per cent), medical expenses (62 per cent) and education (58 per cent). While Gujarat, Punjab and Uttar Pradesh are top states with average annual remittances of over Rs 2.50 lakh, UP and Bihar are among the largest remittances-receiving (5 to 6 times yearly) states in the North, though the South continued to lead with 8 times yearly remittances, according to the study which covered about 3,000 respondents in age group of between 22 to 64 years in direct interviews across 38 towns and cities. Around 63 per cent persons said remittances had uplifted their lifestyle, consumer durable purchases, while 67 per cent said it led to better health and access to medical facilities. 50 per cent of people highlighted increased savings and investments, and 63 per cent noted its usage for better schooling and higher education, Shetty said while noting that 60 per cent-70 per cent of Western Union’s business was in rural India and the company had expanded into 6,000 towns and villages in the country.
Pointing out that remittances to India kept increasing every year, he said India is the leader today and also in future — where remittances are concerned— due to people’s improvement in skills and opportunities pushing money transfers. ‘India is an important and largest market for Western Union and as the industry evolves, we are putting products in place while also leading in innovation efforts. Remittances and rupee currency fluctuations are directly related and — for the survey — we picked states where we could see strong remittances activity,’ Shetty added.
Pradipta Kumar Bisoi, Chief Postmaster General, Maharashtra Circle, Department of Post, noted that India has the largest Postal Network in the world with 1,55,015 Post Offices with 89.76 per cent being in the rural areas. Indian Post had grown from starting ‘money order’ in 1880 to the present ‘e-money order,’ instant money orders and mobile money transfer, besides carrying out 1.6 million transactions for Western Union, tying up with commerce companies and also arranging railway ticket booking.
‘We are spending Rs 5,000 crore into modernising India Post where about 1.55 lakh village post offices will be modernised,’ he added.
Meanwhile, there are numerous avenues to invest your money and Indians are eyeing the lucrative foreign concerns that carry big brand names and marry business with pleasure in their offerings of consumables and non-consumables. India-based Sundaram Mutual recently announced the launch of its ‘Sundaram Mutual Brand Fund’ – a five-year closed-end equity scheme – which aims to invest 65 per cent to 100 per cent of this scheme’s assets under management (AUMs) in equity securities listed on overseas stock exchanges around the world. The equity securities of the world’s strong brands and those with the potential to become globally-recognised brands will be targeted for investments under this scheme. For investment in international securities, Sundaram Asset Management Company (AMC) has entered into an agreement with Sundaram AMC Singapore to act as Investment Advisors.
Sunil Subramaniam, Deputy CEO, Sundaram Mutual said the performance of the scheme will be benchmarked against MSCI ACWI Index. ‘Six years ago, we were partners with BNP Paribas and then realised the potential of investment in the global market. So we set up a Mutual Fund outside India in Singapore which is a stiff regulator (AAA-rated country and gilt-edged location). Today we are the third biggest in India after UTI and SBI. We wanted to have a long-term wealth creation/diversification option for investors and whether Bull/Bear markets or international markets are doing well or not, this fund will decide decent returns for investors through investment in world brands. We don’t need to do monitoring – financial or brand element of the fund except for ‘corporate governance.’
‘Obsession with perfection has made companies unique brands that span borders, and categories that sell across geographies, sustain pricing power across economic cycles, build a competitive moat, and generate durable cash flows and high returns on capital. A strong brand has competitive advantage and improved earnings. It took 19 years for one company to break even in Japan, and today Google, apple, AmEx, UPS, NIKE are some of these companies which are a great investment for us. This is a good time to add foreign brands to one’s Indian portfolio (so that if the Indian companies are not doing well, the companies abroad will be doing well). Rising urbanisation will lead to rise in demand for aspirational brands. GDP levels in Brazil and Russia are nearly three times higher than India among the BRICs countries, while Google revenue from India crossed Rs 3,000 crore in March 2014 (Up by 47 per cent from previous year and targeting Rs 6,000 crore for March 2015).’
To a question that at a time when FIIs are in investment mode in India, how will you convince them to invest in companies and brands abroad? He said ‘We are putting this money into companies that are getting capital from many other countries in the world and FIIs put money into companies that do well. However, one cannot predict currency fluctuations and the Indian currency will depreciate over a five-year period, but over the next 10 years, India will add another 65 million people to its labour force. We have strength of conviction that will lead to strength of flows,’ he said.
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