Diversification overseas is fully embraced by Indian family businesses, experts said at Moneycontrol’s second edition of the 2022 Indian Family Business Awards on Aug. 19.
At a panel discussion on succession planning in family businesses, Rishabh Shroff, managing partner of Cyril Amarchand Mangaldas, said that even though their businesses in India are diverse, more and more families are opening offices abroad.
“No matter how diverse your portfolio is in India, you are still exposed to India risk. So we have a number of family businesses that are now looking overseas to have more or less a hedge against India,” Shroff said.
Among the preferred countries, he said, Dubai has now overtaken Singapore as the top choice for families looking to diversify their businesses abroad. He added that GIFT cities are also beginning to have some appeal lately.
“The reason Dubai or Singapore are the preferred countries is because the ecosystem favors Indian families settling there. You are very welcome in the Indian capital. They have a good ecosystem of advisors there who are also knowledgeable about the Indian ecosystem,” Shroff said.
“Dubai has prevailed more than others, making it easier to open up structures to build a sophisticated ecosystem around them. Compared to Singapore, Dubai welcomes Indian money more than Chinese money,” he said.
Soumya Rajan, founder and CEO of Waterfield Advisors, said an interesting new area that the government has now launched is the Family Investment Fund. “After that, the government will allow clients to get exposure abroad to diversify their investment portfolio. However, it is currently in a very early stage and we have not yet received approval for a family mutual fund,” she said.
“But the fact that there was such a rule put in place at all seems to indicate that there is a tiny provision that allows families to think about diversifying their investment portfolios,” Rajan said.
Shroff also stressed that under the new Overseas Direct Investment (ODI) guidelines, a flood of cash has flowed into India to allow companies to diversify. “But the government or the RBI may have recognized the situation a bit too late and decided to send some of the money back to India or at least curb the flow of capital abroad,” he said.
The Indian Family Business Awards, which brought together an impressive list of prominent Indian family business leaders, recognized the tenacious spirit of the companies that are instrumental in placing the country on the world’s $5 trillion economic map.
The prestigious event spotlighted the role of India’s leading family businesses, which have played a key role in state building and wealth creation. Emerging family businesses, spread across 17 categories, were praised and recognized for their excellence.
