Will Modi’s reforms convince investors to bet on India again?

On 10 July, while presenting India’s budget for 2014-15, finance minister Arun Jaitley announced that the cap on foreign direct investment (FDI) in the insurance and defence sectors was being raised to 49% from 26%. Two days earlier, the railways minister, while presenting a budget for the railways, had said that the ministry was seeking cabinet approval to allow FDI in the rail sector.

While foreign investors have long lobbied for raising FDI caps and opening up the few remaining sectors where FDI is not permitted, the applause that has followed these recent announcements has been muted.

“There is a certain level of scepticism both with present and prospective investors,” says Celia Jenkins, a partner at Tuli & Co, a Delhi-based insurance boutique.

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