Till now, one of the biggest deterrents to attracting foreign investment in India was the cap on FDI. For Hong Kong investors in particular, China is a strong contender for funds. Given Hong Kong’s proximity to China, there is little incentive to look at other markets, including India. The CEPA agreement with China gives investors in Hong Kong the benefit of owning 100 per cent stake in Chinese companies. Hiking the FDI cap in India will, therefore, make a crucial difference.
