Ricardo Santamaría, Head of Country Risk and Debt Management at CESCE, participated in the event organised by the Spain India Council Foundation and the Secretariat of State for Commerce to reveal the reasons why India is a priority destination for companies’ international expansion. “At CESCE we want to talk about the existing opportunities but also about the risks posed by India so that we can advise responsibly and efficiently on Spanish investments,” he explained, early on in his address. “According to the International Monetary Fund, the Indian economy ranks 10th by contribution to global GDP,” Santamaría explained, emphasising that India is an ideal destination for foreign investors because it is “a remarkably strong country within the BRICS group,” and boasts a booming domestic market. Santamaría also encouraged Spanish companies to look to India as a destination for expansion, saying they would find a highly dynamic economy as a result of high saving and investment rates.
CESCE classifies risk into four categories: political, credit, systemic and regulatory risk. “Credit risk is India’s main weakness, as there have been some imbalances with moments of depreciation following the tapering of stimulus measures by Bernanke’s FED.” In the political arena, there is clearly a degree of uncertainty in India after the elections, “although analyst outlooks and Modi’s management experience in Gujarat both suggest a period of stability.” In the financial sector, there has been “a slight increase in the indebtedness of private companies.” Lastly, according to Santamaría, companies must overcome certain regulatory issues in terms of business and of labour and tax laws, which “sometimes hinder economic activity.”
CESCE undertook an assessment of Indian risk levels and placed the country in Group 3 of the OECD’s Country Risk Classification (medium-moderate risk). “How should we interpret this assessment? It should be noted there are seven groups, so India is far from being one of the most exposed areas,” explained Ricardo Santamaría. CESCE’s Head of Country Risk and Debt Management concluded by pointing out that there is greater risk in the short term than there is in the medium to long term. Taking this into account, apart from the aforementioned challenges, he said: “India is a great investment opportunity, especially for Spanish companies, which excel in many sectors.”
CESCE is a mixed-capital company in which the Government owns a majority stake (50.25%), and the rest is owned by banks (45.85%) and private Spanish insurance companies (3.9%). The company was created in 1970 to manage the Government’s export credit insurance policy and provide a funding instrument for the international growth of Spanish companies. At the moment, it is the fourth largest group in Europe and the second largest in Spain in the credit and guarantees sector.
More images in the Gallery
India. Integral Development Plan for the Indian Market - 2014 Strategy. Secretary of State for Trade
Cesce in India. Document drafted by Ricardo Santamaría, Head of Country Risk and Debt Management at Cesce
