Nippon Life India Asset Management Company MD & CEO Sandeep Sikka, who was re-elected AMFI president, was part of a 200-member business delegation that accompanied commerce & industry minister Piyush Goyal to Japan last week. In an interview, Sikka argues that there will be a rush of investments from Japan, with FDI translating into higher portfolio flows as retail investors also join. Excerpts:Mood among Japanese investors…The relationship between India and Japan is only getting better. We are seeing the conversion of good political relations into good business relations. Both the countries have different strengths: India has scale, talent and growth, while Japan has capital and technology. The conversation has now shifted from why invest in India to how much more to invest. The internal discussion in Japanese boards is moving from assembling in India for the local market to making in India and making for the world.Concerns over predictable policies, repatriation of profits…We have been in India for a long time and there are a lot of investors who invest through us. We are owned 75% by Nippon and from our point of view repatriation of dividends has been smooth. There is a lot of political and policy certainty in India now. Since Mr Modi became PM, Japan has seen five or six PMs. At the roundtable with foreign portfolio investors (FPIs), the sentiment was very strong.After FDI, we are going to see more Japanese portfolio flows. Japan has a savings pool of $14 trillion, of which half is in bank accounts. Of the asset management money of $2.2 trillion, one-third, which is around $800 billion, is invested overseas and India gets around 1% of that. Now, more household money will come to India. Through NISA, Japanese govt is trying to encourage more overseas investment and Nippon just launched a scheme for that.India is world’s fastest growing economy it offers tremendous returns. It always starts with FDI, which is followed by FPI and then retail. We have funds focused on different categories of Japanese investors and there is a very positive trend of AUM and flows of India-focused funds in Japan: from $6.7 billion in 2016 to $9.7 billion in 2021 and $19.6 billion in 2026.No jitters, Indian MF investors going strongOne or two months do not affect the overall trend. New investors have been coming into the market; new SIPs were opened and gross inflows remained positive. Investors have matured, during times when markets are choppy, they invest lumpsum, otherwise, they prefer SIPs.Worst of West Asia overCrude prices have an impact on import bills and current account deficit, which impacts the rupee. The FCNR(B) initiative has been very successful. FPI inflows have turned positive after outflows for a few months, and the rupee seems to have stabilised. So, things are falling in line.Impact of CASIt is a step in the right direction as it seeks to build transparency into the system. Any structural change takes time to settle and things will get better. It will help mutual funds in better price discovery, which is good for NAV and reduces tracking error differences in passive funds.
