Canadian pension funds, some of the strongest in the world, are looking to put billions of dollars to work India’s food security, energy security, education, and infrastructure industries.

Canadian High Commissioner Stewart Beck told Indian officials that these funds were seeking an 8% to 10% return from potential regional investments.

“As long as one can have that in a relatively risk-free environment, I see a good future in India," he said, adding  that last week representatives of five largest Canadian pension funds were in India to talk about how to bring Canadian capital in this market.”

“Those five funds alone represents around 700 billion dollars of investible capital," said Beck. 

The move comes as India’s success story of recent years takes a tumble with some predicting exceptionally dire times for the Indian economy.

That said, the Goldman Sachs forecast of a 4% Indian growth rate for 2013 outshines Canada’s own. In 2012, the nation’s GDP grew just 1.7%. India grew by 3.2% over the same period. The nation also has a growing middle class and a young workforce that will, it is predicted, spur the economy back to its former strength.

Beck cautioned, however, that Canadian investors were concerned with the “layers” of tax in India. They were not against paying tax, he clarified, but they were concerned with the very technical nature of the system.

"One of the concerns the Canadian pension funds have is the taxation system in India. India has layers of tax. Canadians do not have any problems in paying tax. Already, some Canadian pension funds have invested in India and although they are not large investments, by normal standards it’s pretty large and we want to bring in more because we see the opportunities," said Beck. 

Beck said despite the economic slowdown Canada believes that India provides a long-term secure and stable capital investment.

The Ontario Teachers’ Pension Plan (OTP) recently opened an office in Hong Kong, reflecting the proactive investment approach and the growth of Asia.

OTP, is the single largest single profession pension plan in Canada with CAD130bn. Since OTP’s inception in 1990, more than three quarters of the plan’s income has come from investments. When the plan started investing in financial markets, the fund stood at $19bn. Since then its investments have earned an average annual return of 10.1%.

Presently, OTP has deployed about $12bn allocated to private capital or private equity, of which $1.5bn is in Asian, regional private equity funds specialising in geographical or industrial sectors. 

The Brookings Institution, a private nonprofit organization devoted to independent research, last week said that India’s current slump threatens to bring back the lowest economic numbers in twenty years. This sagging performance will burden both India’s domestic politics and its global strategic goals, it said in article published on brookings.edu.

After three years of 9 percent growth, India’s economy has sharply slowed. Projections for 2014 range from 4 to 5.5 percent; Paribas bank estimates growth during the April-June 2013 quarter at 3.7 percent. Manufacturing growth, which had done well during the boom years, sank to 3.5 percent in 2011 and barely topped 3 percent in 2012. Perhaps the biggest attention-getter has been the plummeting value of the rupee, down 22 percent between May and September 2013, Rs. 63 to the dollar in mid-September.

The recent Global Competitiveness Report 2013-14, ranking India at No. 60, leaves no doubt that these are exceptionally dire times for the Indian economy. This World Economic Forum report of Sep 4 puts India 31 places below its emerging market peer China and barely ahead of Russia; it is India's lowest rank in this survey.

The report highlights serious concerns voiced by Tata Sons Chairman Emeritus Ratan Tata last month, when he said: "We have lost the confidence of the world. We have been slow to recognise that in the government."

The current economic scenario is no less grave than the 1991 crisis. The government is in a state of policy paralysis. A trust deficit irks foreign companies in India. Economic growth tests a new low every month. Independent studies talk of rampant corruption wrote Rahul Singh who teaches Competitiveness in Emerging Markets at Birla Institute of Management Technology.

The government in an Ostrich-like approach refuses to address serious threats, terming these as a momentary phase that shall pass soon. Economists and business groups call it a policy paralysis and leaderless politics, he wrote.

Singh suggest a few macro-level actions to fix the situation, to arrest the fall and to reverse the depressing escalation:

* First, policies and institutions for restoring global business confidence in India and ensuring ease of operations for business are a must. While it is good to have the attention of the opposition on issues of corruption, social security, and inclusion, it is equally obligatory on its part to extend cooperation to create a dynamic economic eco-system that can speed up growth. A Business Advisory Council comprising business leaders, management experts and economists is needed urgently to work on policy issues only along the lines of National Advisory Council.

* Second, reforms for doing business and sustaining business are needed on a continuous basis to balance foreign investments. A focussed annual reform plan needs to be introduced. This will help in introducing reforms and managing the developments in the domain. Infrastructure, manufacturing and the supply chain should have an annual execution plan to create a great eco-system. A piecemeal approach does not work and builds no resilience.

* Third, India needs to get started on the path of economic diplomacy besides focussing on the diplomacy of terrorism and security. The fact is developed markets have influence today, but emerging markets will influence tomorrow; so we need to better our relationship with emerging markets. The US diplomatic corps in India is bigger than the Indian diplomatic corps globally. India's diplomatic capability is disproportionate to its responsibility.

* Fourth, the government should give bigger responsibility to chambers of commerce and the chambers need to share their research and opinions with the government as a bridge between the government and industry. They also have to take up larger responsibility in marketing the nation on behalf of the government and building Brand India.

* Fifth, India needs to introduce single window entry solution policy like few other countries. Countries with a growth risk are looking towards a 25-year plan while India is not even looking at the next five years. India needs to change this and move forward if it wishes to be a significant player in the economic history of the 21st Century.