India's falling currency attracts US investors

By Marc Castro

Oct 05, 2013 09:42 AM EDT

India's top ranked takeover advisor Bank of America Corp identified the rupee's depreciation as the main factor in generating interest from US companies in setting up factories in India. The rupee fell 16% in the past year, making it the worst currency after the yen and the rupiah.

According to Bank of America India country head Kaku Nakhate, "US companies are looking for an alternative base in Asia outside China and India fits the bill. We are getting many inquiries from them. They want stability of rules in areas, including land acquisition and taxes."

The drop in the Indian rupee's value, making India the more enticing destination because of the rising operating costs in China and the labor issues in Bangladesh. According to Moody's Investors Service Senior Analyst Vikas Halan, India would need to ease rules and reduce its bureaucratic red tape.

China is the world's second largest economy and is targetting 7.5% growth this year. Goldman Sachs Group predicts India to have a 4% growth while the Reserve Bank of India forecasts an expansion of 5.5%.

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