Thank you for the question. I think for clarity we need to distinguish between foreign direct investment and portfolio investment in India.
If you know a single specific company and you are interested in buying 50% or 40% or 30% of, for potential strategic reasons, India permits that investment from Canada, and many companies have done that. The level of investment in these types of situations is limited. Most Canadian investors invest in companies on a portfolio basis, because a portfolio helps you mitigate risk. We, as Canadian investors, use asset management companies or funds to invest in the stock market locally as well as abroad, and these Canadian investors are very much interested in investing in India, but because of the limited amount of information available from Indian companies, they will not invest in any single company but in a diversified portfolio of a number of companies in a given sector.
That strategy is used by investors primarily to mitigate risk and to deal with the limited amount of direct information available from any single individual company.
Those portfolio investments, if done directly, are subject to significant restrictions both in terms of taxation and of approvals from the Reserve Bank of India. So many companies have used the route of Mauritius to make those portfolio investments, but because the investor in that case is a company from Mauritius and the information flow comes from that company with a significant lag back to Canada, investors become less and less interested in investing.
Many Canadian investors have invested in Indian companies listed on the New York Stock Exchange or the London Stock Exchange, but our regulations do not permit Indian companies to directly list on the Toronto Stock Exchange. If they could do that, many Canadian investors would be able to purchase those securities as well.
So we definitely need interventions to avoid these hindrances in the financial services sector.