Two Us Firms Hold Back Investments After Terrorist Attacks In Us

Capital One, the world's largest credit card processing company, and FNX, a US-based financial architectural firm, have joined the list of US companies which are putting on hold their investment plans for India following the aircraft attacks on September 11.

Both the companies were planning to set up back-office processing and call centres in India to take advantage of the low infrastructure cost and cheap labour available here.

The US accounts for 40 per cent of foreign direct investment coming to India, followed by Mauritius, the popular investment route used by non-resident Indians (NRIs). Japan and Germany are the third and fourth largest investors in India.

 

FNX, which provides state-of-the art front, middle and back-office solutions for the international financial community, had planned to set up its back-office operations in Bangalore. It is one of the fastest growing privately held companies in the US.

Capital One, the largest issuer of card products worldwide, had finalised its plans for India. It was in the process of identifying a suitable location to house its proposed 2.5-lakh square feet back-office processing centre.

"Investment in call centres, and back offices for banking, finance, insurance, and infotech-enabled companies recently started showing signs of picking up. The recent developments will deal a blow to the sentiment," said a foreign management consulting firm.

"While it is too soon for companies to cancel their plans altogether, they have advised their consultants that plans are on hold for the next six to eight weeks," he added.

Even Indian companies whose market capitalisation has been eroded following the attacks are hesitant to expand their operations. "Investment in real estate, which is considered to be a highly illiquid asset, has been put on hold," said a property developer.

At the same time, enquiries are swarming in from NRIs, who are looking at setting up second homes in India, following apprehensions over their status abroad and insecurity over a change in the laws.