Previously US funds had stayed away from India’s realty sector even while favouring other investment domains. As such this radical change in outlook may seem rather unexpected.

Though, not if one has been closely monitoring India’s investment friendly policy changes. In February 2005 the government sanctioned 100% foreign investments in construction projects with fast-track approvals, thereby changing the foreign investors’ perception of India’s realty market.

Besides one cannot ignore the fact that currently investment in Indian projects promise returns close to 25%, a figure difficult to match in the US and Western European scenario. India’s booming economy is making development of office space a lucrative investment option.

There are several aspects to this trend, wherein domestic steel companies are eagerly scouting for mining assets abroad.

While Indian steel companies have recently made major capacity enhancements to meet with market demands, there is a short fall of coking coal used in the manufacture of steel. In fact the government has urged steel companies to pick up mining assets in countries that have good coking coal reserves.

Coking coal makes for nearly half of all raw material costs. It therefore becomes imperative for steel companies to look for options for reducing input costs. Coking coal requirement of the Indian steel industry is estimated to be around 30 million tonne against a domestic production of 7.5 million tonne.

However experts believe that there is another facet to this trend, which is the growing ambition of Indian steel companies to grab a share of the global steel market. Indian steel giants are actually looking at setting up manufacturing operations near their target markets, so as to reduce logistics costs.