What's Wrong with India?

10/07/2013 6:00 am EST

Focus: GLOBAL

Jim Rogers

Author, Street Smarts: Adventures on the Road and in the Markets

Although he loves the country, food, and people, legendary investor Jim Rogers outlines the reasons why he doesn't think it's a good idea to invest in India.

SPEAKER:  My guest today is Jim Rogers.  Thank you so much for joining us here at the Money Show. 

JIM ROGERS:  I am delighted to be here, Nancy, my pleasure. 

SPEAKER:  I just read an really that you wrote about India recently, and boy you were lambasting them, so why don't you tell us about that and why you're not a fan right now. 

JIM ROGERS:  Well, it was an interview, I didn't write the article, but yeah, I explained that I was short India.  I had sold India short and why I had.  India is a fabulous country to visit.  I love India and I love Indians, but as far as a country to invest in, no, but if you can only visit one country in your life, Nancy, you should go to India. 

SPEAKER:  I would love to go. 

JIM ROGERS:  It's an extraordinary place. 

SPEAKER:  I've not made it there. 

JIM ROGERS:  Go.  Beautiful women, brilliant men, brilliant women, fabulous place to visit, but boy. 

SPEAKER:  It's a very smart group of people but they don't really have the educational facilities that are needed. 

JIM ROGERS:  No, fewer than half of Indians stay in school til they're 12, so I mean, yes, you'll run into lots of smart Indians but there are a billion people, so of course you'll run into some smart Indians. 

SPEAKER:  Sure. 

JIM ROGERS:  It's a wonderful country, but not a place for me to invest. 

SPEAKER:  Well, in one of the areas that you talked about in that interview was about the financial infrastructure and that they really don't welcome foreign investment.  Can you elaborate on that a bit? 

JIM ROGERS:  No, they don't, no.  If you, Wal-Mart cannot open shops, stores in India because it's a security risk to have foreigners opening retail, you know that politicians always come up with crazy things.  Wal-Mart's all over China, for instance.  No, it's very difficult to do business in India as a foreigner or even as an Indian unless you're in with the right people, takes a long time to open companies, massive.  I mean, they have the worst bureaucracy.  I've been around the world twice, Nancy, I'm telling you, I've seen a lot of bureaucracies.  The Indians learned bureaucracy from the English and then they took it to a higher plane.  I mean, it's astonishing how difficult it is to do business in India unless you're in with the right people. 

SPEAKER:  Now, investment wise as an American I guess you can invest in an ETF, but there's really no other way to go over and invest in Indian companies, if you could find one you wanted to invest in, right? 

JIM ROGERS:  Well, it's difficult.  There are some ADRs. 

SPEAKER:  ADRs. 

JIM ROGERS:  There are companies, GDRs as well.  There are companies that trade outside of India, and there are ETFs, and there are mutual funds but it's, you can't just pick up the phone and buy shares on the Indian stock exchange like you can in Germany or Australia or America or something because there are massive restrictions, and just yesterday since that interview they came out with more exchange controls.  The government goes from bad to worse to worse still, it's astonishing some of the things they come up with. 

SPEAKER:  Yes. 

JIM ROGERS:  And they claim to be this open and vibrant economy and they're constantly coming up with more problems for anybody. 

SPEAKER:  So you don't see anything happening near term that would make you change your mind about even investing in an ETF there? 

JIM ROGERS:  Well, if the market collapsed I guess I would cover my shorts. 

SPEAKER:  That's right, buy low, right. 

JIM ROGERS:  I'd have to cover my shorts, and you know, the currency has gone down maybe 30% in the last year or two, so if you have investments in India, and even if they stay flat you've lost 30% -

SPEAKER:  Sure. 

JIM ROGERS:  - because the currency is down, so as my shorts, you know, maybe the stocks don't go down but the currency goes down so you can make money more than one way. 

SPEAKER:  Are there any movements for reform there to change the investment scenario, that actually have a you-know-what chance of working? 

JIM ROGERS:  Yes, there have been movements for reform in India since 1947 when they got independence, you know, yeah, they're constantly.  Go on the internet and there are millions of people complaining and calling for reform, but all the reforms do are just one Band-Aid here, one Band-Aid there, punish this group, help this group.  No, they don't solve the problems. 

SPEAKER:  Well, sounds sort of bleak.  Well, we'll catch up with you -

JIM ROGERS:  But if you can only visit one country, it is the most extraordinary country, the most extraordinary people. 

SPEAKER:  And great food, I'm sure. 

JIM ROGERS:  And great food, great everything. 

SPEAKER:  Wonderful.  Thanks for joining me, and thank you for being with us on the MoneyShow.com video network.

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