Case Study: Foreign Investment

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India is located in southern Asia, with the Bay of Bengal on the east and the Arabian Sea on the west. One-sixth of the
world’s population (approximately 1 billion people) lives within the country’s 1.27 million square miles. Though Hindi is the dominant language in terms of number of speakers (it is the mother tongue to over 40 percent of Indians), India is essentially a multilingual nation with more than 10 other languages spoken by 20 million people or more. These include Telugu, Tamil, Marathi, and Bengali. Most states are divided along linguistic lines, with different states accepting different “official” languages (one each). English serves as the national language among the educated Indians. Higher education in

science and engineering is in English. The Indian economy
derives only a quarter of its output from agriculture, with services contributing almost 55 percent. However, more than 70 percent of Indians are directly or indirectly dependent on agriculture. Three-quarters of Indians live in over 600,000 villages. Many of these communities lack infrastructure such as roads, power, and telecommunications. Hence, India’s rural population presents a huge untapped potential for many marketers. The country operates as a democratic republic, and for the most part, one party has dominated the government since independence in 1947. At that time, India was born of the partition of the former British Indian empire into the new countries of India and Pakistan. This division has been a source of many problems through the years. For example, much to the

dismay of the world community, both countries had nuclear
tests in a cold war atmosphere. Also, many millions of Indians still live at the lowest level of subsistence, and per capita income is very low. India’s misaligned central and local public finances have contributed to an overall fiscal deficit of more than 10 percent of GDP.

In the past, doing business in India has been quite...
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