India's Business Environment

Topics: India, Mumbai, Government of India Pages: 43 (15288 words) Published: June 1, 2013


India with its consistent progression and adequate profoundly skilled manpower delivers outstanding prospects for investments. India is the most populous democracy and tenth most significant economy in the world. India is the 4th most extensive economy all over the world when it comes to purchasing power parity. India features a federal system of Government with distinct demarcation of powers between the Central Government and the State Governments. India allows a liberal, captivating, and trader friendly investment environment. India is straining on encouraging foreign investment. India posses most liberal and transparent policies on foreign direct investment (FDI) among major economies around the globe. 100% FDI is acceptable under the self-regulating approach in all sectors/activities apart from few areas, which demands prior authorization of the Government. Under self-regulating, investors are required to only notify the Reserve Bank of India within 30 days of receipt of inward remittances. India has liberalized and articulated foreign exchange controls. Rupee is readily convertible on current accounts. For FDI- Profits earned, dividends and proceeds out of the sale of investments are fully repatriable. India incorporates a giant socio-economic class and 55% of its population is below the age of 25.High economic growth and escalating per capita income has resulted into higher growth in the national market, which is the prime growth engine for Indian marketplace. Government of India highly emphasizes on the development of infrastructure in highways, ports, railways, airports, power, telecom, etc. Government is constantly looking for domestic and foreign private investment, for infrastructure sector development.

-Economic History & Liberalisation:

India has an economic history of thousands of years that dates back to the Indus valley civilization. Ancient India was a rich country till foreigners plundered it for several hundred years. But it has a history of a great economy due to its trade relations with foreign countries from the Far East and to the western European countries and Africa.

a. Ancient Economic History:
The Indus civilization had great economy, which can be seen by the importance of trade that this civilization gave and also facilitated transportation. There was a marked improvement in the trade by the trade silver coins which were minted during the 600 BC by the Mahajanpada, Followed by the Maurya Empire who conquered almost the whole of India by 300 BC. During this period, trade flourished and economy was very good. The next 1500 years saw India with many rulers and is known as the largest economy of the world that dates back to the 1st and the 17th centuries AD. 

b. During the Mughal Rule
Before the Europeans, India was ruled for over 700 years by the Mughal emperors and had some of the most powerful rulers who had good knowledge of trade and commerce. India was better economically during these times and saw some of the most golden years in terms of economy. Till the 17th century, India was not totally under the rule of the British and hence it was not yet plundered by these colonial rulers. However, it still experienced some unprecedented downs in economy. Studies have revealed that the gross domestic surplus goods contributed the world's 25.1% economy. It was estimated to be the second largest in the world, more than the treasury of Great Britain. 

c. Advent of the Europeans

With the advent of the Europeans everything changed forever and India saw a sharp decline in its economy. They were responsible for ruining the Indian economy to a large scale through their reforms. It was a two way depletion of resources. The most prominent reason for the decline is the way British exploited India for 200 years. They bought raw material at a cheaper rates in India and sold the finished good at a very higher rate as compared to the rates in the...
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