Poter’s Diamond Analysis on FDI in India
➢ India is the second most populous country in the world. Some 68% of the population still lives in rural areas. A total of 550 million Indians are under the age of 25 and 350 million under 15 years (IBEF, 2008). By 2013, the net addition to the productive population (age 25-44 years) will be 91 million, or 33 %. The biggest benefit of this demography is the high consumer base [pic]
➢ The working age populaton is expected to rise by 83% by 2026. ➢ India is fifth largest economy in the world and has the third largest GDP in the entire continent of Asia. It is also second largest among emerging nations (based on purchasing power parity). ➢ India has world’s largest number of scientific and technological training centres after the USA.Many MNCs have set up R&D centeres. About 2000 recognized R&D institutes operate in India. ➢ India being a strongly regionalized country, most of them only know a small part of India which cannot representative of the whole country. The idea of “unity through diversity” (the national motto) and the complexity of the country make India difficult to tackle: languages, hundreds of dialects, and strong regional cultures and identities. Even within the Indian population, people do not understand each other fully (it can even be easier for a north Indian to sell his products in Dubai rather then in South India). ➢ The Indian government introduced new legislation on special economic zones. Companies that choose to invest in those zones are offered tax concessions such as a 15 years direct tax holiday and full exemption of import duties etc. ➢ India is fastest growing free market democracy in the world. ➢ The new policy of Government of India is, of couse, much better then old plicy. However, in comparison with the business environment in many other countries, India still is not very attractive in the eyes of foreign companies, despite the large and growing Indian market. ➢ The infrastructure in the country is imporoving but not at the rate at which it is required. India faces huse problems in its transport infrastructure including rail, road and air. Problems include power demand shortfall, port traffic capacity mismatcha, poor road conditions (only half of the countr’s roads are surfaced), low telephone penetration (1.4% of population). [pic]
➢ The total length of roads in India is over 30lakh kms including both metalled and unmettaled roads. In terms of road length, India has one of the largest road networks in the world. The national highways account for less then 2% of the total road network but carry 4% of the movement of goods and passengers. ➢ The total rail route length is about 63,000km and of this 13,000km in electrified. The railways carrry over 11 million passengers and 11 Lakh tones of goods everyday. ➢ India has a long coastline, about 90% of sea borne trade is handled via major ports of kandla, Mumbai, Nhava Sheva, Marmagao, Cochin, Tticorin, Chennai, Vishakapatnam, Paradwip, Haldia, Goa and Kolkata. ➢ Domestic air services are looked after by Indian airlines and private airlines while the international airport service is looked after by Air India. Mumbai, Chennai, Kolkata and Deli are the four Major International airports of India. ➢ AT Kearney ranked India as the second-most attractive democracy in its FDI confidence indexin 2006. ➢ India is attractive investment destination.
➢ India’s emergence as a leading destination for foreign investment is result of positive indicators such as stable 8 % annual growth, rising foreign exchange reserves, a booming capital market. ➢ India has over 380 universities and aout 1,500 research institutes, which churn out approximately 200,000 engineers, 300,000 post graduates, 2,100,000 other graduates and around 9,000 PhDs. This large base of skilled manpower offers unparalleled advantages to the companies operating in India. As a result, many multiantional...
Please join StudyMode to read the full document