Foreign Direct Investment Opportunities in India

Topics: Investment, India, Foreign direct investment Pages: 9 (2399 words) Published: June 30, 2013
Directory of Management e.Publications July (2011) Vol. 1, Issue 1

FOREIGN DIRECT INVESTMENT OPPORTUNITIES IN INDIA

Author(s): Mujahid Hanif
Research Student, Department of Management Sciences, The Islamia University of Bahawalpur.

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Directory of Management e.Publications July (2011) Vol. 1, Issue 1

1. Introduction
There are plenty of reasons for why India is a good destination for foreign direct investment. India has a high spend able income, emerging middle class, low cost competitive workforce; investment friendly policies and progressive reform process all contributing towards India being an appropriate choice for investors.                    Following relax economic reforms in the late 1980s and early 1990s, India is now one of the world's rapid growing economies, as well as the second most crowded. Faster growth is increasing and India now a leading world importer of vegetable oils and pulses. Despite a rich and extensive agricultural resource base and rising producer subsidies, farm sector investment and growth have remained sluggish, creating pressure for reform of domestic agricultural policies. It has been difficult to achieve consensus on the reform agenda, but measures to increase market orientation, improve marketing efficiency, promoting use of technology, and strengthening incentives for private investment are increasing. India has GDP of 1,367.216 Billion USD as for 2010 growing @ over 9% annually. India has a stable political environment and responsive administrative set up. Well established judiciary to enforce the law. Land of rich natural resources and different climatic conditions. India's growth will start to overtake China's within three to five years and thus it will become the fastest large economy with 9-10% growth over the next 20-25 years (Morgan Stanley). India has been continuously introducing investor friendly policies and incentive based schemes. India has received a total of US$ 25.9 billion of FDI in 2009-10 which makes it second favorite for FDI. Investment rate forecast is to be 37% in 2010-11 and 38.4% in 2011-12 while Domestic Savings rate is forecasted to be 34% in 2010-11 and 36% in 2011-12. India's economy will grow fivefold in the next 20 years according to McKinsey. Cost competitiveness due to low labor costs. Total labor force of almost530 million. Large pool of skilled manpower and strong knowledge base with large English speaking population. The amount of population in the working age group (15-59 years) is expected to increase from approximately 58% in 2001 to more than 64% by 2021. There is huge untapped market potential. Simplification and rationalization of direct and indirect tax structures.

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Directory of Management e.Publications July (2011) Vol. 1, Issue 1

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Decrease in import tariffs. Complies with WTO regulations. Strong and dynamic banking and financial institutions.

2. Indian Economy
Indian economy has shifted to a high growth economy in previous few years. It is showing very good and stable growth in these years and in expected to rise in the future.

3. Agriculture Sector
Agriculture sector has shown growth of 4.4 per cent. The growth rate estimates of GDP in quarter 2 are based on the projected production of fruits and vegetables, other crops, livestock, forestry and fishery, which have grown in the range of 3-4 per cent. According to the Ministry of Agriculture of India, production of rice, coarse cereals, pulses and oilseeds is expected to grow by 5.9%, 19.4%, 39.3% and 10.3% respectively during the Kharif season of 2010-11.

4. Manufacturing sector
Manufacturing sector has grown by 9.8 per cent during the second quarter (JulySeptember) as compared to 8.4 per cent during the same period last year. Construction grew by 8.8 per cent compared to 8.3 per cent. Mining and quarrying sector grew by 8.0 per cent in.

5. Services Sector...

References: CIA World Factbook. (2011). India. Available: https://www.cia.gov/library/publications/the-world-factbook/geos/in.html Last accessed 30th Jan 2011. Economic Research Service, US Dept of Agriculture. (2009). Briefing Room: India. Available: http://www.ers.usda.gov/Briefing/india/ Last accessed 30th Jan 2011. IMF. (2010). World Economic Outlook. Available: http://www.imf.org/external/country/IND/index.htm Last accessed 30th Jan 2011. ITP Division, Ministry of External Affairs, Govt of India. (2011). Investment Available: http://www.indiainbusiness.nic.in/investment/investment.htm Last accessed 30th Jan 2011. kwintessential.co.uk. (2011). Doing business in India. Available: http://www.kwintessential.co.uk/etiquette/doing-business-india.html Last accessed 30th Jan 2011. Stylus inc. (2004). Doing Business in India: A Cultural Perspective. Available: http://www.stylusinc.com/business/india/business_india.htm Last accessed 30th Jan 2011. World Bank Group. (2011). Economy Profile of India. Available: http://www.doingbusiness.org/~/media/FPDKM/Doing%20Business/Documents/Profiles/Count ry/DB11/IND.pdf Last accessed 30th Jan 2011. worldbusinessculture.com. (2011). Doing Business in India. Available: http://www.worldbusinessculture.com/Business-in-India.html Last accessed 30th Jan 2011.
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