FDI tide turns in favour of BRIC countries

The Indian government made several reforms in the economic policy of the country in the early 1990s. This helped in the liberalization and deregulation of the Indian economy and also opened the country's markets to foreign direct investment

Major advantages of FDI in India have been in terms of -

Increased capital flow.

Improved technology.

Management expertise.

Access to international markets

Valuations in BRIC economy is quite attractive,particularly, in India and China- although reasons to invest in these two countries are quite different. India has been quite successful in managing its financial affair in this turbulent weather of global financial crisis. Its stock market, real estate and other markets took a dip to re-adjust (many use  term "correction" as if they know the "exact value")the expected returns  in northward and,therefore, enhancing attractiveness (alongwith a strong central government). China,being largest debt provider to US economy, automatically home for US and other investment to keep China invested.Russia has been down for while but once oil price rises (which is expected, as globally major investments in oil-alternate resources were kept on hold, thanks to global financial crisis), it will be back sooner than later.Brazil is anyway not in so bad shape and is recovering and learning the financial prudence from Chile.Overall,BRIC is the destinantion for investment and may have some competition from Saudi Arabia, Qatar and may be, Oman but not very significantly. Reason is that these countries need technical know-how more than money (as they have surplus funds, and are significant investor to many countries including US).

yes its true if we open up more we can see more investments in india . As per the current market position India is not way far behind in attracting investment. If we consider the youth force, its better advantage for india

Foreign direct investment has been made easier than ever before. In a move that could effectively make caps on FDI meaningless. Under the existing norms, if a firm with, say, 40% foreign equity and 60% Indian equity had invested Rs 100 crore in another firm, Rs 40 crore of this amount would be treated as FDI. Under the revised norms passed by the Cabinet on Wednesday, it will now be treated as zero FDI. The treatment of indirect FDI would virtually open up all sectors including, retail and insurance. The new norms would also allow increased FDI in companies through the direct and indirect route.

Sectors like insurance and telecom, in particular, could see more FDI flowing in. In sectors like telecom, for instance, Bharti Airtel and Vodafone will now have lower FDI on paper than they do at the moment, without any change in the shareholding pattern. An "Indian company" is defined as domestic investment in a company being more than 50% (even by one share) and controlled by Indian partners. So, investments by any such company will now be treated as entirely domestic. The only exception will be when a joint venture company creates a wholly-owned subsidiary in India. In that situation, the foreign stake in the subsidiary company will be considered as equal to the stake in the holding company.

The adoption of these guidelines will simplify, streamline and rationalize the methodology of calculation of indirect foreign investment across sectors leading to investor friendly, credible and predictable regulations. This would facilitate greater foreign capital inflows and send a positive signal in the present difficult economic scenario.

India should open all sectors for FDI including retail. There should be more SEZ for FDI. What is more important is that our country needs to address the local problems and politics which is the main hindrance of FDI projects. The democratic system gives the advantage to miscreant minds if they are more in number. The government became a silent spectator to even their illegal activities which annoys the Investors. The labour unrest in all most all the sites is also one of the reasons which are not found in China. What I want to say that every body concerned should understood the importance of FDI for the growth of our country   and the government should firmly deal with illegal activities which slow down the FDI.

I think in next 10 years only BRICK countries will call the shots.

This weeks Forbes gives some answers to your question. Abot construction of National Higways and other roads India needs close to 100000 crores which they are trying to raise most of it from FDI. So government is not averse to FDI.

Yes India should attract more FDI. Because FDI ensures a huge amount of domestic capital, production level & employment opportunities, which are the major steps to contribute the economic growth of India. Various foreign firms are now occupying a position in the Indian market through Joint Ventures and collaboration. The maximum amount of the profits gained by the foreign firms through these joint ventures is spent on the Indian market.

We need huge foreign inflows to back our economic growth and they are vital for a capital deficit country like ours, but need to careful about heavy and sudden selling off as this can affect the economic stability. Also try exploring new options like Islamic finance and do everything possible in favour of building investor confidence.

India is lacking behind to attract FDI from overseas investor due to their policy constraint.

In the year 2007 when Indian market was at pick India manage to get FDI of $ 34 billion only as compare to $134 billion by china. This huge difference between the ability of the two countries to attract FDI can be directly attributed to the economic policies adopted and the steps taken to attract FDI.

The policy of china has been to rely heavily on FDI for the investment made in China. For example in the year 2007 42 percent of total investment in china by FDI against this only 21 percent of the total investment in India was accounted by FDI. In fulfillment of its policy on FDI China provides many facilities to foreign investors to set up manufacturing plants in China, particularly for export of goods manufactured by them.

In comparison, India has not differentiated very much between FDI for export and that for domestic consumption. Thus though, India offers better environment to foreign investors to set up manufacturing plants for local sales, it did not offer substantial incentives for export oriented industries.

If you compare FII investment then we see foreign investors are more bullish towards India. 2007 India attracted 18 billion of FII. Excess FII is not good for any country as investor can take away money as soon as market sentiment becomes little bad. On the other hand FDI stays there. I think India should promote policy to attract more FDI rather than FII.