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Topic : FDI in India
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Started by : Rashmi Patil, Financial services   01 25 2010 11:21:52 +0000
Industry : BankingFunctional Area : India(Markets)
Activity:  57 views;  last activity : 07 06 2010 20:18:09 +0000

In the  recent edition of Partnership summit 2010 which was organised by CII, people said that further economic reforms is necessary in India to attract more Foreign direct investment and currently India doesn't have a investor-friendly climate to attract more FDI, though we are seeing our economy doing more good than other developed countries and our GDP also heading in the right direction, but to sustain this development that we are seeing, we need more FDI in future, so, How India can attract more FDI?

 
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1 2 3 4 5
1 Improve infrastructure drastically
2 Government Initiatives
3 Government Intia
4 Build Confidence amongst Investors
5 Reduce FDI tax rates.

Improve infrastructure drastically

idea posted by Rashmi Patil Financial services

If you want more money then spend money on infrastructure, so if we invest interms of creating very good infrastructure then if the environment is conducible for investments, then automatically investments will happen, as India is having manpower but not infrastructure, it is said that India has a potential to attract more than 500 billion dollars in the future, but 150 billion dollars will be lost just because of inadequate infrastructure, so spending money on infrastructure not only brings more money interms of investments, but also increases employment in the country, so its a win-win situation for India which needs to understand and take some brave decisions to attract more FDI.

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by shome suvra chakraborty, costing &MIS, Patton International Ltd  | 01 27 2010 09:45:00 +0000

FDI in a particular country will depend on its effects of investments by the multinational co in other counties also. It is to be kept in mind that only the amount repatriated from the host country by the co(branch or subsidiary) to the parent co will add value  to its shareholders. Before investing in a foreign country  the deprival effect should be considered which is the difference between the estimated cash flow if the investment were made minus the cash flow if it is not made. APV should be considered (taking the effect of inflation in the host country) to interpret the viability of the project.

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Government Initiatives

idea posted by Ravinder Pundir Sr. Consultant/Business Analyst, Cisco Systems

I think the main issue why we are not able to tap the big share of foreign direct investment is the lack of interest & initiatives from the Government side to boost the trade and the bilateral tie-up where the foreign companies and delegates could see the enormous growth in future and which may attract them to put their money in India...Indian Government is not keen to develop those areas which attract FDI flow in India such as Infrastructure , communication , Engineering etc...even if some amount of FDI is issued the Government is not able to properly channelise and use the fun for different development programmes and schemes for which it was being issued due to which it further put the question mark on the ability of the people on whose hand the sum was given....

I totally agree with Rashmi that we are not having enough infrastructure in the country to support many activies and initiatives in our plans and which further stop the foreign companies and organization to choose India as one of their centre but the main question is who is responsible for lack of infrastructure and will provide the fund to boost the same ? isnt the Government who is jst doing nothing except wasting the money on the name of different different activies which is nothing to do with the common people...do we have any index or parameters on which we measure the government role on the infrastructure sector ?

Lets' see the examplary work being done by the China on the infrastructure side and if im not wrong here no can set the wonderful example like China...may be Dubai is also on the same track...but who is doing all the work in China ...its with the help and cooperation of the Chinese Government due to which it was possible to put china on the global map where every organization and the company want to set up their office...

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by AKNR Chandra Sekhar, Manager-Release Management, ANZ Operations and Technology  | 01 25 2010 19:39:36 +0000

It all revolves around Govt. and its policies.  Our Govt. is not very keen on capitalized investments, it has more operation expenditure. We have very good natural resources (air, water and solar energy) how much our govt. is tapping these resources with its policies.

We are billion people, our Govt. should encourage entrepreneurs to create innovating products and make FDI investment to flow through them. This will encourage people to start thinking beyond job and each Indian will become a Tata or Birla or Ambhani and internationalize their product through FDI.

Unfortunately, our Govt. is still not tapping its people and resources to explore and not innovating.  It is encouraging all Indians to become gurus in "Copy and Paste"-ODC/Call Centers and "Cut and Paste"- offshoring business processing.

Rgds,
CS

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Government Intia

idea posted by RAJNISH Sr.Analyst, An Investment Inc. - Singapore

It has been said that " Fear is that little darkroom where negatives are developed ".

There is no doubt that hurdles to FDI exist. But the question that is begging to be answered is that when there is a broad consensus on the need for attracting FDI, why do these hurdles exist? Here we find ourselves up against conflicting needs.

 Broadly, the reasons for India seeking FDI are :

1. To achieve transfer of technology and management techniques 2. To reduce dependency on aid.

Juxtaposed to these desires are the very real fears of a country locked away from global competition for the last few decades. These are :

1. The fear of excessive foreign influence  2. The fear of losing national wealth  3. The desire to protect indigenous entrepreneurship and workers.

These fears, how much ever parochial, do exist. Stating the pros and buttressing the same with research work, ad nauseam, is not the way out. What we face is a leadership crisis. Leadership alone can shake us to unclutter the mind and focus our energies on implementation. This is a point worth remembering The Supply Side of FDI ,Socio-cultural Attractiveness,Educational Fitness,Market Fitness and Governments Fitness,Measuring Up and lots of upgradations are required Beyond our Techniques vide Improving Socio-cultural fitness ,Improving Education fitness ,Market Fitness ,Government Fitness in order to attract the foreign investors.

Welllll other than with these long-term measures and strategy. We need to understand the “task list as mentioned below :

  • India lacks a brand. A group within the Finance Ministry should be formed exclusively for this purpose. More than 40% of FDI comes from 3 countries alone – USA, Mauritius, UK (see Annexure 3). The Gulf and EU are largely untapped.
  • So far NRIs have been tapped for raising capital alone. India must actively encourage them to set up business here (a la the VietKieu in Vietnam). Here, implementation of dual citizenships would help.
  • The US, Brazil and Philippines process 70% of the food they grow. India requires up to $6 billion to raise this to 15%. This is an attractive sector for exports and this sector should be in the direct approval route.
  • Clean Development Mechanism (CDM) projects are a mechanism where companies in developed countries can invest in developing countries to achieve carbon reduction objectives. Global CDM investment flows are between $5.2-17.4 billion per year. It is estimated that India could collect 7-14% of these flows. Leading to an increase of FDI to 35-50% of current levels.
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Build Confidence amongst Investors

idea posted by ABHIJIT KULKARNI Project Manager, BNP Paribas

Complete all the Projects On time and build confidence amongst investors such as IMF & World Bank

Project Delays and cost over runs should be avoided and penalised,

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Reduce FDI tax rates.

idea posted by Manish N Chugh Officer Trainee, Stock Holding Corporation of India ltd.,

I feel one of most important investment decision making factor is :  applicable TAX rate for the foreign investors. Therefore, if we can reduce it to certain extent then we cannot only improve the investment amount but also the number of investors to invest in such a growing economy. It can be quite difficult but i feel to win something we need to lose something. ... Thank you, Manish N

Cheers!!

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