Foreign Direct Investment in India – Is it why we invest in India?


If you are facing a tough choice about investing in Asia at the moment, India could be the destination that you should opt for. The process of reform that was kick started with liberalization is going ahead with great gusto. While the dreaded red tape is snipped and paper work is at a minimum, there is a beeline of investors wanting to park their funds in India.

English language and democracy

But why choose India when the surging Asian tiger China has the entire infrastructure in place and has made great strides ahead of India? Primarily, China is still closed to many investors as they feel intimidated about the country’s poor human rights record, lack of democracy and proficiency with the English language. Compared to China, India is the largest democracy in the world and most of the institutions are patterned on the colonial British model leading to far more investor-friendliness than elsewhere.

With English being a major business language and more English speakers than anywhere else in Asia, makes India a most preferred destination to the western investor. Over the decades after the reform and liberalization was kick started, India has made great progress and has a growing middle class that can easily outnumber total populations in many western nations.

The reason why international investors are seeing India as a potential market is the way the country has braved all odds from terrorism to a multilingual and cultural population with diverse groups to come to this stage.

Open door policy for investors

For getting economic growth up and running faster, the economy is geared to take on increased overseas competition. Earlier, the industrial licensing policy literally shooed away investors and they traveled to other markets. But, leaving aside certain sectors that require industrial licensing, there is an open door policy for most sectors. With the easing up of the Indian investment procedure, the India market is receptive and encourages foreign technology to flow in unabated. Only the public sector enterprises and products reserved for the small scale sector require compulsory licensing.

You can invest in India in all the major sectors of the economy leaving out defense and railway transportation. If you want, you can set up a 100% subsidiary of your company in India without taking permission from the Reserve bank of India (RBI) provided the investment adheres to the predetermined guidelines and time limit. You can benefit from what is known as an automatic approval route if you buy equity from the existing business owners as you would not have to go through the usual formalities. Formalities are only meant for new investors who want to bring in money and set up industries in India.

Processes have been simplified to make India an investor friendly destination and attract more FDI (foreign direct investment) and the Foreign Investment Promotion Board has been set up to streamline efforts. They also come in with recommendations if you want some suggestion and help. To facilitate your investment down to the finish, a single window clearance is in place. It helps in receiving and working on applications to make the investor feel at home in his or her new destination.

Under the aegis of the Commerce Ministry, the SIA or Secretariat for Industrial Assistance can also help you with the data they frequently update and publish on industries.

For speeding up coordination, an Investment Promotion and Infrastructure Development cell has been set up. It has managed to ease up worries that several investors may face while investing in India. As there were bottlenecks earlier before the reforms took off, the initiative is on by the Indian government to remove any misconceptions and make investors feel at home.

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