Foreign Direct Investment Opportunities in India

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.

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

Among services, financial, insurance and real estate services grown by 8. 3 per cent, while community, social and personal services growth was at 7. 3 per cent. In the transport and communication sectors, the production of commercial vehicles, cargo handled at major ports, cargo handled by the civil aviation, passengers handled by the civil aviation and the total stock of telephone connections grown at rates of 4. 5%, 0. 5%, 25. 3%, 12. 2% and 38. 7%, respectively in Q2 of 2010-11 over Q2 of previous year. 6. India: An Attractive Destination for FDI

India has been growing very fast for last few years and it has shown impressive development since then. India’s economy has grown by many times since last few decades and it has become a very attractive destination for FDI. There is much reason for India’s viability as a destination for foreign investment. All above-mentioned variables including disposable incomes, emerging middle class, low cost competitive workforce, investment friendly policies and progressive reform process all contribute towards India being an appropriate choice for investors and businessmen.