Foreign Direct Investment or FDI redirects to the direct investment into a production unit or company that is usually managed by an individual or a company from outside the country. FDI means buying a company or expanding the business in an existing company already existing in the country. In India, it has been a hot topic since few days. Though the ruling party advocates for the implementation of FDI in India to boost financial growth in the country, the oppositions are not in a mood to support. However, the government has almost taken the decision to let the foreign countries invest in India. As a result, they have eased the FDI rules to help the foreign countries to get a hassle free investment opportunity in India.
The Prime Minister of India, Dr. Manmohan Singh along with the senior cabinet ministers has nodded his head in the approval of the plans for FDI. This decision is believed to the telecommunications industry to be taken over completely by the foreign companies. After the announcement of allowing foreign supermarkets to establish retail sectors in India last September, there has been a huge hue and cry by the small shop owners all over India. These protests held back the government to implement the FDI rules then. However, it will be implemented soon once the plan gets clearance from the cabinet.
The recent decision on FDI rules will allow many foreign companies to spread their feathers on the current Indian market and overshadow the attempts made by Indian companies to attain a firm position in their respective businesses. The leniency towards FDI in India would first see Britain’s Vodafone group and Norway’s Telenor ASA to operate in the country without any collaboration with an Indian company. However, there are few industries, which are excluded from FDI. Those industries include insurance, tea and so on.
It is expected that more foreign direct investment companies will be attracted to invest in India. The defense sector will allow the cap for foreign direct investments up to 26 per cent.However, if there are proposals for investments beyond this limit, it will be scrutinized and decided based on the requirements. As India’s economic condition is going through an improvement of a snail’s speed, it is believed that the FDI will help India grow economically in a better pace.
The recent market in India has been worst due to the fall of rupee against dollar. So people have started believing easing FDI rule might help the economy grow. However, time can only say the success or failure story of FDI in future.