Monday, September 22, 2014

FDI IN INDIA HURDLES GOING DOWN

FDI is becoming the hot cake in Indian Political arena, people who are on the right side and some are on the left side in support and protest. Certainly it is a great growth tonic for any economy, and India requires the stimulant for its current economic growth. According to Nomura report net FDI inflows to India could cross USD 30 billion marks this fiscal year.

Indian Government is aggressive to increase the FDI inflows in India. Way back government had opened the retail sector to FDI with economic relax process set in place by the Industrial Policy of 1991, in 1995 WTO General Agreement on Trade in Services, for wholesale and retailing services was the forwarding step. Year 1997 seems to be the mile stone when 100% rights allowed under the government approval route; in cash and carry. The escalation in the initiatives seen in the year 2011 and 2012 when 100% FDI in Single Brand Retail allowed, and on the very next year government allowed 51 percent foreign investment in multi-brand retail. Recently Consolidated FDI Policy (Effective from April 17, 2014), setting new horizon in FDI in India,  the Intent and Objective says 

“It is the intent and objective of the Government of India to attract and promote foreign direct investment in order to supplement domestic capital, technology and skills, for accelerated economic growth. The Government has put in place a policy framework on Foreign Direct Investment, which is transparent, predictable and easily comprehensible. This framework is embodied in the Circular on Consolidated FDI Policy, which may be updated every year, to capture and keep pace with the regulatory changes, effected in the interregnum.”

India is moving fast from restrictive FDI regime to liberal word. Resource, Equity, Execution, Banking, Insurance, Compliance, Infrastructure, and Transportation were barrier in Indian FDI, even   big firms in India were not permitted to retrench or layoff any workers, or close down the unit without the permission of the state government, now, States have been more reform-oriented and stringent regulations is going down.

Recently, pardhan mantra jan dhan yojna (PMJDY), is considered to be the Financial sector reforms, to strengthen the micro finance structure of Indian society.


The Foreign investors are optimistic to Indian market, due to rapid globalization of many industries and vertical integration but, to accelerate FDI flow in India, there are still needs for transparent sector oriented policies and a drastic reduction in time consuming re-tapism and an affirmative collaborative political approach is much needed.
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