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'It's a risk not to invest in India'
Madhu Chittora
If the number of foreign dignitaries visiting India in recent times is any indication, India has never had it so good before. The 'tourist' influx signals the country's growing pre-eminence in the world, both politically as well as commercially. It also shows that the great Indian growth story is in tact no matter what is happening elsewhere.
In terms of foreign direct investment, India may not be anywhere near the top countries, but the inflow indicates that the past does not reflect the future. Says Jean-Charles Demarquis, Consul General of France in Mumbai, "Nowadays, we have one certainty: if it was risky to invest in India a long time ago, it would be a risk for any company with a global strategy not to invest in India today." The fact that Dr. Manmohan Singh, who initiated India's economic reforms in 1991, happens to be India's Prime Minister now is a positive factor in the eyes of
foreign investors. "He has taken bold steps. Now that he is prime minister, he can open the doors for investment," Rajinder Bedi, Director of Emerging Markets, Illinois Department of Commerce and Economic Opportunity, states.
Foreign investors from different countries are looking at different sectors. For Bedi it is hospitality sector and major hotels and resorts. For the UK, which already has a major presence in power, oil and gas, telecom and service industries, it is biotech, healthcare, pharmaceuticals, automotive and other ICT and hi-tech areas that offer investment potential in the years to come. On the other hand, Mohammad Shokrani, Consul General, of Iran, feels, "There are four sectors where, I feel, Iran is strong, namely defence, energy, technology and IT. Energy and IT are the two attractive fields that we can invest in. We need IT and India needs energy; the last because we have a lot of sources of energy and India has a need for energy."
Does this mean that foreign investors are waiting to invest in India? That may not be the case. India has to overcome a lot of deficiencies in its system if the country must attract large FDI on sustainable basis over a period of time. A recent World Bank report Doing Business in India reveals some disturbing trends. According to the report, it takes 89 days to register a firm in India costing $264.59 (equal to 49.5 per cent of gross national per capita income). Against this the regional average is 46 days and OECD average time is 25 days. Also, foreign investors find India's labour laws less friendly than, say, those of China. The government must take serious note of these shortfalls; otherwise investors may opt for other destinations.
[With inputs from Rahul Kamat]
[2 May 2005]
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