Tuesday, June 16, 2009

Change? YAWN....

“The only person who never makes mistakes is the person who never does anything”
(aka the Indian government.)

Maybe I am jumping into conclusions too fast or I am not qualified to speak on the subject. But the way I see it, the Indian government is not on the right tracks to become a global force. Here is one of the million reasons why we are not making the right decisions.

India’s FDI(Foreign Direct Investment) is less than 1% of the GDP(Gross Domestic Product). While this might be an important and good decision by the government in the times of recession, it still conveys the fact that we are not ready to take the big leap and open various avenues of improvement in the country.
Keeping the bigger picture of a global force India has a lot of work to review it’s FDI policies.

Why is it important to have FDI?
In the simplest of answers, FDI helps in the gentrification of the society as new companies bring along with them a new set of skills, management ideas, innovation and overall growth for the economy.

India’s foolhardy of turning down IKEA has cost the country an investment of 1 billion dollars! IKEA’s plans of opening 25 showrooms across the country and providing various job opportunities in a predominantly unemployment hit country like India suffered a major blow due to the country’s FDI policies.
The country's norms on foreign investments in retail state that a foreign company can hold no more than a 51% of the stake and must have an Indian partner.

On the contrary, the Indian government must have sunk their teeth at this opportunity especially now since the recession seems to be reclining and banks gaining confidence by returning part of the stimulus packages.

If we continue turning down companies like IKEA our development dreams will never bear the bud, forget the fruit.


Anonymous said...

HOW? HOW? How did you manage to think like this?

Venkatesan said...

The Indian govt never refused the permission, whereas IKEA defered the launching. They were expecting more than 51% of investment and relaxation in FDI investments. The new govt has not relaxed any rules.
IKEA could not find suitable invester with 49% investment, this may be due to many reasons like business model, viability etc.
So the govt never say no to any investment which will help our country.

Adi said...

They defered the launching because of the FDI norms. THe government refused to relax these policies which IKEA found non viable in the current economy.