Helping You Build Wealth With Honest Research
Since 1996. Try Now

MEMBER'S LOGIN

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Why raising FDI caps won't help?
Mon, 22 Jul Pre-Open

India has in the past eight months embarked on a bold programme of liberalisation and economic reform in an effort to attract foreign investors and revive economic growth. The much talked about FDI in multi brand retail was allowed in September last year. But till now not a single investment has poured into India. Indian businessmen are also not investing in India and prefer other countries because of various hurdles and government's policy of repeatedly changing the rules of the game after capital has been committed.

The environment for doing business in India is tough. There are several reasons for this. Bureaucracy and corruption are the major factors affecting India's image as a favored destination for foreign investment. There are also questions over transparency and judiciary system. The legal process in India can be time-consuming and cumbersome as well.

Frustrated with India's policies, land acquisition problems, and slowing economy, foreign investors like US retail giant Wal-Mart, insurer Berkshire Hathaway and steel companies Posco and Arcelor Mittal all pulled back on Indian investment plans this week.

Multinational firms entering India assume that India has a large workforce. However, most of the Indian population resides in rural areas and illiteracy rates are still high in India. Secondly, a high percentage of people even in urban areas are self-employed. Moreover, with increase in urban middle class incomes, the percentage of working women has decreased. Hence, the employable English-speaking workforce is less than quarter of the urban population.

Just the announcement of opening up of FDI cannot be termed as a reform. The announcement in no way makes India an attractive investment destination. It is the ease of doing business that attracts entrepreneurs. But this would require efficient governance, which the present government seems incapable of.

The day the government creates a transparent and easy way of doing business in India, there will be enough Indian entrepreneurs lining up to set up businesses. The country would then not require foreigners to help in employment creation.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives

Read the latest Market Commentary


Equitymaster requests your view! Post a comment on "Why raising FDI caps won't help?". Click here!

  
ABOUT EQUITYMASTER

Since 1996, Equitymaster has been the source for honest and credible opinions on investing in India. With solid research and in-depth analysis Equitymaster is dedicated towards making its readers- smarter, more confident and richer every day. Here's why hundreds of thousands of readers spread across more than 70 countries Trust Equitymaster.

PREMIUM PRODUCTS
QUICK LINKS
POPULAR TOPICS
TRENDING TOPICS
FREE NEWSLETTERS
EQUITYMASTER SUPPORTS
  • HelpYourNGO
  • You Tube
  • Linkedin
  • Twitter
  • Telegram
  • Google Play

Copyright © Equitymaster Agora Research Private Limited.

Whitelist | Refer | Terms | Privacy | Contact | About | Sitemap

Phone +91-9136015013

Equitymaster Agora Research Private Limited (Research Analyst)
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Email: info@equitymaster.com. Website: www.equitymaster.com.
CIN:U74999MH2007PTC175407

Name of the Compliance & Grievance Officer: Ms Sonal Ramachandran
Telephone: +91-22-61434003 | Email: compliance@equitymaster.com

LEGAL DISCLAIMER:
Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

All rights reserved. Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.