Indian public waking up to economic benefits of foreign investment.

India's economic scenario before 1991 was guided by a conservative mindset, planning and low growth. The financial sector reforms in 1991 triggered new vistas of growth and technical know-how. India also became active on the global trade front.

Liberalizing the economy and easing restrictions on imports of goods enabled Indian industry to bring in the best technology, machinery and expert support. Economic activities got a big boost and the value of India's economic resources began to unlock.

GDP increased manifold, which created scope for bringing in precious financial resources. This came through openings in its capital market to foreign institutional investors for investing in secondary markets and equities, thus revealing the real value of the economic potential of various sectors of the Indian economy and its corporate sector.

All these historic steps created a much larger space for foreign direct investment (FDI) in various sectors. Initially, the Indian government allowed FDI in insurance, banking, non-banking financial companies, telecommunications and townships. These steps resulted in the setting up of a new generation of banks in the private sector and private insurance companies.

The Indian public has gradually accepted the logic of FDI after reaping the benefits of global investments and advanced technology. The capital markets magnified and increased the involvement of retail investors, who started playing in equity sale purchase to book profits.

World famous insurance companies like Allianz, Metlife, Prudential and New York Life brought best global practices and a big basket of multiple products targeting every segment of Indian society. This attracted policy holders even in the lower economic strata of society.

The Indian public has started realizing the enormous benefits of FDI as it has fuelled growth in various sectors.

In 2012, the Indian government announced its policy to open FDI in the retail sector, which at once received a hostile reaction from various political parties.

The government succeeded in getting majority support and in proceeding with its policy agenda. However, it left the decision to allow FDI in retail and opening of giant international retail stores and chains to individual state governments, which can now implement the government's policy as the majority of them are now in favor of it.

There is a general belief that FDI in retail will bring international stores like Walmart, which will result in the eradication of middlemen and exploitation of farmers. It will ensure better prices for their produce and good margins for manufacturing units. Consumers will benefit by getting good products at competitive prices.

There is, however, a perception that FDI in retail will throw small retail owners out of business and take away the livelihoods of millions of workers. As per one estimate, 40 million workers earn their living in India's retail sector. The majority, however, believe that big retail houses will bring in action, vibrancy, dynamism, promote quality and increase employment and skill sets.

Large sections of society feel that the Indian government should widen the base of foreign direct investment and extend it further to cover investments in various other sectors like hydroelectric power, thermal power, irrigation, roads and transport, sea ports and sea transport, the civil aviation and airline industry, commercial real estate and housing projects.

In particular, Indian corporations are strongly pitching for allowing FDI immediately in the civil aviation sector, which is bleeding from its mounting losses.

By and large, society is becoming conscious of the enormous benefits of FDI and believes that it has contributed in supplementing domestic capital requirement, technology and skills to promote economic growth.

It will usher in increased competition by ending the era of monopoly in various segments of the economy. Consumers will have a better shopping experience and a wider range of products.

This will also bring increased employment opportunities and trained human resources who adopt best international practices and service models. It will also ensure increased pay for its work force. All in all, FDI seems to be a safe gamble, even a profitable one.


Source : globaltimes.cn