Doing Business In India

Overseas investors are looking at India as an attractive investment destination owing to the prospects of high returns. A number of Corporate and Multi National Companies from all over the world have established business in India and have expanded over the years.

Investments have been made by Corporate across the board and almost all the sectors have seen inow of funds. Global players such as Daimler Chrysler, General Motors, Ford, LG Electronics, Samsung, Sony, Amway, Tupperware, Pepsico, McDonald's, IBM, Oracle, Microsoft, Aviva, Nortel, Nokia among others have beneted from their operations in India and have made expansion plans for the country. The companies plan to expand by way of product diversication, setting up manufacturing base in India, increasing the existing production capacity, establishing research centres in India, etc.

The reform process initiated during the late eighties and early nineties have begun to show their impact and India is taking huge strides in the course of growth and development. However, recognizing that there is no room for complacency, Indian policy makers are moving ahead with due caution and at the same time integrating India with the global economy.


INDIA: AN ATTRACTIVE DESTINATION FOR FDI

India has emerged as the fourth largest economy in the world on a PPP basis. The quality of business environment in India has improved manifolds in the recent years. The strong fundamentals underlying the Indian economy make it an obvious choice for investors all over the world.

There is ample reason for India's viability as a destination for foreign investment. In addition to the above-mentioned macroeconomic indicators, higher disposable incomes, emerging middle class, low cost competitive workforce, investment friendly policies and progressive reform process all contribute towards India being an appropriate choice for investors.

The government of India has put in place a liberal and transparent FDI policy. In the post liberalization era, a number of initiatives have been taken to attract FDI in several sectors. This includes opening of many new sectors to FDI, raising FDI equity caps in sectors already opened and procedural simplication. Today, the FDI policy in India is widely reckoned to be among the most liberal in the emerging economies and FDI up to 100% is allowed under the automatic route in most sectors and activities.


SECTORAL OPPORTUNITIES

Vast investment potential exists in sectors such as biotechnology, retail, real estate, roads and highways, power, telecommunications, civil aviation, special economic zones, healthcare among others.

These investments are encouraged by the facts that India has a large pool of skilled and competitive manpower, huge research and development base, Government support and conducive policies, growth in the Indian domestic market owing to higher disposable incomes, abundant natural resources required to set up industries, etc.


REASONS FOR ADVANTAGE INDIA

1. World's largest democracy with 1.2 billion people.
2. Stable political environment and responsive administrative set up.
3. Well established judiciary to enforce rule of law.
4. Land of abundant natural resources and diverse climatic conditions.
5. India's growth will start to outpace China's within three to ve years and hence will become the fastest large economy with 9-10 per cent growth over the next 20-25 years (Morgan Stanley).
6. Investor friendly policies and incentive based schemes.
7. India's economy will grow vefold in the next 20 years (McKinsey).
8. Cost competitiveness; low labour costs.
9. Total labour force of nearly 530 million.
10. Large pool of skilled manpower; strong knowledge base with signicant English speaking population.
11. Young country with a median age of 30 years by 2025: India's economy will benet from this "demographic dividend".
12. The proportion of population in the working age group (15-59 years) is likely to increase from approximately 58 per cent in 2001 to more than 64 per cent by 2021.
13. Huge untapped market potential.
14. The urban population of India will double from the 2001 census gure of 290 m to approximately 590 m by 2030 (McKinsey).
15. Progressive simplication and rationalization of direct and indirect tax structures.
16. Reduction in import tariffs.
17. Full current account convertibility.
18. India is member of WTO.
19. Robust banking and nancial institutions.
20. The "2012 A.T. Kearney Foreign Direct Investment Condence Index" has ranked India second most attractive destination for FDI , an improvement from its third rank in the year 2010.

More information on doing business in India can be found at office website at: http://indiainbusiness.nic.in

* Source: Ministery of External Affairs, Govt. of India
Investment & Trade Promotion (ITP) Division




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