Getting up in a beautiful home, wearing elegant branded dresses which not only

define the personality but also give a sense of pride, then going to the office in a
exuberant yet affordable car, working on systems which are either unheard of or are
rare in offices, coming back in the evening to a happy family and having a memorable
time with them. This is what a workingman used to think when the concept of
Globalization started knocking ferociously on Indias door. Yes there were fears, yes
there was uncertainty, yes it would be something new but it will give you the power of
experimenting, it will give you newer options and finally it will make your dreams
come true.
Then in 1991, under the leadership of Shree PV Narasimha Rao, India embraced
Liberalization and Globalization. Since then India has become a hub for various
brands ranging from Panasonic and Suzuki to Sony, Mercedes, Audi and what not.
Today, India, popularly known as the land of snake charmers in the West, is
undergoing a massive transformation and charming the world with its 3D effectDemocracy, Demography and Demand.
The worlds largest democracy went for election in mid 2014 and its resultant was a
stable government giving hope to the fellow Indians to building a new nation and
providing aspirations to the foreign investors about India as an investment destination
Our Prime Minister, Mr. Narendra Damodar Modi has inarguably taken it upon
himself to market India globally. As a move to boost cross country relationship,
tourism and trade, the Prime Minister travelled to popular and powerful countries of
the world offering a hard to resist deal of Make in India.
With opening its avenues for Foreign Direct Investment (FDI), India story is selling
big time across the world as the favorite destination to attracting foreign investors.
The fact was further corroborated as India topped the list of Baseline Profitability
Index 2015, 5 places up from its earlier position in 2014.
It has been largely due to the governments efforts that the country has become a hub
for investment. In 1991, when India was still entering into the global market, it was
suffering from many hiccups ranging from inexperience to poor economic conditions
to unpredictability. To counter these issues, the then government announced a new
industrial policy to reduce the barriers in setting up base in India. Since then, the
relative position for India in the global economy has improved to a great extent. India
not only has a high influence in international institutions but also is adopting
internationally accepted best practices for production and provision of various goods
and services.
Today, when global firms look towards India, they not only see a growth potential but
also an opportunity to touch and capture untapped markets. But just looking and
admiring the market opportunities is not enough, most of the firms today, are either
planning to set up a base or are actually in the process of making India their hub.
Indian government today is taking various steps to ensure that there is seam less flow
of funds by foreign investors. Some of the measures that the government has taken in
the recent past include

Relaxing the FDI norms across various sectors including but not limited to
defense, Telecom, Power exchanges and PSU Oil Refineries
Opening new sectors for FDI

Raising equity caps in the sectors already open to FDI

Besides these, a new automatic regime has been introduced where, the global firms
looking to enter India, are not required to seek any prior approval, but instead are
needed to comply with a simple rule of supplying 30 days of inward remittances to
the Reserve Bank of India and file documents within 30 days of shares being issued to
the foreign investors.
Invest India, Indias official investment promotion and facilitation industry is headed
by Shree Ratan Tata and looks into the day to day and year to year measures and
incentives that need to be taken to make India an attractive destination. This agency is
a joint venture of

FICCI (51% equity shares),

Department of Industrial Policy and promotion (35% equity shares) and
Ministry of Commerce & Industry and State Governments of India (owning
0.5% equity shares each)

With the new government coming up in the last fiscal, there were not only positive
sentiments in the market, but also there were high expectations about the ease of
doing business. These expectations were met in a significant manner, which saw the
investments through FDI shot up by 162 percent to US $1.9 billion in the first 10
months itself, with the total FDI being $4.48 billion in January 2015 from $2.18
Billion in the corresponding month in 2014. The major investors, that lined up were
Mauritius at $7.66 billion, followed by Singapore, Netherlands, Japan and the United
States varying between $5.26 billion to $1.58 billion. This steady fund flow through
foreign investments has helped India in recuperating from poor Balance of Payments
situation and stabilizing the value of Indian Rupee in the market. Looking at
Amazons example, we see that the firm, which hasnt really had any meaningful
profit in 20 years, has already made, $1 billion sales in India since its inception in mid
2013. They say that slow and steady wins the race, but amazons aggressive tactics
like raising $2 billion from investors to invest in India, has seen it become the third
best player in the country behind just Flipkart and E-bay owned Snapdeal. And all of
this has been possible due to governments loosening its hold over FDI and relaxation
of various norms in terms of investments.
There were times, when the cars in India were limited in number, bikes were scarce
and Bajaj scooters dominated the two-wheeler industry. Hamara Bajaj was a tagline
on anyone and every ones lips. Arvind textiles and Raymond Suiting were the
clothing brands that everyone wanted to wear. Over the years, various brands with
products ranging from clothing lines to electronics to automobiles along with services
organizations and retail chains have come and settled in India. The entries have been
either in the form of mergers and acquisitions, like in the case of Tata Motors
acquiring Jaguar and Land Rover, Suzukis tie up with Maruti and Renault teaming up
with Mahindra, or a direct set up as in the case of service organizations like Deloitte
and Accenture which have set up their offices in India and run their business under
their Indian tributarys banner.
Amazon Inc. is one the firms, which identified India as a great market place. What
they found unique about India was the presence of a large number of small and
medium enterprises. Amazon realized that although the products of these SMEs were

great, but the market exposure that these firms had was down to the minimal. To
counter this, Amazon has been regularly trying to invent new ways to get these SMEs
up and online and so far the strategy has helped both. Recently, the Maharashtra state
government signed a memorandum of understanding (MoU) with the Swedish
furniture-retailing giant, IKEA, to set up two to three stores, with an estimated
investment of around Rs 600 crore.
The acquisition of Jaguar Land Rover by Tata Motors turned out beneficial for both
the brands. In India, the market share of Tata Motors had been on a continuous decline
for a few years, and they were looking forward to the luxury segment, which was at
that time unexplored by the firm. At the same time, Jaguar Land Rover was also
looking forward to enter the Indian market, where the other European automobile
giants were already present. The acquisition, helped Tata not only in entering the
luxury segment with a brand that was quite well known and famous, but also provided
them an opportunity to get hands on the JLR technology which helped them in
improving their cars performances in the other segment. For JLR, they were able to
enter the Indian market with ease and also were able to strengthen their hold in
European Markets, where they were now able to receive steel as the raw material at
cheaper rates from Tata Corus another Tata group subsidiary.
Funding for various projects in India by global conglomerates is done either via the
means of Foreign Direct Investments (FDIs) or Foreign Indirect Investments (FIIs).
FDI is one of the major sources of non-debt financial resource for the economic
development of India besides being a critical driver of economic growth. It helps the
various MNCs to take advantage of cheaper wages, vast pool of skilled and unskilled
professionals as well as special investment privileges like tax exemptions. Over the
past one year, especially due to the extensive marketing of Make in India, India has
received proposals worth Rs 21,000 crore (US $3.32 billion), of which Rs. 6000 crore
of proposals have already been approved by the government. Besides the above FDI
flow, the government has also allowed for 100 percent FDI in railway infrastructure,
excluding operations. Previously, this sector was not open for any type of Investment
by foreign conglomerates. It has been forecasted, that the foreign investment cash
flows are going to double and cross the US $60 billion mark in the current fiscal year.
The reason behind this extraordinary increase is said to be a combination of the efforts
of the current government (through the Make in India Program) and the belief and
confidence the foreign investors have in these efforts. These predictions have been
made by an international study after a rigorous survey and study of industry
sentiments. Going by statistics, in FY 14, India received $34 billion of FDI inflows,
which was nearly 22 percent greater than the previous fiscal. In global rankings, FY
14 saw India ranked 9th among the countries receiving highest amount of FDI inflows,
jumping from 15th position in the previous fiscal year. Besides all these efforts, India
is also providing the area-based incentives to firms, looking to set up their operations
in North Eastern region, Jammu and Kashmir, Uttaranchal and Himachal Pradesh.
Other incentives like unit set up ease and permissions in the SEZs, NIMZ and EOUS
are being relaxed to increase the investment possibilities. These results of these
incentives can be seen in the fact that firms like Twitter Inc. and Keiretsu Forum, a
global angel investor network with 1,400 accredited members have forayed into India
in recent times. Twitter Inc. is planning to set up an R&D facility in Bengaluru to
grow faster in the emerging markets. This is the firms first such facility outside the
United States. On the other hand, Keiretsu Forum is investing $48 million in
Narayana Hrudayalaya hospitals, a multi-specialty healthcare provider in Chennai.

Facing the competitive neighbors

A right mix of liberal government policies, correct timing and an enormous market
potential in the unexplored continent of Asia, all act as an enticing factor for FDI in
India. Countries like China, Hong Kong and Singapore also offer similar advantages
either on a varied scale. China is one the major competitors, that attracts significant
amounts of investments by global conglomerates. Looking at the last fiscal year,
China attracted a staggering four times more FDI inflows compared to India.
Although the growth prospects look seemingly fruitful for India in the next two fiscal
years, India needs to continue attracting and engaging foreign investors to make
investments. For this, India promptly needs to upgrade itself with the new age
technology and the environment. The 3 Ss namely Skill, Scale and Speed may just
prove very effective.
1. Boosting the productivity
According to current research/ study, India would surpass Chinas population
by 2020. This massive population growth, which is set to pay demographic
dividends to the country can actually be demographic disaster if not handled and
molded deftly. The basic demands needs to be fulfilled via equal availability of jobs
which the FDI will bring along but the human workforce needs to be equally skilled
to capitalize on the opportunity.
2. Infrastructure Availability
Lucrative policies certainly attract investors and the accompanying huge
potential market makes the deal hard to resist. However, the elementary infrastructure
should be in place in order to set the ball rolling. A company may provide funds and
make a state of art manufacturing unit however one cant expect the company to build
roads and make arrangements for electricity all by themselves!
3. Improved Technical Know how and focus on R&D facilities
What China provides other than speed and scale is a skill factor, which India
needs to focus on today. Producing lakhs of engineers and MBAs every year, what
India lacks is the quality and industry exposure. The Prime Minister has stressed on
the need of new IIMs and IITs in every state of India, but taking a reality check we
see, that the process will be slow and will take time. Focusing on the improved
performance of the current lot of students will help a lot in this regard.
The responsibility lies with the government to provide a conducive environment and
also a facility that helps in attracting and engaging investors both domestic and
foreign.