Foreign Direct Investment (FDI) as its name depicts is the investment done by a corporation in an abroad based corporation either by extending the existing business operations or by directly buying an abroad based company. Though today India is the largest democracy in the world, but its governmental, as well as, the political set up has many imperfections and shortcomings. Defect like bureaucratic hassles, power shortage, political inconsistency, corruption and infrastructural insufficiency. Despite all these political deficiencies, India is one of the most lucrative places for FDI Investments, in the observation of the wealthiest Americans and European investors. It is the true reason that the researches made in the Indian sector sets up more and more overseas investors coming to India and investing abundantly into the different sectors of the Indian market. India was ranked at the second position in worldwide foreign direct investments, in the year 2010.
The rapid and steadily growing market of India in the major parts of its sectors has made India one of the most reputed and popular target in the whole world, for Foreign Direct Investment. Foreign Direct Investment has been a sensational topic in the recent days. It has entered in toIndian business in almost every sector like transportation, IT, telecommunication, hospitality services, computer software and hardware. The major investments are made by countries like UK, US, Singapore, Mauritius, Canada, China and much more, But now it has been noticed that India is losing its ground on FDI investments. India’s Finance Minister P Chidambaram is trying his best to boost the confidence among the foreign investors like US and Canada.
An easy method to inspect the seriousness of the disturbing crisis can be judged by two simple questions. The first question that strikes is why FDI investment in blue-collar sectors, while thinking to switch from, China prefers Cambodia instead of India? The second question includes that why India prefers to spend more on non-productive resources like real estate assets and gold rather than fruitful enterprises? These two questions are certainly worth noticing to think seriously about the intensity of prospects in India.
The main reason for the frightening conditions of the Indian market and Indian economy is the solutions followed by the policy makers of India. Rather than focusing on what it does it take for small and medium enterprises (SMEs) to prosper in India they are trying to represent India as an ultimate country for Foreign Direct Investment. If existing opportunities of how SMEs trade can succeed in the Indian economy were accessible to the global investors, without human interference, it would build the lenient conditions that would be helpful for attracting FDI. The SME segment is essential for creating employment and professional openings. The SME sector also makes a good atmosphere for competition and can be taken as an energetic catalyst in capturing the attention of giant brands. The development rate of the small and medium enterprise sector in India has not been inspiring over some last years. The FDI standards of the Indian government are not yet that open-minded to attract FDI to a large extent.
The Indian Government should take some imperative steps to broad the inlet for FDI.