India Inc. waiting for FDI to uplift the face of the industries
The Indian equity market is seeing a surge as many foreign portfolio investors have bet big on Indian equities. The FIIs (Foreign Institutional Investor) are pumping in nearly $16 billion into Indian debt and equities since January 2014 and the last few months have been great for India Inc.
The FIIs expect the Government to revamp the entire FDI (Foreign Direct Investment) policy and allow them to start their operations in India. POSCO, the South Korean steel making MNC faced problems during their land acquisition phase in India. The telecom sector is also reeling under the policy pressure of the government.
Even though the opposition feels that FDI will be harmful to the local industries, data shows that allowing more FDI in aviation and pharmaceutical industries has only helped these sectors.
The immediate action plan could be to make legislative changes for increasing the cap in insurance from the current 26 %. India received an inflow of average annual FDI of about $24 billion (in the last two years); however the potential is much higher. The inflow received by China and other Asian countries is higher and it is expected that the Indian insurance and pension sectors will also be benefitted by FDI.
The e-commerce sector is also expecting a boom with FDI inflow and the past records show that all the stakeholders have been benefited from FDI. FDI is permitted in road construction, manufacturing of rail-based factories, shipping, ports however the actual level of investments has not been significant.
Source- The Hindu Business Line
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