Fdi Introduction and History

Attracting foreign capital (Indian government encouraged foreign investment) for new ventures. Foreign investors feel more comfortable working with a reputable party. Appendix 7 provides evidence of this (e.g. ventures with IBM, AT&T, Bell Canada).

Foreign direct investment FDI is an investment of a company from one country to another whereby assets are acquired, operations are set up and joint ventures with local firms are made (Financial Times , n.d.). FDI is a risky and more expensive method of venturing globally as compared to licensing and exporting, however it does not stop companies from doing so due to its many advantages. FDI is one of the key drivers in speeding up the development and economic growth in Malaysia. Sound macroeconomic management, presence of a well-functioning financial system and sustained economic growth has made Malaysia an attractive country for FDI. Moreover, FDI plays a crucial role in Malaysia economy as it generates economic growth by increasing capital formation through the expansion of production capacity.

There are several specific aspects of the political environment, such as the principle of “indigenous availability”. Which was very difficult to trade and also establish the rules and the regulation. Secondly, it was forbidden the use of foreign brands in India.

Protectionism, especially in scenarios with continued high unemployment and economic malaise; India exploits scrutiny of India’s own restrictions on inward foreign investment. The rules are particularly tough on foreign investment in banks.

Many developing nations are trying to resist foreign ownership of their companies because of nationalist sentiments and fear of foreign political and economic influence. They fear that it will leave their resources more vulnerable to exploitation by the foreign companies.

3) Trade policies: Indian government 's attitude and policies towards attracting foreign direct investment in the country is much more favorable as compared to France. India has been able to attract huge foreign invesments in the country from global corporations. The foreign multinationals like Acme have been offered substantial benefits and relaxations to set up operations here. Especially for US companies, which is India 's largest trading partner, the situation is even more favorable as compared to France, where anti-US sentiments have cropped up after the Iraq war.

They are in consistent need of remote working capital in period of both immediate and roundabout speculations. In any case in the 1980s the drying-up of business storehouse monetary establishment loaning, due to obligation emergencies, constrained numerous nations to change their venture strategies in order to draw in more stallion stable cast of outside capital, and FDI had all the earmarks of being one of the most straightforward approach to get remote capital without undertaking any dangers connected to the obligation.

Couple of years before the policy maker decided to lower down the tariff barriers and to give permission for foreign investment. Multinational companies have started rushing into countries where they wanted to achieve the market position (Arindam K. Bhattacharya and David C. Michael) The entry of multinationals is good for the country as they bring

5. Strict regulation of the foreign exchange market with too many restrictions on foreign investment in Indian companies.

This section analyses the linkage between inward FDI flows and innovation activity in Indian service sector. The focus is on service sector since there has been unprecedented inflow of FDI in services in recent years.

In the late 1970s India introduced economic liberalization policies that allowed state owned enterprises to be privatized, at the same time granting foreign investors the ability to access these once isolated markets. Since the inception of these new economic policies in 1991, the Indian economy is growing on a remarkably higher economic growth trajectory (Gupta 2015). India’s economic growth rate averaged above 8 per cent per year between 2003 and 2011

Nehru’s period was known by extended economic development plans that organized as five year plans based on policies of the Soviet Union. Given the colonial conditions that India had been through; these plans were particularly admirable for them. By 1970s, regulatory policy regime of India became gradually restrictive and inward-oriented.

India: Foreign Trade PolicyAlthough India has steadily opened up its economy, its tariffs continue to be high when compared with other countries, and its investment norms are still restrictive. This leads some to see India as a ‘rapid globalizer’ while others still see it as a ‘highly protectionist’ economy.Till the early 1990s, India was a closed economy: average tariffs exceeded 200 percent, quantitative restrictions on imports were extensive, and there were stringent restrictions on foreign investment. The country

During this period the government had to rely heavily upon the private savings (financing from business houses like Tatas, Birlas etc) . This made these business houses very strong and they gradually started having a strong say in the nation’s policies and economic reforms due to the financial dependency on them.

However, in terms of risks for FDI, a major risk in India is the bifurcation of existing states. A bifurcation would result in different political parties in power in the provinces where the foreign firm exist, and this could result to be a bane or a boon for the organization. However, since RE has no ill effects to it, it seems like an industry that will be held in high regards by any political party that is in power.