What's new in FDI now

By : Syed Ather Hasan
Foreign Direct Investment or FDI is neither a new term or nor first in our country. After opening the Indian market for foreign companies during P V Narasimha Rao's government when current Prime Minister Dr. Manmohan Singh was Finance Minister Foriegn companies gradually started investing their companies in India in almost all the sectors either directly or through a partner. After the exit of Narasimha Rao's Government , successive governments followed the same policies since then, though they were not Congress led government. We had governments of various parties including BJP led government. One thing was always common in all these governments and that was economic policies. Every new government not only encouraged foreign direct investments but also expanded its list. According to MANUAL ON FOREIGN DIRECT INVESTMENT published by Secretariat for Industrial
Assistance Department of Industrial Policy and Promotion Ministry of Commerce and Industry
Government of India, New Delhi. Which is published time to time with new changes in guidelines,
"In recognition of the important role of Foreign Direct Investment(FDI) in the accelerated economic growth of the country, Government of India initiated a slew of economic and financial reforms in 1991".
Initially there were some hue and cry when for the first time Indian economy was opened and government liberated the economy by reforming the policies to fecilitate the inflow of foreign funds. The slogans I remember then were that the government is selling Indian business to coke and pepsi also this is another step in making the nation slave of foreign companies, some even raised questions such as this is another way of establishing east India company therefore our sovereignty and democracy is at stake. Then the reformers and supporters of liberalisation stated that this step is not only beneficial to consumers but would also help us achieve better facilities by means of developing infrastructure as the revenues will increase, there would be heal thy competition as well. But at the end we realised that this whole exercise changed everything in our life, and it was a positive change. It was only after liberalisation did we see so many goods and services which were otherwise just a dream for us, we use to hear about so many brands of cars and other goods only through our overseas friends and relatives and had an impression that it is perhaps only for that part of the world and we have nothing to do with it.
Government of India releases the factsheet showing investment's facts and figures, let us see what it says, the amount invested in 1991-1992 was just paltry Rs 408 crore or $ 165 million, the very next year i e 1992-1993 it was RS. 1094 $ 395 Million reached to Rs. 11,397 crore or $ 2590 million in October 2005. From January 2011 to April 2011 the FDI was Rs 29'189 crore or $ 6511. Cumulative direct investments in last 19 years stands at Rs. 594'569 crore or $ 132,837 million. This show how we have constant inflow of FDI in India for the last twenty years or so. Every year there has been significant increase in foreign investment, it covers almost all the major sectors of the industry. FDI is active in power, chemical, telecommunication, automobile, hardware, real estate etc. It has also stormed the stock markets. Now the question is where is the absence of FDI in India?.
The present impasse about FDI is just a means to get some public attention it seems, if the question about foreign retail chains setting their shop is not favourable then it applies to domestic retail chains as well. What I understood in this whole uproar is that the opposition feels that many small traders and farmers may get adversely affected if these foreign investors start their business here.
These are very hypothetical assumptions the only interest in this drama is to consolidate the vote bank of traders and also get funds from not only them but also from Indian corporate houses who are engaged in retail business. If these are valid apprehensions then it applies to all the sectors of the country, the other apprehensions that the FDI in retail sector will lead to control and command of farmers and small industries by foreign retail companies is absurd as same can be done by Indian business houses. To control such malpractices government must formulate new laws as this would become need of hour one day.



2011-12-07



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