FDI means foreign direct investment where foreign companies look for cheaper avenues in other countries and invest money in production and services. They gain because their production cost is cheaper spelling out more profits for them than their native countries. The host country where they invest is benefited for the population gets lucrative employment opportunities and foreign currency inflow. China is one of the most sought after location for FDI in manufacturing. FDI commonly exists in form of joint ventures. FDI is already allowed in India in various sectors such as services, telecommunication, construction activities and computer software and hardware. According to Ernst and Young, foreign direct investment in India in 2010 was $44.8 billion, and in 2011 experienced an increase of 13% to $50.8 billion. India has seen an eight-fold increase in its FDI in March 2012. So what has now been introduced is allowing FDI in few more sectors such as in aviation up to 49%, in Broadcast sector up to 74%, in multi-brand retail up to 51% and in single-brand retail up to 100%.
What government has announced is nothing catastrophic, nothing new. Government wanted to introduce it in Nov 2011, but could not. The current global sentiment on India is that of pessimism. We are burdened with fiscal deficit. Rupee is losing against dollar. For every rupee lost against dollar, we are debted with 8000 Crore rupees more. Why this is happening is a matter of grave concern and of debate rather than the solution proposed to counter this problem. With dipping investment grades, allowing FDI in other sectors is a desperate attempt to improve our global position and maintain investors faith and allow markets to heal, hoping for steady recovery of rupee.
For those who have apprehensions that FDI in retail will kill local grocers’ business, why do they think that FDI would do it? We already have Indian chain of super-stores and marts such as Big Bazaar and Reliance, and although they have been doing well, they still form only 4% of this business. What magic wand would foreign investors use for snatching away business from un-organised retail or organised retail? If organised retail had to kill local business then it would already have happened in capable hands in Indian business giants. We do not need a foreign entity to do that. To those who argue that locally manufactured products would be outdone by cheaper substitutes from other nations, have they been blind to 'Chinese' replicas of every product - be it games or mobile.
What Foreign investors can help improve upon is the much helpless state of farmers. In the whole chain of transferring produce from farms to actual outlets, Farmers are exploited most and needless to add they suffer most.
FDI can be a godmother to such farmers, eliminating the middle-men and improving upon much needed infrastructure. Pre-conditions to FDI in India seem fair enough to achieve what India actually wants.
Conditions state that FDI can only proceed with a minimum investment of $100 million and that too 50% of the investment is to be in back-end infrastructure development. 30% of all raw material has to be procured from India's small and medium industries. There is permission to set up malls only in cities with a minimum population of 10 lakhs. Products should be sold under the same brand internationally. Foreign investor should be the owner of the brand.
If FDI were to be allowed 'honestly' with given set of pre-conditions then we surely can expect some benefit.
The question on FDI should not be whether it should be allowed or not but rather it should be if FDI can achieve, what is expected to. FDI is expected to improve India's global position and help rupee climb the ladder. Surely FDI can bail us out temporarily, but we need to strengthen ourselves from core to make a permanent impact.
The reasons for our continuously going down with our debts and poor performance of rupee need tough investigation and analysis. Why our imports increasing and exports falling. Despite being an agricultural nation primarily, why are we short of our produce and need to import. Climate and monsoon no doubt are big spoilers but not the only reasons. Bad roads or rather no Roads, lack of adequate storage facilities, under-performing railways add cost everywhere. What are state governments doing? Where is the taxpayer’s money going? Why political scamsters and frauds still free? Why there is no strict punishment against those who break the law? Why no justice has been provided in corruption cases? This is just the tip of iceberg. I and surely you can go on and on, on why India is under performing despite our best attempts. And this is what we expect government to do. This is what we expect our opposition to find answers to. Why Arvind Kejriwal is the one whistle-blowing on government officials. Why the opposition could not do this task so far? This is UPA's second term. What has been opposition been doing since long?
It’s a pity that of all the political scandals which the government has done, Opposition finds FDI worthy enough to pull out their supports. Why did not they pull out support when Coalgate was exposed, when CWG sham was highlighted, when 2G scam came into picture?
Opposition using FDI as their elections manifesto is a sad representation of sorry state of affairs our country is into. It is also symbolic of how politicians still want to take advantage of ignorant and un-aware masses.
It saddens me to core of my heart at this situation. We are failing as a nation not just because of our government but also because of absence of a good opposition.
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