News / Asia

India Attracts Record Foreign Investment Despite Slowdown

Employees watch as a tunnel boring machine is lowered at a construction site of the Delhi Metro Rail Corporation (DMRC) in Chelmsford Club in New Delhi, January 31, 2012.
Employees watch as a tunnel boring machine is lowered at a construction site of the Delhi Metro Rail Corporation (DMRC) in Chelmsford Club in New Delhi, January 31, 2012.

India attracted record foreign investment of about $50 billion last year. Despite a slowdown in its economy, India continues to be an attractive global investment hub.

Much of the economic news in India during the last year was not positive. High inflation persisted. The rupee depreciated. The stock market lost nearly a quarter of its value. Growth rates were revised downwards to seven percent.

But foreign investors are still keeping faith with the potential of Asia’s third largest economy. In the first eleven months of 2011, foreign direct investment totaled $50.81 billion, up 13 percent from the previous year, according to a recent report by global consultancy Ernst & Young.

Analysts say India’s expanding middle class and a large and cheap labor force remain attractive for global businesses.

Chief economist at consultancy Crisil in Mumbai, D.K. Joshi says economic turbulence in Western countries means multinationals will have to explore Asian markets for growth. Among these, India’s huge domestic market is clearly one of the main magnets.

"Growth slowdown that is taking place in India needs to be looked at in the global context. If you look at the weak growth prospects in advanced countries, especially Europe and Japan, and tepid recovery in U.S., seven percent growth in India looks very good.  So, from a growth differential perspective I think we are still very attractive," said Joshi.

India has been attracting foreign investment in sectors such as automobiles, telecommunication, technology and pharmaceuticals.

But the area where it desperately wants foreign investment is infrastructure - a sector in which India plans to spend one trillion dollars in the next five years. On a recent visit to the United States, Indian Finance Minister Pranab Mukherjee pitched for overseas businesses to help build the highways, ports and power plants which the country needs.

However, analysts point out that many foreign investors have been deterred by lack of governance and slow policy-making in India.

D.H. Pai Panandiker heads the economic think tank, RPG Goenka Foundation in New Delhi. He says foreign investment in India also remains below potential because many sectors of the economy are still closed to outsiders.

"It could have encouraged much more if reforms had come. It would have been a flood of foreign investment. What people are expecting is more liberal reform.  Retailing is one area, but in others like insurance, banking… that would make a considerable difference to Indian economy," he said.

The government has been assuring investors that those reforms will come. Although it backtracked on opening the retail sector to overseas investors in December, because of political opposition, the government's top ministers have said that the decision is only on hold and will be implemented.

Investors are wanting to tap the potential of the Indian market and U.S. based companies are the leading investors in India.

On Monday, U.S. based Starbucks Corporation announced plans to open its first store in August, to woo coffee drinkers.  It plans to soon expand to 50 outlets.  Like other companies, analysts point out that Starbucks wants to expand in the Asia-Pacific region, where growth is accelerating faster than in the United States.  

You May Like

EU Court Fines Poland for Hosting CIA 'Black Sites'

Ruling is first time a court has acknowledged suspects were held and tortured at the sites, under US program launched following the 9/11 terrorist attacks More

Migrant Issues Close to Home Spur Groups to Take Action

Groups placing water, food in the desert, or aiding detainees after release, have one common goal: no more deaths of migrants crossing illegally into the US More

Video At AIDS Conference, Prevention Pill Stirs Excitement

Truveda shows promise, spurring debate over access and other approaches More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Treatment for Childhood Epilepsy Heats up Medical Marijuana Debatei
X
Shelley Schlender
July 24, 2014 6:43 PM
In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Treatment for Childhood Epilepsy Heats up Medical Marijuana Debate

In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Airbus Adds Metal 3D Printed Parts to New Jets

By the end of this year, European aircraft manufacturing consortium Airbus plans to deliver the first of its new, extra-wide-body passenger jets, the A350-XWB. Among other technological innovations, the new plane will also incorporate metal parts made in a 3-D printer. VOA's George Putic has more.
Video

Video Death Toll From Israel-Gaza Conflict Surpasses 700

Gaza officials say a shelling hit a compound housing a United Nations-run school in the Gaza Strip, killing more than a dozen people, during an Israeli offensive in the area. Heavy fighting between the Israeli military and Hamas militants continued on Thursday, pushing up the death toll. So far, more than 730 Palestinians and 35 Israelis have been killed in the conflict. VOA's Scott Bobb has the latest from Jerusalem.
Video

Video AIDS Conference Welcomes Exciting Developments in HIV Treatment, Prevention

Significant strides have been made in recent years toward the treatment and prevention of HIV, the virus that causes AIDS. This year, at the International AIDS Conference, the AIDS community welcomed progress on a new pill that may prevent transmission of the deadly virus. VOA’s Anita Powell reports from Melbourne, Australia.
Video

Video Israel Targets Gaza Supply Tunnels

The Israeli military has launched a ground operation in Gaza to destroy the myriad tunnels that may have been used to smuggle weapons to Hamas. VOA's Zlatica Hoke reports that could mean more hardship for the people of Gaza, who obtain some of their essential supplies through these underground passages
Video

Video Researchers Target Low-Cost Avatar Technology

Scientists at the University of Southern California Institute for Creative Technologies say 3-dimensional representations could revolutionize social media. Elizabeth Lee has more from Los Angeles.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.

AppleAndroid