Why Invest In India?

There are several good reasons why foreign investors are attracted to India or they should invest in India for long as well as short term gains. It is world’s fourth largest economy as per GDP-PPP. Location of India is very strategic and it gives access to the vast domestic Indian as well as South Asian markets. India has a long history of stable parliamentary democracy.

India has a large and rapidly growing consumer market mostly of Great Indian Middle-class that comprises up to 300 to 350 million people.  India represents a large market for branded consumer goods which currently is estimated to be growing at 8% per annum and demand for several consumer products is growing at over 12% per annum.

Foreign investment is now more welcome in India then ever before after year 2005 when Government of India approved of 100% investment by FDI in various sectors in India.  A formal approval is still required but is automatic in nature and consists of sixty categories of various Industries.

Biggest advantage India has is her large work force of skilled man-power and highly motivated professional managers. Most of all they are available at competitive cost for most of the Multinational Corporations. In India there are large pools of scientists, engineers, technicians and managers. IIMs (Indian Institute of Management) and IITs (Indian Institute of Technology) are well known and world reputed institutions managing high standards of education for years.

Investment after Globalization in India:

Foreign direct investment in India has reached 2% of GDP, compared with 0.1% in 1990, and Indian investment in other countries rose sharply in 2006.

As the fourth-largest economy in the world in PPP terms, India is a preferred destination for foreign direct investments (FDI); India has strengths in information technology and other significant areas such as auto components, chemicals, apparels, pharmaceuticals, and jewelry. Despite a surge in foreign investments, rigid FDI policies resulted in a significant hindrance. However, due to some positive economic reforms aimed at deregulating the economy and stimulating foreign investment, India has positioned itself as one of the front-runners of the rapidly growing Asia Pacific Region. India has a large pool of skilled managerial and technical expertise. The size of the middle-class population stands at 50 million and represents a growing consumer market.

India's recently liberalized FDI policy (2005) allows up to a 100% FDI stake in ventures. Industrial policy reforms have substantially reduced industrial licensing requirements, removed restrictions on expansion and facilitated easy access to foreign technology and foreign direct investment FDI. The upward moving growth curve of the real-estate sector owes some credit to a booming economy and liberalized FDI regime. In March 2005, the government amended the rules to allow 100 per cent FDI in the construction business. This automatic route has been permitted in townships, housing, built-up infrastructure and construction development projects including housing, commercial premises, hotels, resorts, hospitals, educational institutions, recreational facilities, and city- and regional-level infrastructure.

Meaning of term "Investment" in various perspectives

Term Investment in Business management:

The investment decision which is also known as capital budgeting is one of the fundamental decisions of business management:  Managers determine the investment value of the assets that a business enterprise has within its control or possession. These assets may be physical (such as buildings or machinery), intangible (such as patents, software, goodwill), or financial. Assets are used to produce streams of revenue that often are associated with particular costs or outflows. All together, the manager must determine whether the net present value of the investment to the enterprise is positive using the marginal cost of capital that is associated with the particular area of business.

In terms of financial assets, these are often marketable securities such as a company stock (an equity investment) or bonds (a debt investment). At times the goal of the investment is for producing future cash flows, while at others it may be for purposes of gaining access to more assets by establishing control or influence over the operation of a second company (the investee).