Showing posts with label FDI. Show all posts
Showing posts with label FDI. Show all posts

Friday, April 26, 2013

Damn globalisation!

If you are one of those who sits back over a cup of coffee, marvels at India’s growth & takes all pessimism with a pinch of salt; this is a book you can’t miss. It’s a rich account of where we stand & where we’re headed

When I read ‘Confessions of an Economic Hitman’ a few years back, I was shocked to know that the US government has such extensive involvement in private corporations, which further its objective of global dominance. What I understood from the book was that underdeveloped or developing economies with vast amounts of natural resources were exploited by the US, which did so by embroiling them in a debt trap. However, as I sat through Aseem Shrivastava’s and Ashish Kothari’s Churning The Earth – The making of global India, I realised that global politics has moved much beyond and globalisation is now a grand scheme through which powerful nations wish to achieve global dominance. Shiravastava (an economist) and Kothari (an environmentalist) weave an intricate and comprehensive account of the social and environmental changes that have brought about unprecedented development (or so it seems) in India over the last two decades, at a horrible cost. In summary, the book is about India’s unbelievable growth story, why it is a sham and how millions of people suffer everyday at the cost of a few elites ending up better off. The writers have managed to assimilate a great deal of data to substantiate their arguments. For instance, to prove that the increase in Foreign Direct Investment (FDI) has done more harm than good, the authors use the Government of India’s Economic Survey – data which is easily available in the public domain. As per statistics churned out by the survey, India managed to finance its investment from domestic sources between 2002 to 2008 because domestic savings equalled domestic investments. This implies that FDI worth $120 billion during this period generated massive returns for investors without adding any new productive capacity. The more important question is what was all this money used for? It piled up in the form of RBI’s dollar reserves, which were in turn used to finance surplus imports. In short, India was tricked into spending beyond her means even when she could have done without it.


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 


Source : IIPM Editorial, 2013.
An Initiative of IIPM, Malay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles
 
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Sunday, November 18, 2012

INDIA INC.: BCG REPORT

The BCG report elaborates how MNCs struggle in RDEs like India, win-win partnerships are the best option

Moreover, the report does not highlight the kind of bottlenecks that MNCs often face in the local market at the government end, like extended periods of protectionism. For instance, the Indian telecom market has only recently allowed 74% FDI, which was earlier restricted to 49%; and retail FDI is still a burning issue; one of the reasons why Wal-Mart has made a very quiet entry. Meanwhile, most domestic giants have managed thus far to lobby successfully for their own gains at the cost of the foreign companies.

Nevertheless, MNCs realise the worth off the RDEs and are ready to take the risks involved. They scale up, stumble and may even fall flat, but they do not want to bail out so easily. “Multinationals are looking at every opportunity available. They are using the path of aggressive marketing, localisation, associations and tie-ups as few strategies to make space for themselves,” states Dungarwal.

Indeed, the best recourse in such instances becomes engaging in win-win partnerships with local firms, though there are examples of companies that have done very well without it (like Nokia, LG, HP and Pepsi). Interesting examples like Hero Honda, Bharti Wal-Mart (so dynamos are not necessarily anti-MNC!); Reliance Retail-Marks & Spencer, Tata-Fiat, Mahindra-Nissan, Emaar-MGF et al only go on to show the importance of such partnerships, which are tremendously beneficial to local players as well. After all, if the terms had been mutually beneficial, even the Spartans could have made up with the Persian invaders!


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.


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