Effect of economic recession on FDI in India

nychadha

New member
Hi All, would like see and learn your view points on - Effect of economic recession on FDI in India. Welcoming a good participation!
 
The FDI flow will not be hampered on the other hand the government has to liberalise the flow of FDI into the economy on certain sectors which is in need of foreign management and funds. Some sectors like retail I think requires more FDI inflow to accelerate the economic groth of the country
 

ramdas.jadhav

New member
FDI in india will definately will get affected as global recession and liquidity problem. But it will be only for certain sector like real estate & IT which was over rated.
 

manasi_1381

New member
FDI in multi-brand retail?

Posted: 20 Oct 2008 02:05 PM CDT

Could global economic turmoil achieve, what the dream team of economic administrators could not achieve for retail sector in India?
Yes, we are talking about allowing FDI in multi-brand retail!

The country has so far not allowed any FDI in multi-brand retail due to strident political opposition, particularly of the Left, to the entry of multinational retail giants in India, who in their opinion, could ruin livelihood security of small traders and a large number of persons employed with traditional form of retail business.

However, as fears of foreign fund flows into India diminishing in the next few months are becoming real, the government has begun to seriously think in terms of revisiting its policy on FDI in the retail sector.

This, if allowed, will open up floodgates of new capital as foreign retail majors are too keen to foray into India’s retail sector.

While, infusion of 100 per cent FDI in ‘cash and carry’ (B2B) retail is currently permitted, only 51 per cent FDI is allowed in single brand retail. No FDI is, however, permitted in case of multi-rand retail.

While, the likes of Metro AG (Germany) and Shoprite (South Africa) have already taken advantage of 100 per cent FDI in ‘cash and carry’ business and likes of Carrefour (France) and Tesco (UK) have announced their intention to do so, single brand retailers like Marks & Spencer (UK) and Vision Express (Netherlands) have been forced to accept partnerships with local business houses for entry into single brand retail. Given the choice, many of them would have liked to go on their own.

Multi brand retail giants like Wal-Mart, Carrefour, and Tesco, on the other hand, due to current FDI policy, have been compelled to either take franchise route or provide technical (back-end) services. Some have even chosen to wait until the policy is completely changed to meet their requirements.

Although, no major policy decisions are expected as the general elections are due in the next six months, the government is believed to be considering relaxation in FDI norms for both single and multi-brand retail.

Kamal Nath, the union minister of commerce and industries, at a recent trade conference in Paris, had announced that the government is seriously considering permitting up to 100 per cent FDI (as against 51 per cent at present) in single brand retail, specifically in the area of luxury retail. The official line so far has been to consider allowing 100 per cent FDI in single brand retail in the segments that do not adversely affect local employment.

It is also believed that, despite pronouncements to the contrary, the commerce ministry has mooted a proposal that seeks to allow up to 49 per cent (as against Zero per cent at present) FDI in multi-brand retail.

Although, this will require a lot of political courage on part of the government, if both proposals of the commerce ministry are accepted, the country can expect to receive a large inflow of FDI in the retail sector from MNC retailers, as modern retail is growing at 40 per cent or more every year
 

darshanaoo

New member
FDI in multi-brand retail?

Posted: 20 Oct 2008 02:05 PM CDT

Could global economic turmoil achieve, what the dream team of economic administrators could not achieve for retail sector in India?
Yes, we are talking about allowing FDI in multi-brand retail!

The country has so far not allowed any FDI in multi-brand retail due to strident political opposition, particularly of the Left, to the entry of multinational retail giants in India, who in their opinion, could ruin livelihood security of small traders and a large number of persons employed with traditional form of retail business.

However, as fears of foreign fund flows into India diminishing in the next few months are becoming real, the government has begun to seriously think in terms of revisiting its policy on FDI in the retail sector.

This, if allowed, will open up floodgates of new capital as foreign retail majors are too keen to foray into India’s retail sector.

While, infusion of 100 per cent FDI in ‘cash and carry’ (B2B) retail is currently permitted, only 51 per cent FDI is allowed in single brand retail. No FDI is, however, permitted in case of multi-rand retail.

While, the likes of Metro AG (Germany) and Shoprite (South Africa) have already taken advantage of 100 per cent FDI in ‘cash and carry’ business and likes of Carrefour (France) and Tesco (UK) have announced their intention to do so, single brand retailers like Marks & Spencer (UK) and Vision Express (Netherlands) have been forced to accept partnerships with local business houses for entry into single brand retail. Given the choice, many of them would have liked to go on their own.

Multi brand retail giants like Wal-Mart, Carrefour, and Tesco, on the other hand, due to current FDI policy, have been compelled to either take franchise route or provide technical (back-end) services. Some have even chosen to wait until the policy is completely changed to meet their requirements.

Although, no major policy decisions are expected as the general elections are due in the next six months, the government is believed to be considering relaxation in FDI norms for both single and multi-brand retail.

Kamal Nath, the union minister of commerce and industries, at a recent trade conference in Paris, had announced that the government is seriously considering permitting up to 100 per cent FDI (as against 51 per cent at present) in single brand retail, specifically in the area of luxury retail. The official line so far has been to consider allowing 100 per cent FDI in single brand retail in the segments that do not adversely affect local employment.

It is also believed that, despite pronouncements to the contrary, the commerce ministry has mooted a proposal that seeks to allow up to 49 per cent (as against Zero per cent at present) FDI in multi-brand retail.

Although, this will require a lot of political courage on part of the government, if both proposals of the commerce ministry are accepted, the country can expect to receive a large inflow of FDI in the retail sector from MNC retailers, as modern retail is growing at 40 per cent or more every year

yup ......................................................................................................................................................................................................................................................
 

deepakraam

Par 100 posts (V.I.P)
Well a nice q to talk about.FDI is always a better option for country than a FII.When the developed economies are shirking in growth it is quite natural for the companies to start shops in developing economies esp in a country like India.Well FDI investments also needs the support of the Govt and our Govt is doing its best to bring investments to the country.FDI in BFSI will not be possible due to the global financial crunch but investment in other avenues like Retail,Print,Cinemas,Infrastructure will boom.

-Deepak.
 

vishakha12

New member
Hi

I think the economic market down n crisis will affect market but will not last for long time i guess bcoz it is hampered mainly in US and retail or finance sector are current boom,Banks always go on in any case n many no of people go for it daily so the booming sector will be reset for sometime but not last long.
indian economy can pick it up easily

vishakha
 

nalingoel007

New member
hi
the foreign minister is lookng to allow 100% fdi looking for credit inflow..and tht too thay are looking for fdi's in arab countires..it will strenghthen our market
 

anyzen

Par 100 posts (V.I.P)
This ongoing economic recession means bad business for all sectors, When there is no liquidity how the fdi will emerge.
 

Hemnaath

New member
Hi all,

Herewith i would like to share upon my views regarding the topic "The Effect of economic recession on FDI in India" The first and foremost information i would like to share is that there is a common misperception amongst all that our nation India is under recession due to the global recession.Infact,that is a pure misperception.Since recession was first started in the US country in real estate industry and then in banking sector.Which eventually lead other countries end up in the recession effect.The fact is that our nation is the larger exporter of IT,which made an effect amongst IT industry.So this was mis perceived as we are under recession.Our nation is safer than any other nation across the globe.I would call it as either meltdown or slowdown which in turn is good for economy like India.The term i used meltdown or slowdown is not my own perception.This is how the famous economists around the globe termed the turmoil.I would strongly say that there is no recession exist in our nation in any industry.Even on FDI it was just a meltdown or slowdown,not a recession.

Cheers!

Hemnaath
 

MRK466

New member
Re: Effect of economic recessioed by n on FDI in India

FDI is effected by short term variations in markets,ay some point in past it has shown its effect but market gradually picked up......
 

anand2110

Par 100 posts (V.I.P)
FDI r good for india...but we can remain dependent on them but again our deficit doesnot allow us to take ne other steps...
 

gurpreetsingh

Par 100 posts (V.I.P)
Well FDI in India have suffered due to recession. In India we have actually not faced the recession but it was a slowdown in economy. Now conditions have improved but still i see that there will be less FDI in comparison to it should be in India if recession was not there. FDI in real estate sector, IT Sector, B.P.O Sector, in these sector we can expect good FDI in near future. But i also think we must be aware and alert in F.D.Is because if Indian government became too much soft towards F.D.Is so it can also have a negative impact on our economy if recession in future again hit the world economies.
 
S

shrey420

Guest
In respect of FDI- FDI or Federal Direct Investment, is the investment by foreign nationals in a country’s industries. In case of weakening of US$, there will be lesser funds in terms of rupees, invested by the US citizens and thus the FDI from US as such will be effected adversely. However with the US industries in turmoil, India will become a very attractive destination for all investment, within the US and without. Therefore the impact of a weak US dollar on FDI as such will be suitably compensated by the increase in FDI from other sources.imports by a substantial amount. As such, in a purely economic sense, exports to the US are much more essential for the economy and for the livelihood of all involved. Thus it can be said that the loss which Indian economy will face through the loss in exports will far out-weight the gain for the importers.
 

kumar_sailendra

New member
The FDI flow will not be hampered on the other hand the government has to liberalise the flow of FDI into the economy on certain sectors which is in need of foreign management and funds. Some sectors like retail I think requires more FDI inflow to accelerate the economic groth of the country

yes you are correct in this regard.letting the FDI inflow will solve the problem
 
The recession in the US market and the global meltdown termed as Global recession have engulfed complete world ecomony with a varying degree of recessional impact. World over the impact has diversified and its impact can be observed from the very fact of falling Stock market, recession in jobs availiability and companies following downsizaing in the existing available staff and cutting down of the perks and salary corrections. Globally the financial sector sacking the existing base of employees in high numbers in US the major example being CITI Group same still followed by others in hospitality industry Jet and Kingfisher Airlines too. The cut in salary for the pilots being 90 % can any one imagine such a huge cut in salary.
 
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