Explaining the benefits of recent FDI permit in India, with special focus manufacturing
| From Plastics, Metals, to Electronics India Welcomes All Foreign Companies with Better Garland Now
There have been many companies and groups that have been waiting to hear this news (FDI permission in India) from more than a decade to guess. The news that probably allows them to grow further into one of the world’s largest market and probably of the bests for foreign companies in terms of Foreign Direct Investment is India’s allowance towards it.
Now that India has allowed Foreign Direct Investment (FDI) till a certain level (for the record; in aviation up to 49%, in broadcast sector up to 74%, in insurance sector up to 49%, in multi-brand retail up to 51% and in single-brand retail up to 100%) it seems that industries and other OCBs (Overseas Corporate Bodies) will start entering Indian market. Manufacturing, service (wherein comes Packaging Industry) and also somewhat retail sales. The contribution to manufacturing and service divisions are 23% and 41% respectively. The new FDI announcement has most of its links with retail market but it is also to note that as OCBs will enter the market there is to be an increase in the demand of machines, packaging substances, infrastructures, and many more. This of course again needs a good lot of companies to match the demand end.
In India, cities like Delhi, Mumbai, Hyderabad, Ahmedabad, Pune, Chennai, Bangalore, and Kolkata have been the centres for the development and settlement of OCBs. That to propose shall develop faster and better in many of the industrial and retail sector. Other cities of India that recently have started holding up the idea of Industrial Development in their locations are also on the advent of advancement and development. The events and expos like Plast Expo Saurastra and other such have given a good platform for these OCBs and foreign industries to get acquainted with Indian market and vision ahead.
In 2011 the FDI Inflow of India was just $50 million but this system is surely to multiply this digit in many folds. It is expected that by 2020 India will be able to stand as the leading countries for FDI Inflow and preferred destination of multinational companies and OCBs.
The recently held Plast India 2012 was also a visionary to this opportunity. The success of these exhibitions and expos is a clear indication that this FDI declaration and invitation will be positively accepted by OCBs and other foreign Industries. Now let us just see at the opportunities that this will bring in and try to understand it in division of sectors.
Any industry that is involved in manufacturing anything from plastics, metals, to electronic raw materials can also get a significant advantage from the current FDI advancement. Although this current FDI proposal doesn’t speak much of its various sectors but as per the RBI’s (Reserve Bank of India) database the following are the main areas of Manufacturing Sector wherein the role of FDI is much seen.
1. Alcohol - Distillation & Brewing
2. Coffee & Rubber Processing & Warehousing
3. Defence Production
4. Hazardous Chemicals and Isocyanates
5. Industrial explosives - Manufacture
6. Drugs and Pharmaceuticals
7. Power Including Generation (except Atomic energy); transmission, distribution and power trading
But even in these we can see the open invitation to other sectors that are backlinks to it. Never to forget the simple demand and supply system of every economy and the same will happen in India. The rise in alcohol sector will automatically give rise to industries manufacturing bottles of glass, plastic, fibre, and such addition to that it will also boost the packaging industry that is involved in manufacturing packing products like cardboards, sponges, plastic wrappers, and such.
The same is the story with coffee & rubber processing companies. While in Defence Production, companies involved in finishing raw metallic products into robust metals of high quality with proper mixing of other metals and elements are also benefitted. These robust finished metals and elements are the raw materials for companies involved in Defence Production. It should not be forgotten that this system will make the country work on the principles of world economy and there are many better aspects clearly visible of it.
As per the announcement the aviation industry will have a 49% inflow permit for FDI and that will develop not only the manufacturing sector but also the service sector of the country.
In services sector there are many areas wherein companies and work force are benefitted. Of those few areas are…
1. Civil Aviation
2. Asset Reconstruction companies
3. Banking (private) sector
a. FM Radio
b. Cable network
c. Direct to home
d. Hardware facilities such as up-linking, HUB.
e. Up-linking a news and current affairs TV Channel
7. Commodity Exchanges
These and many other areas of the service sector are productive sections where a foreign body can work in joint with local body to create a better commercial value of the company as well as the produce. People employed in these divisions are also credited to work with other divisions in joint and thereby their hard work is paralleled by the hard work of people employed in the manufacturing sector.
The broadcast sector has a total of 74% FDI inflow permit and also a good enough space of Foreign Institutional Investment (FII) in India. This indicates to the prospect future of the broadcasting sector in India.
A real economy is always wherein advancement in one sector results to the advancement in another and the system thereby goes on developing and evolving better. So is in the case of Foreign Direct Investment, Foreign Institutional Investment, and other economic and financial reforms in India. The multi-brand retail and single brand retail is one of the best divisions where FDI permit was essential and will be beneficial to Indian as well as International market. As India has permitted FDI in multi-brand retail up to 51% and in single-brand retail up to 100%, we can see that this will also enable other big companies like Wal-Mart, TESCO, and such to see their market in India and also use their technology to the best.
So now when in any international exhibitions and expos Overseas Corporate Bodies and MNC will visit India and open its market in India they will not face the problem of not getting a space rather will be encouraged in every way; by the public cum consumer and government.