FDI in India

The Indian government revealed that FDI from Pakistan was allowed. It is a signal for growing relationship between two countries.

The decision may not cause an immediate increase of FDI from Pakistan, but it does show that the two countries are going to a new level of trade and economic development. It is part of the trade normalization process. The Commerce, Industry and Textiles minister of India Anand Sharma commenced that procedure making is underway and will come out soon. As relationsip is growing warm, the opening up in investment will cut down the illegal trade by estimated 10 billion.

Governments hope the opening up in investment will bring about greater confidence in bilateral relationship. Economic development can solid the base for further trust as the economic tie between countries can keep close corporation.

The banks are keen to open new branches to expanse their own business. The progress of allowing banking services is going forward. New discussion has been initiated and a plan for setting up India-Pakistan council for better developing FDI is on progress.

Besides, the FDI in retail chain is argued in public. The FDI in India decreased for recent years. In 2011 the investment declined by $14bn. Besides, the Indian retail sector is going through a messy situation. The low efficiency and slumping growth rate force the government to take reformation in this sector. The FDI boost in the sector can help change the situation and bring more employ opportunity.

But the reformation will harm the small vendors in the business. Overseas companies will compete over the vendors and the small shops will have to close down and many people will lose their jobs. Also the local farmers is at the stake as the overseas companies will press down the price and squeeze the profit for framers. But it is good news for the customers as they will enjoy the premium service provided by overseas vendors.

Overall, FDI growth in India is a good sign for this developing countries. The capital inflows with FDI can help the countries boost their economy and create more jobs. Capital and jobs always are good element for developing economy. The FDI in retail sectors should be encouraged. Except for IT industries, other business industries in India are going through a slump developing. The FDI in these industries can change the low efficiency and messy management situation. It is going to have cost. The traditional management and developing pattern will be inevitably changed. Small vendors and local suppliers will harm. But the cost is worth in term of the benefit brought about.

If the FDI from neighbor country which has disputes in relationship, the FDI is not just good for the economy but also for the political stability in the region. FDI from Pakistan will enhance the cooporation between countries and solid the base for peace. The meaning of FDI is further than economic developing.