INVESTMENT SCENARIO IN INDIA

India is thought to be a first-rate investment. India has a vast potential for foreign investment and foreign players find it their next investment destination.

As rightly said by Sukomal C Basu, Chairman & Managing Director, Bank of Maharashtra; India is the fourth largest economy in the world and has the second largest GDP among developing countries, in purchasing power terms. It is experiencing growth with macro economic stability and is in the process of integrating with the global economy. Far-reaching economic reforms initiated in July 1991 generated numerous business opportunities, leading to degeneration with removal of most licensing procedures.
Economics authorities and various research studies carried out across the globe confirm the fact that India and China will rule the world in the 21st century. For over a century the United States has been the leading economy in the world but key developments have taken place in the world economy since then, leading to the change in focus from the US and the rich countries of Europe to the two Asian giants- India and China.

The wealthy countries of Europe have seen the supreme decline in global GDP share by 4.9 percentage points, followed by the US and Japan with a decline of about 1 percentage point each. Within Asia, the rising share of China and India has more than made up the moribund global share of Japan since 1990. During the seventies and the eighties, ASEAN countries and during the eighties South Korea, along with China and India, contributed to the rising share of Asia in world GDP.

According to some experts, the share of the US in world GDP is expected to fall (from 21 per cent to 18 per cent) and that of India to rise (from 6 per cent to 11 per cent in 2025), and hence the latter will emerge as the third pole in the global economy after the US and China.

By 2025 the Indian economy is projected to be about 60 per cent the size of the US economy. The transformation into a tri-polar economy will be complete by 2035, with the Indian economy only a little smaller than the US economy but larger than that of Western Europe. By 2035, India is likely to be a larger growth driver than the six largest countries in the EU, though its impact will be a little over half that of the US. India, which is now the fourth largest economy in terms of purchasing power parity, will overtake Japan and become third major economic power within 10 years.

Any company or firm irrespective of its size, which aspires to be a global player cannot for long ignore India which is expected to become one of the best emerging economies.

However the million-dollar question here for foreign players is “What is the success-failure ratio?”

Success in investing in India will depend on four factors like: -

Accurate estimation or at least feasible estimation of the India's potential
Proper Risk Assessment while investing in India
Proper understanding of the Indian Financial System
Careful strategic planning backed by thorough research on investment industry

Failure in investing in India can depend on three factors like: -

Underestimation of Indian investment intricacies
Overestimation of investment potential in India
Complexities & reservations of Indian System

One point that investors should understand about investing in India is that India is an investment goldmine for long-term growth. While short term profits may be churned out from time to time but they are not of a penny’s worth in the longer run.

Investment Scenario In India