India became a prosperous nation during 1700s and articulated its economic status in the major areas of food and crop production, textiles, glass etc increasing per capita income to a satisfactory level. However, the year 1757 came with the British rule and has the control in developing and formulating new business policies causing troubles for local farmers and craftsmen. The policy was more in terms of imports rather than exports and huge amount of money was forwarded to different regions specifically Britain.
It's only after Indian Independence when various measures were taken and Indian become founding member of various trade blocs the commission was set up in India to plane further course of action.
We should not forget the 15th century when the first European colonists had started visiting the shores of India. In the early 16th century, Portuguese rule was established on the West coast of India at Goa; however, the Portuguese did not succeed in moving deep into the country. It was the British who began with the battle of Plassey in 1757and moved forward. Then came many changes in the history and lot of development also took place, one of the example was the setting up of Indian railways. Year 1920 has made India withstand the fourth largest railway network in the world and with the history of 60 years of construction. The system by the end of year 1900 provided India with social savings of 9% of India's national income.
Needless to mention that all the engineering skills, knowledge, setting up of universities etc were taking place and moving India towards the road of development. Investment in terms of various subjects was coming in and yes exports were also increasing. For instance, due to the shortage of skilled manpower raw cotton was used to send to Britain and finished goods come back. Infrastructure development was the priority in the 1900 era. These examples clearly states that even in the beginning of the 19th century globalization were taking place, however, in a less conducive manner.
Current Investment scenario in India: Inward and Outward
Globalization and Foreign Direct Investment (FDI) is playing an important role in the development of developed, developing as well as underdeveloped economies. The reasons are simple like introduction of new products, new skills, easy approachable markets and modern technology to the host countries. Every country around the world is playing a important role in the encouragement of foreign and overseas investors and their investments. India is being ranked as the second most favored destination for foreign investments after China by showing a growth year after year.
End of fiscal year 2008-09 Indian received FDI inflows totaling approximately USD$11.2 billion with Mauritius as the highest contributor. Sectors like services including financial and non-financial services attracted the maximum amount of US$6.1 billion. As per the figures released by Department of Industrial Policy and Promotion (FDI) inflows during 2008-09 (from April 2008 to March 2009) stood at approx. US$ 27.3 billion and inflows for the last quarter alone of 2008-09 stood at approx. US$ 6.2 billion. Government on time to time has taken various initiatives to liberalize FDI policies so as to receive maximum investment keeping in mind that domestic products should not get blemished. The FDI outflow from India has also been increased and expected to reach to very high mark.
As per the figures released by Reserve Bank of India the total outward investment from India, excluding that were made by individuals and banks, rose 29.6 per cent to US$17.4 billion in 2007-08. The second highest foreign employer in the UK is India after the US, according to the 2009 UK inward foreign direct investment (FDI) official data. With various mergers and acquisitions Indian businessmen are expanding their horizons and creating a mark in the International arena. Companies like Apollo Tyres, Eveready Industries etc are among some of the companies which are investing abroad. Indian banks, financial institutions are amongst them also to invest abroad. Government as in terms of increasing FDI inflow has taken various initiatives for outflow as well. Like raising the overall limit for overseas investment by domestic mutual funds from US$5 billion to US$7 billion, increasing the limit of remittance and allowing mutual funds to make an aggregate investment etc.
Opportunities and Threats of Foreign Direct Investment
A paper published by David Woodward for G-24 clearly states that FDI flows to developing countries have grown strongly in recent years. It has mentioned that total flows in 2006 were nearly double their 2001 level, and are estimated to have increased by a further 20% in 2007. The paper stated that flows to West Asia have increased by 700%, those to Latin America remain marginally above the 2001 level. Extractive sectors predominate in Sub-Saharan Africa (SSA), and services in West Asia, while knowledge-intensive sectors have become more important in East Asia.
However it's true that FDI do offer various opportunities and helps a country to prosper by means of providing job opportunities, infrastructure development and certain other benefits, but in long-term balance-of-payments effects if outflows for profit remittances and imports prevail over the initial capital inflow and additional export revenues. The dependence of especially developing countries increases so much on FDI that they are busy in formulating new policies to attract investment, but one should not forget that there are countries who have planed their policies in a way that once they were biggest importers of the same products which now a days they are biggest sellers/ exporters.
The views mentioned are personal.