India Risk Analysis

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Global investors, markets, and foreign governments are often held responsible by their citizens or shareholders to ensure the potential is measured against the risks when investing. In recent years the strength of India on the global market has continued to show signs of political and economical growth that makes regions in India attractive investments by various markets. India has taken steps to recognize these opportunities to gain Foreign Direct Investment by realigning government policy towards new business potential. Such potential is often marked by “it’s too good to be true” as global investors determine the risk through in depth analysis of regions around the world and much like team A has outlined for Kerala, India.
Foreign Trade and Investment
Investment in India has increased significantly since the 2001 Indian Government’s approval of Foreign Direct Investment (FDI) reform. In mid-year meetings of 2001, the Government liberalized the restrictions on FDI into India in select industries. The infrastructure of the Indian Government is increasingly interested and actively pursuing FDI from countries such as the United States. India is currently offering automatic business approvals for new businesses that have an initial investment of 100% foreign capital in industries that are considered tourism based. (Indian Embassy, 2001) According to the 2001 guidelines issued under section 4 (iv.), Businesses that are considered to be “commercial premises, hotels, resorts, city and regional level urban infrastructure facilities…” which qualify for up to100% FDI.
Foreign Direct Investment (FDI) inflows to India amounting to US$4.06 billion were received during the financial year 2001-2002, with $2.46 billion (USD) received from the U.S. just in 2000-01 alone. This marked a 66% increase from the previous year. According to FDI Magazine, India was the number 3 recipient of FDI from January of 2002 to June of 2004. India had a total of 41 Foreign Direct Investment projects, beaten only by the United Kingdom with 53 and China with 54. FDI Magazine shares this observation: “Noticeable among the results for the second quarter is the rise of China to become the number one destination for foreign investment by number of projects. However, perhaps more significant is the increase in the number of projects heading for India, up over 77% year on year while the jobs creat...

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The Economy Watch website provides current economical and financial news for most foreign entities at http://www.economywatch.com/
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U.S. Department of State; Kerala-Republic of India; United States Department of State, Public Domain; Accessed 18Feb2005 at: http://www.state.gov/r/pa/ei/rls/dos/3797.htm

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