The Indian government is faced with the mammoth task of making the environment and infrastructure conducive for foreign investors to do business in India. In order to encourage foreign investors or companies to consider India as their business set up, the government, over the past several years has liberalized and simplified the rules and regulations dealing with the foreign investment.
Despite several measures taken and procedures set up by the Indian government to attract and encourage foreign investments in India over the past couple of decades , the improvement has been slow and the government has had to tackle many hindrances like the various restrictions posed in the area of real estate, obstructive clauses in employment contracts, lack of application and execution of intellectual property laws, cumbersome court procedures, the interminable corruption, political instability and inadequate infrastructure. Such barriers and challenges demotivate investors from considering India as a go-to destination from a business standpoint.
The silver lining in recent years is the fact that despite the aforementioned challenges, India has gradually becoming one of the fastest growing economies in the world and is being discovered as an attractive destination for foreign investors. The weaknesses in no capacity take away from India the immense potential it has.
It cannot be ignored that India not only has the largest population in the world but also is a nation of the youth with fifty percent of its population below the age of twenty five. About 65% of the Indians are in the working age group giving a significant edge in terms of cost competitiveness and low labor costs. Also adding to India's potential is the fact that India's labor force is both skilled to perform well and has good command over the English language. This makes it a favorable place for multi nationals to consider India for overseas expansion and recruiting fresh talent. It also gives India an edge over other non-English speaking countries.
The Indian consumer market is expected to grow exponentially in the coming years. The FDI trends also uphold the status of India as a preferred destination for foreign investment. India's strengths are information technology, telecommunication, auto components, apparels, pharmaceuticals, and precious metals and gems.
Investors seek clear policies from the new Indian government which would make them feel more comfortable and confident, in setting up fresh business in India. More progressive regulations are being considered by the Indian government to encourage smooth inflow of investments in India. Understanding and preparing for challenges will help India gain recognition as the top foreign investment destination in the world.