Financial Journalism

Foreign Direct Investment: Good Experience

Automotive Sector

The advent of Foreign Direct Investment in automotive sector has brought in wider range of choices as per the purchasing power of varied consumers otherwise earlier not many automobile models were available to consumers. Also, the competition among various market players has resulted into more advanced, fuel efficient and comfortable automobiles that too with fair prices. Apart from this, the set-up of one automobile unit leads to formation of 150-200 auto ancillary industries. Thus, looking at entire gamut of Automobile Industry, FDI did help it flourish in better manner and also generated number of collateral benefits.

Foreign Direct Investment: Bad Experience

Pharmaceutical Industry

FDI experience in Pharma sector has not been favourable as the priorities of foreign pharma companies stand at variance with the needs of the country. They take over domestic companies with the intent to get control over manufacturing and price-regime of medicines. Japan’s Daiichi Sankyo taking over India’s Ranbaxy Laboratories in 2008 was the first high-profile acquisition of any Indian pharma company by multinational. India has seen plenty of acquisitions since then.

 The monopoly of foreign pharma giants in the country has resulted into essential drugs getting costlier. FDI in pharma sector actually led to healthcare cost going up instead of mitigating it.

Telecom Sector

Though one can’t deny the role foreign telcos played in India’s telecom revolution but the kind of security threats they have generated are also worth noting. If the hardware and chips manufactured abroad go into the electronic equipments, it does raise security concerns. It is being anticipated that China’s major hardware manufacturer Huawei ferrates across crucial information to Chinese Government. Now that Govt. has approved 100% FDI in telecom, it is significant that component industry and electronic chip plants are set-up in India. It has to be ensured that major portions of equipments are made up of locally manufactured components. 

There are five kinds of companies having stakes in Indian economy:

1) Public Sector Undertakings (PSUs)

2) Private Companies

3) Cooperatives

4) Foreign Companies

5) Indian companies having manufacturing base outside