Investment Scenario in India

I finally thought that i should treat my blog like a blog and not like a dear diary page, a couple of days back I got an assignment from Prof Barr saying , I were to leave the US should will I invest in India or China and I had to convince my Prof. why so ..and yes i did do some research

It was more like a writing an assignment.Here it goes....

India has incredible skills to offer to us. It has abundant, high-quality, cost effective manpower to offer compared to China. India’s has been the leader in high quality off shore solutions, which speaks volumes about its technically competent workforce. There are over 255 fortune 500 companies getting their services from India compared to less than 30 from China.

India has been favored more than China as an ideal destination for investment especially for IT companies because of the various SEZ (Special Economic Zones) that exists in the country, which would provide us with tax exemptions and reduce our export/import charges. The government has allowed 100% FDI, where as China would take at least 10 years to even get close to that figure. India offers an liberal industrial licensing policy compared to China. This shows how the Indian government has taken initiatives and measures to improve the invest scenario in India. It is no surprise that, India has been rated as the most attractive destination for investment and 2^nd most attractive destination for Foreign Investment by global consultancy A T Kearney. In fact the IT industry in India is growing at a steady rate of over 50% yearly.

I believe, now is in fact the best time to invest in India. India is among the fastest growing economies in the world with an average GDP 7% to 8% and its annual GDP is forecasted to grow over 8% this year, this would also mean a potential client market in India. The trade policy could only get more favorable. The trade policies have been liberalized. Most items are now on the Open General License including software solutions. The new trade policies are now fully compatible with the WTO, which would mean lesser red tape for us to deal with. What really works to our favor is now over 70% of the total transactions of exporters/importers are Web enabled, this would translate into huge saving cost for us especially considering the nature of our business.

We must invest in India, keeping in mind the large amount of English speaking workforce which would be an added advantage for us compared to China. Since most of our client are US based and we require dynamic global team which would interact with our existing client’s efficiently. India has the idle growth environment, free access to information and freedom to act on the information in a climate that respects wealth generation. The fact that the educated classes in India all know English gives us a competitive advantage in the growing Information Technology market.

India is believed to be a good investment destination because of political stability of the country. India is encouraging foreign companies to invest and I believe no company should ignore this country as it is expected that India has become one of the top three emerging economies. India has a democratic government and democracy is the best system in which power can evolve from the private sector, not from a communist government that acts as a dictator and I believe this a major factor that would tilt all our scales to favor investing in India.

An investment in India does not only mean cost cutting, but also having access to a talent pool which is scarce in the US. Investment in China would mean an obvious cost cutting but we run a risk of lowering the quality of our services, this is evident from the fact that China is still not seen as a lucrative offshore destination. An investment in India, on the contrary is about quality and value addition at a reduced cost. National Outsourcing Association (NOA) had in fact stated that over 255 of fortune 500 companies that had invested in India as a cost cutting measure found an added advantage of reduced time to market their products and increase in the quality of their solutions, leading to an adage that companies initially chose India to save costs but stayed for the speed and quality.

What really would be of interest to us is the fact that India has the highest return on invest factor compared to any other nation in the world, especially in the field of Information Technology. According to the US department of commerce the profitability of US investments in India has been a staggering 48.5 %.

Hence I would strongly recommend that we invest in India, as it would be win- win situation for us. Several American firms have realized the advantages of investing in India. Even Starbucks agree with me as they have opened an outlet in India last year. So the question is will ABC solutions miss the opportunity to invest in the most lucrative software market in the world today?

Hey I got a "A " for this from professor Ed Barr ,that's why I posted it here