The history of today’s Indian civilization goes back to at least 5,000 years. Until the British conquest in the 19th century, the Indian history was similar to the European. Indian colonial time started with the landing of the Portuguese seaman Vasco de Gama in 1498. In the following century more and more European countries entered into trade with the Asian subcontinent. Britain dominated the trades and gained full military and economic control by 1857, followed by the founding of the Indian Empire, ruled by Queen Victoria’s viceroy. Economical structures were formed to the purpose of Britain’s colonial interests but at the end of the century the awareness of Indian nationalism and culture rose. After World War One Indian strive for Independency was strengthened by two key figures: Mohandas Karamchad Gandhi (also known as Mahatma Gandhi) was not only able to mobilize the rural population, who had been ignorant, exploited and apathetic, but also to unite Hindus and Moslems in the fight against the cast system. With Jawaharlal Nehru as president of the Congress Party Great Britain granted parliamentary self-governance for the provinces in 1935 and allowed elections in 1937, followed by a total breach between Hindus and Moslems. By 1947 Gandhi’s principles of nonviolence, passive resistance and civil disobedience beard fruits: Great Britain left the Asian subcontinent. Still trying to unite Moslems and Hindus, Gandhi was murdered by a Hindu-extremist in 1948 followed by the empire’s divide into India and Pakistan.
Another war in 1971 caused the separation of Bangladesh from Pakistan.1On January 26th 1950 the constitution of the “Sovereign Socialist Secular Democratic
Republic of India“2became effective - its structures remain until today. India is the largest democracy in the world with a population of 1.1 billion inhabitants and an area of 3.3 million km², which survived crisis and remains stable despite of its enormous heterogeneity, an unrivaled cultural, social and economic variety. But still a free capitalist market was not able to prevail: Nehru favored a model of a centrally driven and planned economy to fulfill the vision of an “Independent India” - following the model of the former Soviet Union. The mixed economy should protect India from foreign investments and secure its independency and self-reliance. However it lead to India’s isolation from the world market.
Table of Contents
Section 1: India’s general Conditions for Foreign Investments
1.1 Indian History and its economic Reforms
1.2 India’s Economy
1.2.1 The economic Structure
1.2.2 The Impact of Foreign Investments
1.3 Political Economics - Challenges India is facing today
1.4 Social Conditions
1.4.1 Social Developments and Poverty
1.4.2 Emigration
1.4.3 Business Culture
Section 2: Foreign Investments
2.1 Possible Strategies for Investments in India
2.2 India’s Attractiveness
2.3 Foreign Companies in India
2.3.1 Foreign Investments
2.3.2 German Investments
Section 3: India’s special Structure
3.1 The physical Structure
3.2 The demographic Structure
3.3 Economic Areas in India
3.4.The Special Economic Zones
Research Objective and Core Topics
This report investigates the general economic, social, and structural conditions in India to evaluate its attractiveness for foreign investors, specifically focusing on the challenges and opportunities within the current market environment.
- Historical context of India’s economic reforms and market liberalization.
- Structural transition from agriculture to a service-oriented economy.
- Political and social challenges influencing investor confidence.
- Various market entry strategies for foreign companies.
- Regional economic zones and infrastructure developments.
Excerpt from the Book
1.1 Indian History and its economic Reforms
The history of today’s Indian civilization goes back to at least 5,000 years. Until the British conquest in the 19th century, the Indian history was similar to the European. Indian colonial time started with the landing of the Portuguese seaman Vasco de Gama in 1498. In the following century more and more European countries entered into trade with the Asian subcontinent. Britain dominated the trades and gained full military and economic control by 1857, followed by the founding of the Indian Empire, ruled by Queen Victoria’s viceroy. Economical structures were formed to the purpose of Britain’s colonial interests but at the end of the century the awareness of Indian nationalism and culture rose. After World War One Indian strive for Independency was strengthened by two key figures: Mohandas Karamchad Gandhi (also known as Mahatma Gandhi) was not only able to mobilize the rural population, who had been ignorant, exploited and apathetic, but also to unite Hindus and Moslems in the fight against the cast system.
On January 26th 1950 the constitution of the “Sovereign Socialist Secular Democratic Republic of India“ became effective – its structures remain until today. India is the largest democracy in the world with a population of 1.1 billion inhabitants and an area of 3.3 million km², which survived crisis and remains stable despite of its enormous heterogeneity, an unrivaled cultural, social and economic variety. But still a free capitalist market was not able to prevail: Nehru favored a model of a centrally driven and planned economy to fulfill the vision of an “Independent India” - following the model of the former Soviet Union. The mixed economy should protect India from foreign investments and secure its independency and self-reliance. However it lead to India’s isolation from the world market. The lack of competition caused low quality and zero productivity, inefficiency and ineffectiveness of Indian companies: the annual economic growth of 3,6% between 1951 and 1981 was not enough to field the rapid growth of population.
Summary of Chapters
Section 1: India’s general Conditions for Foreign Investments: This chapter provides the historical background of India's economy and analyzes the social and political factors that currently influence its investment climate.
Section 2: Foreign Investments: This section details specific market entry strategies for companies and assesses India's overall attractiveness as an investment location for international and specifically German businesses.
Section 3: India’s special Structure: This chapter examines the physical and demographic characteristics of the country, highlighting key economic regions and the role of Special Economic Zones.
Keywords
India, Foreign Direct Investment, FDI, Economic Reforms, Service Sector, Outsourcing, IT-Services, Market Entry, Globalization, Infrastructure, Special Economic Zones, SEZ, Poverty, Business Culture, Indian Economy.
Frequently Asked Questions
What is the primary focus of this report?
The report focuses on analyzing the economic and structural environment of India to determine its viability and attractiveness for foreign investors following its market liberalization.
What are the central themes discussed?
The central themes include the history of economic reforms, the rapid growth of the service sector, social challenges such as poverty and brain drain, and the practical strategies for foreign market entry.
What is the main research question of this study?
The study aims to identify how India, given its unique economic history and structural challenges, manages to attract foreign investors and what factors currently shape this potential.
Which methodology is utilized in this research?
The work employs a comprehensive analysis of secondary data, including reports from international financial institutions, government statistics, and academic literature on Indian economic policy.
What topics are covered in the main section?
The main sections cover the general conditions for foreign investment, various strategies for market entry (e.g., Joint Ventures, Liaison Offices), and an analysis of India's specific regional economic structure.
Which keywords define this work?
Key terms include Foreign Direct Investment (FDI), Economic Reforms, Outsourcing, IT-Services, and Special Economic Zones (SEZ).
How does the "brain drain" phenomenon affect India's development?
The migration of highly skilled professionals and academics to industrialized nations leads to a loss of human capital, which is considered essential for India's domestic development.
Why are German investments currently declining in India?
German investments have decreased due to the failure of projects during approval phases and the growing preference of German investors for Eastern European markets.
- Quote paper
- Jennifer Joksch (Author), 2006, How India Attracts Foreign Investors, Munich, GRIN Verlag, https://www.grin.com/document/64206
