The Indian government Tuesday opened foreign direct investment gates in 13 sectors in a bid to heal the ailing economy.
Relaxing foreign direct investment in key sectors such as defense, insurance and telecom along with others is expected to give a booster doze to the ailing economy and the fall of Indian currency, according to Chandrajit Banerjee, Director General of the Confederation of Indian Industry (CII).
"It is good news for India, a very bold and a significant step," Chandrajit Banerjee told Press Trust of India.
Banerjee said that it was a step in the right direction. It also will somewhat allay the concerns of the U.S. business community, which had urged the Indian finance minister on his recent visit to Washington to bring changes in india's trade policies.
"This has come at a very good signal. We have been meeting people, meeting think-tanks. We have talked about these steps that India has taken today. This is a good news for them and there is tremendous appreciation for this in the United States," said Banerjee.
Permitting foreign companies to hold a 100 percent stake in companies in the telecom sector is expected to attract massive foreign investment from enterprises like the UK-based Vodafone Group and Russian firm JSFC Sistema.
"The much-needed policy decision is a very positive development for the entire industry. With fresh foreign direct investments coming in, this would further catalyze growth and also the process of proliferation of telecom services across the country," said a spokesperson for JSFC Sistema's Indian subsidiary, Sistema Shyam TeleServices Ltd, which provides telecom services under the MTS brand, according to the Mint.
However some Indian think tanks feared that the sudden relaxing of the Foreign Direct Investment would not be the answer to its economic woes.
"By raising FDI (foreign direct investment) caps to shore up finances, India has shown once again that its reforms are driven not by a strategic vision but by compulsion," a New Delhi based financial expert, Brahma Chellaney, said in a Facebook update.
"All government measures are quick fixes, unless structural issues are resolved , we may not get FDI. What is lacking is clear lack of leadership and vision. We have enough money sitting with Indian industrialists, we need to attract that money for investment. The focus should be on creating infrastructure in Roads/Power/Transportation/Rural Development. Others automatically will follow," added Hari Krishna, an Indian environment and political activist.
Indian finance Minister P Chidambaram has recently returned from the U.S. where he reportedly met with U.S. governmental officials and business people in the country in a bid to attract more investments in India.
