International Business Across Borders Assessment Answer

6) Existing levels of Foreign Direct Investment
7) Summary and recommendation based on your assessment.

INTRODUCTION

THE great performance of developing nations has changed the way businesses and economies work. These group of countries have rapidly integrated with the developed countries and now are a significant part of the global economic force.
Before the worldwide financial meltdown of 2008–09, there was a developing sense among financial specialists and policymakers that the emerging economies, with their new monetary power, are in a better position to withstand the shocks when compared to their developed peers.
India has been the front runner when it comes to growing in tough environments. Along with China, India has contributed a huge chunk to world growth (Dreyfuss, 2009).
The fact that India is basically a consumption story has helped it withstand the rough global weather.
The dynamics have changed immensely for the largest democracy even more after there was a change in the Central Government in May, 2014. Things have started to look better and brighter for the nation (Mohan, 2008).
India is now the fastest growing nation in the world pipping China from the supreme position. It is important to see how the dynamics have changed for this wonderful nation and how things are looking up for the great economy.
It isn’t a surprise when the world’s biggest financial experts are calling India as the bright spot for investments at a global level.

POLITICAL SCENARIO

There has been a major change in the political scenario in India in the last general elections that concluded with Bhartiya Janta Party (BJP) winning in May, 2014. Mr. Narendra Modi was appointed as the Prime Minister of India. The political situation has improved a lot. The red tape scenario has improved a lot and the government has ensured that further improvements are made.
The Parliament of India has two houses- The Lok Sabha (lower house) and The Rajya Sabha (upper house). The ruling party has a thumping majority in the lower house and this ensures that things run smoothly in comparison to the case earlier.
As the government is in vast majority, the government has been able to do things that they think is important for growth. Some of the best things that the government has done are listed below.

MAKE IN INDIA

To encourage investment, support research and improvement (R&D), guarantee item originality and ensure that skill based occupations are available by setting up modern divisions of industries. Modi has connected with the world with his concept of 'Make in India' and it has produced positive reaction from organizations all across the globe. Key Labor Law changes that are in the pipeline will support the cause of manufacturing and also shall boost investments from foreign nations.

SWACH BHARAT ABHIYAN (The Initiative to Clean India)

Swachh Bharat Abhiyan was propelled on 2 Oct 2014 by Modi. Dirt is viewed as one of the significant issues in India and Modi gave the issue its due significance by propelling an across the nation crusade.

Numerous called it a masterstroke from Modi as it put him at par with Mahatma Gandhi when it comes to fighting against something so important. Modi selected eminent identities from film industry, sports, media, business and different superstars to propagate the activity. With so many big shots connected to the cause, it started off as a highly successful concept.

PRADHAN MANTRI JAN DHAN YOJANA (BANK ACCOUNTS FOR ALL)

Narendra Modi on 15th August 2014 declared Jan Dhan Yojana. Within a year more than 15 crore saving bank accounts were opened. The prime focus has been on achieving each family to get credit facilities, benefits and protection by means of insurance to the people who hold these accounts. This has been the best step so far as this brings the masses of India under the banking umbrella. This helps the government to look after the poor more effectively.

FOCUS ON OFFSHORE RELATIONS

Modi's strategy for foreign shores is right now focused on enhancing relations with neighboring nations and getting the world to put resources into India. In the US, he met a few American business pioneers and welcomed them to be involved in Make in India program. During his latest visit to France, he asked Airbus, the aviation goliath, to look for opportunities with respect to manufacturing in India. While in Germany, he made a solid pitch for the scheme of Make in India. He has been attempting to send over the message of a more "focused, certain and secure" India.

SOCIAL STANDINGS

The dynamics of India have been changing constantly. The biggest strength of India has been the fact that the youth brigade of India has gone from strength to strength. The average age of the person in India is below 35 years. There has been a slight population shift from rural to urban areas. Agriculture has been the backbone of Indian economy for a while. India has more than half of its population under the age of 25. More than 65% of the population is under the age of 35.  
India boasts of a plethora of religions and ethnic groups (Bhagat, 2011).

TECHNOLOGY STANDING OF INDIA

India is one of the biggest contributors to the world of technology. The IT and ITes are the main contributors on the technology front. BPO industry is also a huge segment in India. It is a highly favored destination for outsourcing.
India is the world's biggest sourcing destination for the data innovation (IT) industry, representing over 65% of the US$ 124-130 billion business sector. The business utilizes around 10 million workforce. All the more imperatively, the industry has driven the monetary change of the nation and modified the impression of India in the worldwide economy. India's cost factor is highly competitive when it comes to giving IT administrations, which is roughly 3-4 times less expensive than the US.
Be that as it may, India is likewise picking up noticeable quality regarding scholarly capital with a few worldwide IT firms setting up their development focuses in India (Eunni, et al., 2007).
The IT business has likewise given rise to major demand in the education system of India, particularly in engineering and in the division of computer science.
The Indian IT and ITeS industry is partitioned into four noteworthy portions – IT administrations, business process administration (BPM), programming items and building administrations, and equipment.
The IT-BPM division has been seeing a growth of over fifteen percent (Compound Annual Growth rate) 2010-15. This rate is 3-4 times higher than the worldwide IT-BPM expenditure.

ECONOMIC SITUATION OF INDIA

Modi-drove NDA government's main focus is on restoring Indian economy through significant changes in sectors like export and manufacturing. Government has not just expanded the scope of FDI in the various sectors like Insurance, Defense, Radio, Railways. Additionally the government has supported privatization of public sector firms that are making losses for a considerable amount of time.
Without being stalled by coalition accomplices, Modi held on with his emphasis on change. On the front of infrastructure, government has started reviving the stalled projects. India is highly in need of adequate infrastructure. Real changes and advancements are under procedure for Modi's agenda and dream: 100 Smart Cities and Clean Ganga Mission.
India's quick development in the last decade running up to 2012 saw it rise as one of Asia's most encouraging markets. Be that as it may, the recent slowdown made development and productivity progressively tricky, constraining organizations to ponder the way they assign their respective resources (Contractor, et al., 2007).
As development grows and quick shifting in India's urban and rural areas happen, advertisers should settle on key business sector and areas so that the returns are maximized. Understanding the development drivers and recognizing high-potential markets at a granular level are basic needs for organizations hoping to take advantage altogether from this returning tide of development.
India is doing great and the majority of the development that the nation is seeing is from the sector of services. It is truly the new bright spot, the positive in the worldwide economy.
The reason is clear. The nation has concentrated the vast majority of its development on the part of services. Taking into account World Bank estimation of quality added to GDP, 52.1% of worth added to Indian GDP originates from the services' side while industry (includes producing, mining, and so forth.) just makes up around 30.1%. Interestingly, China's part is 48% Services to 42.7% industry.
Moreover, the nation has not been affected by the late downturn in the markets of manufacturing and commodities, as other rising countries have, because of the fact that India is more of a closed economy. Again as indicated by the World Bank, India infers 23.6% of its GDP from various kinds of exports, like China's 22.6% and much lower than other rising economies.
One more parameter where the country is getting benefit is the cooling of global oil prices. Considering the fact that India imports over four-fifth of its oil demand, the price drop of over 60% is a great advantage. The import bill has reduced drastically and the same can be used in other avenues.
Apart from this, the great population growth and better reforms with respect to doing business has set the course for success for India
Truth be told, in view of quality added to GDP by the services segment, both the US and numerous European nations make a far greater amount of their riches from services area than India. But percentage wise India does much better.
With solid development and rising real salary, India remains a brilliant bright spot in the worldwide economy, IMF boss Christine Lagarde said recently during declaration of policy.
In her address, Lagarde said that the worldwide outlook has debilitated further in the course of the most recent six months exacerbated by China's economy relatively slowing down, weakening of commodity costs and the possibility of monetary tightening for some nations.
Developing markets had to a great extent drive the global growth and it was expected that the developed economies would get on the path of decent growth soon.
While developing markets are an extremely different gathering, the story is comprehensively similar (Gaur & Kumar, 2009).
India, by difference, remains a brilliant spot with solid development and rising genuine earnings.
India, for instance, has diminished spending on the highly costly subsidies on energy so it can put more in development upgrading the overall social infrastructure.

FOREIGN DIRECT INVESTMENT (FDI) IN INDIA

FDI is when a company or firm based out of foreign soil invests in a firm or country outside its home territories. FDI is long term kind of investment and exiting such investment is relatively tougher than normal investment. FDI has been one of the major contributors to the monetary advancement of India.
Companies want to exploit the first mover advantage and take benefits of cheap labor and growing demand in the country. With a very high consumer base and a vast youth population, FDI has been so strong that it has already surpassed USA and China as the top FDI destination across the globe.
FDI has steadily increased in India in various sectors since 1991. Post the opening of economy, the interests in India have only grown. In the crucial phase of Indian economy, the legislature of India with the assistance of  World Bank and IMF presented the full scale monetary adjustment and auxiliary alteration program. As a consequence of these changes, India opened its gates to FDI inflows and also adopted a much flexible and open foreign policy to encourage investors from all across the globe. Further, under the new foreign policy approach, the government constituted FIPB (Foreign Investment Promotion Board) whose fundamental duty is to welcome and encourage investments from offshore (Chakraborty & Nunnenkamp, 2008).
The latest standings of permissible limits in FDI in India are given below:
•    Townships, business centers, shopping complexes, coffee, rubber, palm oil, medical devices, duty free shops, specific railway projects, ATM operations (White Label) - 100%
•    Defense sector can have FDI up to 49%.
•    Private Sector Banks can have 74% FDI.
•    Insurance can have FDI up to 49%.

POTENTIAL AND OPPORTUNITY IN FDI (INDIA)

India's Foreign Direct Investment (FDI) arrangement has been slowly changing to make the market more friendly for global investors. The outcomes have been positive and highly encouraging. Nowadays, the nation is reliably positioned among the main three worldwide investment destinations by all universal bodies, including the World Bank, as per a United Nations (UN) report.
For Indian economy which has colossal potential, FDI has had a positive effect. FDI inflow supplements local capital, and additionally innovation and aptitudes of existing organizations. It likewise sets up new organizations. These factors contribute to development of the Indian Economy.
Also, the large size of the market and the need of consumption makes it an ideal destination to put one's money. There has been a considerable increase in disposal income as well for the people of India in general. This makes it an ideal market for almost every class of item.
With India growing and expanding on every front, the demand shall only increase and it is important for firms to capitalize on the same (Balasubramanyam & Sapsford, 2007).

COMPETITIVE ADVANTAGES OF INDIA

There are various reasons that gives India an edge over others. Some of the factors that have created a positive opportunity for India are:
•    A great setup in terms of democracy backed by an independent judicial system.
•    Buoyant capital markets along with good number of banks, bank branches and financial institutes have aided a lot.
•    Excellent work force that is the result of some of the best technical and management institutes.
•    A very high English speaking population. This ensures in smooth in conducting business.
•    The proactive nature of the new government. With policies and schemes that are laid to lure investments, the country can only get better.
•    A huge chunk of demand by the vast population of India. With the fact that most of the population belongs to the youth brigade, the destination is all the more attractive.
•    Labor costs in much lower in India in comparison to the other locations. This happens to be one of the biggest reasons for firms to invest in India (Zheng, 2009).

TRADE POLICIES AND INCENTIVES

The new government is taking steps for constant improvement in trade. Trade impels financial development and national advancement. The basic role is not the minor procuring of Forex, but rather the incitement of more prominent financial action.
The short term goal of the approach is to capture and turn around the declining exports and to give extra support particularly to those areas which have been hit seriously by slowdown.
The long haul goal of approach for India is to try doubling India's pie in worldwide exchange by 2020. So as to meet these goals, the Government would take a blend of strategy measures including financial policy changes, institutional changes, procedural optimization and improved access to the world for businesses.
Change in infrastructure that are needed for exports; cutting down exchange costs, and giving full discount of all aberrant duties and tolls, would be the three measures, which will bolster to accomplish this objective. Attempts will be made to see that the Goods and Services Tax refunds all aberrant charges on various exports.

 FOREIGN CURRENCY AND EXCHANGE INFLUENCES

Reserve Bank of India is the watchdog for the foreign exchange related transactions in India. India has reserves of over 300billion USD. The transactions in foreign currency can be done via lading banks or certified money handlers. Mainly the foreign currency exchanges hands due to trade, requirements of business houses, banking transactions, remittances, export-import (Bordo, et al., 2010).
The demand and supply of the foreign currency influences the exchange rate at the bourses of India. There are certain factors that play a crucial role in determining the way foreign currency is valued. These parameters are:
•    Difference in Inflation levels of the countries.
•    Interest rate regime in the two nations.
•    Current Account Deficits (CAD)
•    Public Debt
•    Political and Economical Stability.

RECOMMENDATION

It is evident that India hold great potential as an investment destination. With the government more than keen to play host to various businesses, the time can’t be better for India. With trade policies being improved, gestation period falling, corruption reducing, greater transparency, huge demand and relatively cheap labor, India is truly the bright spot in the global economy.

CONCLUSION

Today, there is not really any great organization on the planet which does not have an office in India in some way. A few organizations outsource their records and BPO operations to India. This is essentially in light of the fact that paying little heed to the household issues, these organizations get magnificent administration and quality for the expense incurred.
India has proven that it is the perfect place for investment and it is beyond doubt that the government is working hard to ensure that the nation is the frontrunner in growth.

BIBLIOGRAPHY

1.    Balasubramanyam, V. & Sapsford, D., 2007. Does India need a lot more FDI?. Economic and political weekly, 42(17), pp. 1549-1555.
2.    Bhagat, R., 2011. Emerging pattern of urbanisation in India. Economic and Political Weekly, Issue 34, pp. 10-12.
3.    Bordo, M., Meissner, C. & Stuckler, D., 2010. Foreign currency debt, financial crises and economic growth: A long-run view. Journal of International Money and Finance, 29(4), pp. 642-665.
4.    Chakraborty, C. & Nunnenkamp, P., 2008. Economic reforms, FDI, and economic growth in India: a sector level analysis. World development, 36(7), pp. 1192-1212.
5.    Contractor, F., Kumar, V. & Kundu, S., 2007. Nature of the relationship between international expansion and performance: The case of emerging market firms. Journal of World Businesss, 42(4), pp. 401-417.
6.    Dreyfuss, R., 2009. The role of India, China, Brazil and other emerging economies in establishing access norms for intellectual property and intellectual property lawmaking. IILJ (Institute for International Law and Justice), pp. 9-53.
7.    Eunni, R., Brush, C. & Kasuganti, R., 2007. Internationalization of SMEs in India: Fostering entrepreneurship by leveraging information technology. International Journal of Emerging Markets, 2(2), pp. 166-180.
8.    Gaur, A. & Kumar, V., 2009. International diversification, business group affiliation and firm performance: Empirical evidence from India*. British Journal of Management, 20(2), pp. 172-186.
9.    Mohan, R., 2008. Growth record of the Indian economy, 1950-2008: A story of sustained savings and investment. Economic and Political Weekly, 43(19), pp. 61-71.

10.   Zheng, P., 2009. A comparison of FDI determinants in China and India. Thunderbird International Business Review, 51(3), pp. 263-279.