INTERNATIONAL BUSINESS IN INDIA POST 1991 REFORMS

1. International Business in India looks really lucrative and every passing day, it is coming up with only more possibilities. The growth in the international business sector in India is more than 7% annually. There is scope for more improvement if only the relations with the neighboring countries are stabilized. The mind-blowing performance of the stock market in India has gathered all the more attention (in comparison to the other international bourses). India definitely stands as an opportune place to explore business possibilities, with its high-skilled manpower and budding middle class segment.<br />With the diverse cultural setup, it is advisable not to formulate a uniform business strategy in India. Different parts of the country are well-known for its different traits. The eastern part of India is known as the 'Land of the intellectuals', whereas the southern part is known for its 'technology acumen'. On the other hand, the western part is known as the 'commercial-capital of the country', with the northern part being the hub of political power'. With such diversities in all the four segments of the country, international business opportunity in India is surely huge.Sectors having potential for International business in India<br />Information Technology and Electronics Hardware.<br />Telecommunication.<br />Pharmaceuticals and Biotechnology.<br />R&D.<br />Banking, Financial Institutions and Insurance & Pensions.<br />Capital Market.<br />Chemicals and Hydrocarbons.<br />Infrastructure.<br />Agriculture and Food Processing.<br />Retailing.<br />Logistics.<br />Manufacturing.<br />Power and Non-conventional Energy.<br />Sectors like Health, Education, Housing, Resource Conservation & Management Group, Water Resources, Environment, Rural Development, Small and Medium Enterprises (SME) and Urban Development are still not tapped properly and thus the huge scope should be exploited.To foster the international business scenario in India, bodies like CII, FICCI and the various Chambers of Commerce, have a host of services like<br />These bodies work closely with the Government and the different business promotion organizations to infuse more business development in India.<br />They help to build strong relationships with the different international business organizations and the multinational corporations.<br />These bodies help to identify the bilateral business co-operation potential and thereafter make apt policy recommendations to the different overseas Governments.<br />With opportunities huge, the International Business trend in India is mind boggling. India International Business community along with the domestic business community is striving towards a steady path to be the Knowledge Capital of the world.<br />It was evident till a few years back that India had a marginal role in the international affairs. The image was not bright enough to be the cynosure among the shining stars. The credit rating agencies had radically brought down the country's ratings. But, as of now, after liberalization process and the concept of an open economy - international business in India grew manifold. Future definitely has more to offer to the entire world. <br />In the early 1990s, considerable progress was made in loosening government regulations, especially in the area of foreign trade. Many restrictions on private companies were lifted, and new areas were opened to private capital. However, India remains one of the world's most tightly regulated major economies. Many powerful vested interests, including private firms that have benefited from protectionism, labor unions, and much of the bureaucracy, oppose liberalization. There is also considerable concern that liberalization will reinforce class and regional economic disparities.<br />The balance of payments crisis of 1990 and subsequent policy changes led to a temporary decline in the GDP growth rate, which fell from 6.9 percent in FY 1989 to 4.9 percent in FY 1990 to 1.1 percent in FY 1991. In March 1995, the estimated growth rate for FY 1994 was 5.3 percent. Inflation peaked at 17 percent in FY 1991, fell to 9.5 percent in FY 1993, and then accelerated again, reaching 11 percent in late FY 1994. This increase was attributed to a sharp increase in prices and a shortfall in such critical sectors as sugar, cotton, and oilseeds. Many analysts agree that the poor suffer most from the increased inflation rate and reduced growth rate.<br />THE ECONOMY IN THE INTERNATIONAL ARENA<br />The Indian economy has been moving towards closer integration with the global economy and with the leading regional trading blocs. This can be seen using three indicators: (i) Trade in goods and services as a proportion of GDP; (ii) Gross Private Capital (In)flows; and (iii) Gross Foreign Direct Investment as a proportion of GDP. In all three areas, China has had the most outstanding performance and is clearly far ahead of India. However, within the constraints of democratic politics (which have forced India to adopt incremental and relatively ‘softer’ economic reforms), and despite being a late starter in the economic reform process, India can be seen to have done ‘reasonably well’ in globalizing its economy. The ratio of trade to GDP increased from 13.1 percent in 1990 to 20.3 percent in 2000. The proportion of Gross Capital Inflows to GDP during the same period increased from 0.8 percent to 3.0 percent. Gross Foreign Direct Investment as a percentage of GDP (which was zero in 1990) rose to 0.6 percent in 2000.India’s trading relations with major regional trading blocs in 1990 and 2000 can be seen in Table 2. For the year 2000, APEC countries were India’s largest trading partners, accounting for 47.4 percent of India’s global exports and 57.4 percent of global imports. India has, therefore, shown keen interest in joining this forum. Unfortunately, APEC has currently imposed a moratorium on new membership. There is naturally a sharp contrast between India and East Asian countries in their relative rates of export growth due to sharp differences in their export strategies. The contrast is the sharpest when we compare India and China for the period 1950-2000. In 1950, both had roughly similar shares in world trade. China pursued a more aggressive export strategy in 1978 when it created export-oriented Special Economic Zones in Southern China. By 2000, China had captured around 4.0 percent of world trade. In contrast, India’s share of world trade had stagnated at around 0.5 percent for the three decades 1960-90<br />