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Global commerce as a major agenda of almost every trade treaty
has affected the growth of economies worldwide and India is also not untouched by it. In India the seeds
of globalization were sown long ago during 1980’s when there were major concessions granted to the
foreign capital investors. The major outbreak in the reformed economic policy took place in the July 1991
when government of India at the behest of IMF and World Bank introduced new economic policy. Major
amendments were made in FDI policies and subsequent extension in these reforms was carried out in later
Today India stands at a much accentuated position. Sensex has seen its top when it became the world’s
20th index by reaching 20 k marks on 29th October, 2007. As many as 32 indices across the 19 countries
have already crossed that mark. The west markets like UK, Canada, Germany and France have lagged
behind by India as these superpowers had also not seen their indices reach that mark. India’s finance
ministry has claimed that Indian economy is likely to grow at around 9% the finance ministry of India
invited US companies to invest in the power sector including the ultra mega power projects that require an
investment of Rs. 16,000-20,000 crore each.1


Deviation from the old inchoate policies of the business circle of India has bolstered
the growth of economy sector. The old enough rigid and perplexed economic strategies were quite
pernicious for the cultivation of perceptive business culture. Prolixity of the claims of government of India
are now just the ghosts from the past which are no more haunting the Indian GDP. Indian companies have
gone overseas only because of the relaxed financial policies. Special economic zones in pro rata with the
liberal economic reforms have been acclaimed for the much awaited output. Propensities of Indian
companies have enhanced a lot and we see the much better quality of products. The quantum of efforts put
in by the economists in drafting good policies for the much relaxed trade worldwide is outstanding. Now
LABORATORIES etc. are counting in dollars and the remittances are presumed to be much higher than
past. Albeit the inflation has put the financial sector in predicament but it will be soon over. The Indian
multinationals are now hunting down the markets of west and most prominently the markets yet to be
exploited by western multinationals such as Philippines, Indonesia etc.
The export and import polices are on a much higher stake and are assumed to be
relaxed. The open sky policy which was introduced by the government of India is another attempt one
notch ahead.
The increased participation of India is closely linked to the development of modern telecommunication
and computer based information services. The significance of participation in this sector stems in the fact
that telecommunications are themselves an important service activity.2

See Times of India ,October 30, 2007,at p.17
See jayanta bagchi ,world trade organization , (edi 2000),p.144

Some other sectors attracting Indian multinational are infrastructure, steel and iron industries, transport
industries etc.


Indian global giants are on the path of undertaking some of the top ranked industries at a global
level. Mergers and acquisitions at a macro level is also strengthening the reach of Indian economy. Indian
companies are buying major stakes in the foreign multinationals at the cost of billions. The Indian steel
industry has bagged quite a few companies like CORUS which was formed after the merger between
British steel and Dutch group hoogovens in year 1999. CORUS the biggest steel company in U.K was
acquired by TATA at the bid of $8.1 bn.
ARCELOR-MITTAL merged firm stunned the global steel industry with its launch, as ARCELOR was
the nearest rival of MITTAL industries.3 The bid for YAHOO was proposed at $44.6bn by MICROSOFT
Corporation. This was denied by YAHOO. The main agenda of Microsoft was to improve its competitive
position against GOOGLE Inc.
Recent acquisition of JAGUAR by TATA has overwhelmed the country for sure, now surely
the demand of this masterpiece will break records. As we can figure out that beside all stipulation of
economists Indian corporations are achieving outstanding profits.


India has always been a first choice for investor’s world wide for its low labour costs and
huge consumer market. It has been regarded as hub for multinationals. Since 1991 the liberal fiscal polices
and many other strategies of Indian government to lure the foreign investors has for sure worked. The
major changes in foreign direct investment policies of Indian government and relaxed rules and directions
of SEBI have proved beneficial for India as well as foreign multinationals. FDI can be done in India
through two routes. The sectors in which the multinationals want to invest, decide the best suited route for
investment. The general sectoral cap of 74% is found in some sectors such as airport.
The two suggested route thus are automatic route and FIPB (FOREIGN INVESTMENT PROMOTION
BOARD) route.4
Automatic route is way too convenient and it allows investment in some sectors almost 100%.
The investment in sectors which allow investment through automatic route is much preferable as it
requires less paper work. On the other hand FIPB route requires the prior permission of government for
investment in some sectors.
The SEBI regulations have liberalized its norms for foreign venture
capital and foreign institutional investors. All these attempts are bound to prove gainful

Some more Indian corporations are looking forward to acquire stakes in foreign companies in year 2008.
The list of sectors issued by department of industrial policy and promotion sets out the details of the
sectoral cap and the sectors in which FDI is allowed sectors like atomic energy, gambling and lottery etc.
are prohibited sectors for FDI

for the foreign multinationals looking forward to invest in India.5 The relaxed business
norms have made it possible for foreign investors to establish a good market with less of
a paper work and formalities. FDI in India has - in a lot of ways - enabled India to
achieve a certain degree of financial stability, growth and development. This money has
allowed India to focus on the areas that may have needed economic attention, and address
the various problems that continue to challenge the country.
India has continually sought to attract FDI from the world’s major investors. In 1998 and
1999, the Indian national government announced a number of reforms designed to
encourage FDI and present a favorable scenario for investors. A number of projects have
been announced in areas such as electricity generation, distribution and transmission, as
well as the development of roads and highways, with opportunities for foreign investors.
The Indian national government also provided permission to FDIs to provide up to 100%
of the financing required for the construction of bridges and tunnels, but with a limit on
foreign equity of INR 1,500 crores, approximately $352.5m.
Currently, FDI is allowed in financial services, including the growing credit card
business. These services include the non-banking financial services sector. Foreign
investors can buy up to 40% of the equity in private banks, although there is condition
that stipulates that these banks must be multilateral financial organizations. Up to 45% of
the shares of companies in the global mobile personal communication by satellite
services (GMPCSS) sector can also be purchased.

India still stands on the path for achieving the status of developed nation. The reach
of Indian multinationals overseas and the growing productivity of Indian manufacturing industry is the
outcome of generous efforts of the business circle of India. Government has contributed big by relaxing its
norms and rules in regard to foreign investments by Indian. The liberalized rules as pertaining to FDI and
FII has been praised world wide. SEBI has made the path easier foe foreign venture capital investors by
easing the guidelines to be followed. Finally it won’t be wrong to say that India is a new star of global

SEBI notifications and rules govern the FII and FVC’s procedure in India.