Creating the next 10,000 small businesses will secure India’s economic future. | Cartoon titled Big Bad WalMart By J.D. Crowe, Mobile Register – 12/6/2005 12:00:00 AM; via PoliticalCartoons.com Cartoon.
India’s total forex reserves are now around US$300 billion. Simplistically, one could claim that half of this was contributed by investments in Indian businesses by foreign investors who seeks to share profits – without aiming for control.
Even as foreign institutional investors (FIIs) have crossed the $150-billion mark in net investments in Indian stocks over the past two decades, domestic investors are concerned about the markets’ dependence on foreign money.
According to the data published by capital markets regulator Securities and Exchange Board of India (Sebi), FIIs have had a net investment of $152 billion till October 30. In October alone, FIIs put in $3.5 billion, which took the total value above the $150-billion mark.
Sebi’s data since November 1992 show FIIs have made $119.6 billion of net investment in equity and $32.4 billion in debt through stock exchanges, primary investments or other routes.
According to the regulator’s records, there are 1,751 registered FIIs in India. Sensex, the benchmark index of the Bombay Stock Exchange, has risen to 18,415 from 2,929 in this period.
via FII inflows top the $150-bn mark in India – (Links supplied).
Small business – over-regulated and underfunded. | Cartoon source and credit embedded
Between Foreign Direct Investment (FDI), which is usually accompanied by case-specific exemptions, permissions, policies, rebates, FII seeks simpler systemic and transparent exemptions, permissions, policies, rebates. Indian businesses have attracted FII flows rather easily – and India has always been a laggard in FDI inflows.
Between 1970-1990, India created many small business that needed some capital to become world class. It is mostly these companies that got the US$150 billion. These are about 10,000 companies – mostly listed on the stock exchanges.
India’s main issue is that today the next 10,000 companies that can attract US$150 billion are nowhere in sight.
The Indian Government is busy protecting and fixing older businesses – while next-generation of 10,000 businesses are on no one’s radar.