FOREIGN INVESTMENTS, NEW HORIZONS

The Central Government has started privatization process in 1991, with the objective of making as steady and fast a growth as the integration of the country in the global economy. In June 2000, the foreign investments were liberalized and India gained a strategic advantage in terms of preferred destination for investments that it became a unique and main destination for many investments coming from important countries of the world like U.S., U.K., Germany and other countries constituting E.U.

The emergence of India as a major force in the investment scenario seems to have attracted the entrepreneurs from U.K. and France searching the world of Indian industries wanting to invest in their countries.

FDI is allowed through the following forms of investment:

1. Financial collaborations
2. Joint Ventures & technical collaborations
3. Capital market via Euro emissions
4. Full possession of subsidiaries
5. Private investment or preferential adjudication

The investments directed towards foreign countries undergo a procedure of authorization by the Government which in most of the cases is automatic and non-discretional. The sectors in which by rule, the authorization is not automatic (for example editorial, broadcasting, postal services) the Indian Government reserves the right to authorize investment case by case.

With a view to make India more attractive for foreign investors and for expediting the approval for investments, the Government has decided to simplify the procedure relating to FDI evaluating the various procedures through General Permission Route (RBI route) instead of the existing Government approval route (FIPB).In this way the approval of Foreign Investment Promotion Board will no longer be required, but their proposals will be examined by the RBI. Every investment by the foreign companies in India requires prior approval of the Indian Government. In the last years the limit of Indian companies’ foreign participation was gradually reduced and FDI is not permitted in the following industrial territories:

• Retail trade
• Production of atomic energy
• Lotteries
• Betting or gambling
• Municipal buildings and real estate investment
• Agriculture (with some important exceptions)

The success in India depends on the correct evaluation of the potentiality of the nation, the underestimation of its complexity and the overstatement in its possibilities can lead to failure. Entry into the Indian market requires a well designed plan supported by careful and detailed research. For those who take the time to look at India as an opportunity for growth in the long run, the opportunity is definitely worth the effort.
In India, the volume of Italian investment has grown considerably. The complementarity of the industrial structure of the two countries, characterized by a dominant presence of SMEs, was a crucial factor in the growth of bilateral relations.
Apart from the automotive sector, successful Italian-Indian partnerships and joint ventures were initiated in areas where Italy has traditionally been market leaders such as: confectionery, household equipment and electrical components, chemicals, granite, food, petrochemicals, industrial machinery, leather, textiles and metallurgy.

Among the leading investors include: Perfetti SpA, SAME SpA, Dunhill Industries SpA, De Nora SpA Permelec, Plant Patent Services Ltd, Agip Petroleum and Pirelli Cavi SpA. Investments were mainly made in the following states: Maharashtra and Gujarat (western region), Karnataka (southern region), Tamil Nadu, Andhra Pradesh (south India), West Bengal (eastern region). With regard to the ranking given to major trading partners of India, Italy, in 2002 occupied the tenth place in the world and the fifth largest in Europe.

Vietnam

Vietnam has been quite adept at attracting FDI (Foreign Direct Investment) from the start of the 1986 economic reforms, which have had a significant impact on economic development in the country.
In 2005, Vietnam earned a total FDI of 4.5 billion euro, the highest figure reached the last eight years, of which about 3.1 billion came from 771 new FDI projects and the remaining 1.4 billion came from additional investments into the earlier FDI projects. The year 2005 proved as the golden year for foreign entrepreneurs who are focused on the Vietnam market: an estimated turnover to the calibre of € 15.4 billion, the highest figure since 1997 the year of the Asian currency crisis. The growth of international confidence in the implementation of FDI in the country is linked to the relentless effort to improve its legal framework and to award incentives to foreign investors and to meet its commitments towards the international community.
Vietnam has maintained a stable socio-political and thanks to years of careful observation, formulation and implementation of policies in line with the national and international market conditions, it was possible to record an extraordinary flow of FDI to this country.
In 2007, Vietnam attracted foreign direct investment worth more than € 15.4 billion, an increase of 70% compared to 2006 figures, about 1,500 new investment projects were approved in 2007. Areas of interest focus on:

• Construction
• High Tech
• Production of electronic components
• Telecommunications

The labour cost in Vietnam remains among the lowest in the world and the workforce is predominantly young, highly educated and this has made Vietnam an important node in the network of industrial production in Asia. In 2008 however there were 40 FDI projects approved with a value of 38.5 billion euro and focused on the following areas of interest:

• Electricity
• High value production.
• Production of electronic components
• Steel production
• High technology
• Development of entertainment complex
• Port development (construction)
• Development HORECA
• Transport infrastructure
• Urban development

 

Many large companies and corporations are increasingly interested in participating in FDI in Vietnam. From January to March 2008, the province of Hanoi registered 37 investment projects with a capital investment of € 407 million, Bac Ninh won four projects worth € 73 million, for Hai Duong were 9 projects valued at about € 63.6 million and Thua Thien Hue attracted the largest FDI: a single project of 230 million €.

However, there is room for improvement with regard to:

• Infrastructure
• Problem management
• Human resources training.

The value of total foreign investment for the year 2009 stands at
• € 39.2 billion (estimated at 31/12 / 2009), 52nd country in the world FDI rank, see overall rank.