Indian Economic Troubles

As globalization has emerged and evolved into one of the leading factors driving business decisions today, certain countries and economies have been profiled for their seemingly important role in this new age. India is seen as one of those stars in the age of globalization but recent setbacks may warrant a second look. With anemic growth in the United States economy and the European Union with its whole host of problems some economic consequences for India seem legitimate. However, with the missteps that India businesses have taken, both at home and abroad, the business practices of the country must be questioned.

First is the internal economics. This is largely shaped by the corruption that is still prevalent in India. As an emerging economy the perception of being a corrupt nation has serious consequences for foreign investment as well as a countries ability to become an economic powerhouse, which may be India’s potential. Out of the BRIC (Brazil, Russia, India, and China) nations only Russia is perceived as more corrupt then India. This is a problem that will only be exaggerated as investors continue to see India grow and place pressure on the business community and the government to correct these structural issues to receive their investments.

Second, the international activities of Indian based businesses must be looked at. The island nation of Maldives had a contract with Indian businesses that would build an international airport for the tourist island. The project was cancelled when the new government in Maldives took over for being too favorable to the Indian stakeholders. Despite warnings from India about the toll this would take on the two countries relationship, Maldives was not prepared to succumb to Indian strong arming. This has been a theme across the globe recently as Indian companies have either sustained large losses or have been kicked out by governments of emerging economies in Latin America and Africa. After the Bolivian government claimed that an energy company based in India was not fulfilling their promises the $2.1 billion investment in an iron ore mining operation was terminated. French officials have threatened to take over a couple of steel plants owned by an Indian business tycoon if he went forward with shutting them down to lay off workers. The question must be asked, what is it about the Indian way of business that causes such friction?

Inherently, India is able to offer value to investors and companies regardless of the imperfections they may possess. With over a billion people within its borders the opportunities present are limitless and is why the country has received much praise and criticism. What will become of this potential is the most pressing question that India must face.