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27 Nov

B. Foreign Investments:

B. Foreign Investments:
Globalization facilitated investments monetary and assistance immensely Indian has diverse for FDI investments resulting in foreign investments from many countries as witnessed in following diagram:
As mentioned before government liberalized flow of FDI in various sectors such as:
(i) Defence:
FDI in defence cap was lifted to 49 per cent by government which was seen as necessary move in lieu of low investments from abroad during past decade to the tune of meagre 4.6 million dollars. India needs technological assistance especially in developing and extracting strategic materials like titanium which is used in almost all aerospace engines but India does not hold them in substantial quantity.
This is even truer in face of fact that China has embargoed major amount of rare earth minerals. Currently, the Indian armed forces are in a state of pitiful neglect. Billions of dollars would be required to put the national security back on rails. If all the pressing needs of the three armed forces – the army, the navy and the air force – were to be met fully, the nation would require funds in excess of $100 billion.
Also this has to be managed within the next three or four years, not decades, if India has to bolster its defence and come up with a credible and effective deterrent vis-a-vis China and Pakistan.
A developing country like India cannot generate this kind of money on its own. In fact, no developing country can afford to do so, barring one: China. And China is already doing this with an annual defence budget of over $ 188 billion, compared to the Indian defence budget of $47.4 billion as per the 2013 figures.
Things have slowly begun to pick up. Aequs Pvt. Ltd, a Karnataka-based aerospace components manufacturer, has received approval from the foreign investment promotion board (FIPB) to increase overseas funding in its Indian unit to 40% of its equity, making it the first firm to make use of the higher foreign direct investment (FDI) limit notified for the defence sector.
Apart from seeking additional foreign infusion of funds, Aequs has earmarked an investment of $100 million as it plans to expand into more segments, set up factories in the US and Europe and increase its manufacturing capacity by three times to generate revenue of $200 million by 2020.
(ii) Insurance:
Government passed ordinance to approve the 49 per cent hike in FDI in insurance sector. Need for FDI in insurance sector stems from ironical situation that in spite of having 52 companies, they provide only 25 per cent of insurance cover. To increase the depth of penetration and to fill the lacunae of gigantic gap between market cover and market size government has invited private sector in insurance.

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