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Thursday, August 2, 2012

Govt allows FDI from Pakistan - do you oppose this ?

Am I a fanatic ? – I asked  myself couple of times, when I read this news item…… before judging, put yourself to self test…  India is a democracy – a Parliamentary democracy with a federal set up.  The Government is headed by Prime Minister, supported by a council of Minister.  The Railways is headed by Mukul Roy… read this post - TN Exp accident and Minister's indulgence and when you such people as heads, you cannot logically expect good governance.

The World is a global village ! - Human interaction over long distances has existed for thousands of years.  We proudly say that in very olden days, people from here sailed with pearls to other parts of the World – that was International Commerce, when no INCO terms existed.  By virtue of such travels, there could be spread of philosophy, religion, language, arts and culture.    Over the years, global movement of people, goods, and ideas have  expanded significantly.  To put it simply, when a thing is available in plenty in one place and in short supply, it is natural that the demand and supply meet, benefitting both, irrespective of National barriers.

That sounds fine and logical, especially when globalization is seen more as a way of doing business, or running financial markets.  There are developing countries which require funds for developing their infrastructure, for providing better sanitary conditions, for providing quality health treatment – if assistance from over the border, comes for these, it certainly does good for the country.

But, the foreign investment comes with strings and not necessarily in the area of your want – more on the areas where they can make money ! – while one would welcome a new type of medicine, would a country need cokes and pepsis for their survival ?  - more worrying is FDI – the Foreign Direct Investment. Foreign direct investment (FDI) is investment directly into production in a country by a company located in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.  What is the need for allowing a Foreign Company to reap rich benefits by investing in select sectors, against the local manufacturers, local traders and local business people – what do they bring in – the expertise, the technique of simply more money !!! – and what harmful effect will this have on the economy of the Nation ?

The Nation for few years now has been witnessing debates on FDI in retail.  Stocks of several listed retail players have already started moving up. FDI in retail is a ticklish issue and political opposition has forced the government to postpone it several times in the past. However, the probability of the proposal getting passed sooner is definitely higher.   Competition is welcome and one cannot expect protection all the time ! – but what is available locally, when offered by an International brand, is likely to get costlier in a short time.  Sure you don’t need a Foreign company to brand and sell you things locally available at a much higher cost – the profits so earned would go out of the country and harm the economy of the Nation as well.  Only recently, UP CM Akhilesh Yadav opposed FDI in retail stating that it will harm farmers and small traders.

The Govt. yesterday [on 1st  Aug 12]  formally allowed foreign direct investment (FDI) from Pakistan, the latest in a series of confidence building measures to build trust between the two nuclear-armed neighbours. Pakistani citizens and companies will be allowed to invest in all sectors apart from defence, space and atomic energy, a government statement said. Pakistan  has been on the negative list under the Foreign Exchange Management Act, or FEMA, which prohibits investing in India. According to a press note issued by the Department of Industrial Policy and Promotion, the nodal agency that drafts foreign investment rules, it has been decided to permit a citizen of Pakistan or an entity incorporated in Pakistan to make investments in India under the government approval route.   FDI will be allowed in all sectors except defence, space and atomic energy.

What is wrong in this move, one might tend to ask ?  -  this move legally allows Pak Nationals and Pak entities  to fund industry or start business operations.  Is there any industry which is suffering for lack of funds or would not be initiated but for the Pak money flowing in ?   Should we keep open all the doors with a neighbour who has been at war at least 3 times officially, keeps encouraging incursions and skirmishes on the border.  The Home Minister and others at every possible opportunity speak of ‘funding and encouragement being provided for terrorists from across the border’ – all the Agencies accused Pakistan of role behind the Mumbai siege……… trade between the countries can be allowed but is FDI really required.   Do you feel like opposing this move ? – please read the first line of this post again ……

With regards – S. Sampathkumar.
2nd Aug 2012.


  1. Open to door to Investors ; open the fences for illegal immigrants ; give visas under teh garb of cricket matches - then let them swallow us - shame on the Nation - Prasanna

  2. Put Mukul Roy and all his cabinet colleagues in the unreserved compartment and send them in the train to Lahore.. Nation would benefit - Ishaq