Should India focus on outward FDI
By: Amit Bhushan Date: 20th Nov. 2015
The FDI investment from India in services sector seem to be slow to take off. It is this sector which could have been most promising in current environment and helped other developing nations to infuse new technology, associated learnings and dynamism in their services sector.
This could have been in Financial Services/Fintech/entertainment/media & education sectors e.g. mobile wallets, or in E-Commerce supply chain/logistics companies with innovation of Cash on Delivery (CoD), cab hailing, property hire/purchase, or ticketing etc. which have sprung up and are steadily transforming lives as well as help in raising productivity and jobs.
Flow of same services/technology to other developing countries with similar infrastructure could have easily brought about similar transformations and allowed avenues for Indian firms to grow further - in short a win-win combination. The other alternatives for the emerging markets would be to adopt technology and managerial talent from costlier sources by over capitalizing this nascent sector with significant lead time to break even commercially - not necessarily a win-win, though it may result in a slightly higher initial fund flow. This would have been besides attendant problems like cultural shock, work condition overhaul, expectation management etc. which would be significant.
It also helps that the Indian techpreneur, under suitable growth and reward conditions is relatively more willing to start small using more manpower than capital, rather than take a big bang approach with attendant risks. Growth of services helps improve living standards for masses bringing in sophistication of demand, environment sensitivity and relatively more sustainable growth in emerging economies.
What is required is encouragement for such entrepreneur to grow local jobs in host countries and enabling conditions to help appreciate local laws and customs, commercial and tax environment to improve ability to service local customers and markets effectively and here the willing local partners may assist.What may be needed is Indian consortiums of small entrepreneurs from operating entities, tech vendors, legal, financial and commercial experts to join hand with in-country entrepreneurs with clear responsibilities and payback mechanisms to form ventures which can enjoy rapid growth basis right technologies and conditions.
What would have helped perhaps is that suitable Indian chambers of Commerce and Industries collaborate with respective local country chapters in emerging economies for such investments and ventures to form and flourish and media highlighting the success of such ventures to encourage more entrepreneurs to take such routes. Given the rapid growth of such ventures, the potential for such investments to grow multi-fold under suitable conditions within a few years and making significant impact in communities serviced by such ventures cannot be ruled out.
Yet there seems to be a dearth of effort in this regards because of lack of focus on "small" and so such stories are grossly neglected and there seems to be lots of missed opportunities which could have flourished simply by improving interactions and may be a bit of innovative finance/credit. What may perhaps also help is encouragement of Technology adoption funds in these country to be encouraged to finance the tech initiatives by services sector in their local market citing improved productivity and jobs in the local economy as well as host of attendant benefits like better living comfort for population, tax revenues etc.
By: Amit Bhushan Date: 20th Nov. 2015
The FDI investment from India in services sector seem to be slow to take off. It is this sector which could have been most promising in current environment and helped other developing nations to infuse new technology, associated learnings and dynamism in their services sector.
This could have been in Financial Services/Fintech/entertainment/media & education sectors e.g. mobile wallets, or in E-Commerce supply chain/logistics companies with innovation of Cash on Delivery (CoD), cab hailing, property hire/purchase, or ticketing etc. which have sprung up and are steadily transforming lives as well as help in raising productivity and jobs.
Flow of same services/technology to other developing countries with similar infrastructure could have easily brought about similar transformations and allowed avenues for Indian firms to grow further - in short a win-win combination. The other alternatives for the emerging markets would be to adopt technology and managerial talent from costlier sources by over capitalizing this nascent sector with significant lead time to break even commercially - not necessarily a win-win, though it may result in a slightly higher initial fund flow. This would have been besides attendant problems like cultural shock, work condition overhaul, expectation management etc. which would be significant.
It also helps that the Indian techpreneur, under suitable growth and reward conditions is relatively more willing to start small using more manpower than capital, rather than take a big bang approach with attendant risks. Growth of services helps improve living standards for masses bringing in sophistication of demand, environment sensitivity and relatively more sustainable growth in emerging economies.
What is required is encouragement for such entrepreneur to grow local jobs in host countries and enabling conditions to help appreciate local laws and customs, commercial and tax environment to improve ability to service local customers and markets effectively and here the willing local partners may assist.What may be needed is Indian consortiums of small entrepreneurs from operating entities, tech vendors, legal, financial and commercial experts to join hand with in-country entrepreneurs with clear responsibilities and payback mechanisms to form ventures which can enjoy rapid growth basis right technologies and conditions.
What would have helped perhaps is that suitable Indian chambers of Commerce and Industries collaborate with respective local country chapters in emerging economies for such investments and ventures to form and flourish and media highlighting the success of such ventures to encourage more entrepreneurs to take such routes. Given the rapid growth of such ventures, the potential for such investments to grow multi-fold under suitable conditions within a few years and making significant impact in communities serviced by such ventures cannot be ruled out.
Yet there seems to be a dearth of effort in this regards because of lack of focus on "small" and so such stories are grossly neglected and there seems to be lots of missed opportunities which could have flourished simply by improving interactions and may be a bit of innovative finance/credit. What may perhaps also help is encouragement of Technology adoption funds in these country to be encouraged to finance the tech initiatives by services sector in their local market citing improved productivity and jobs in the local economy as well as host of attendant benefits like better living comfort for population, tax revenues etc.