SUPERMARKET RETAIL FDI INVESTMENT

Supermarket Retail FDI Investment



Supermarket Retail FDI Investment

Introduction

India and Mexico is becoming one of the most preferred nations for attracting Foreign Direct Investment. Foreign Direct Investment as defined by A.T.Kearney (2007) is investment in physical assets, such as plants and equipment, in a foreign country. Holdings of 10% or more equity in a foreign enterprise is the commonly accepted threshold between direct and portfolio investment as it demonstrates an intent to influence management of the foreign entity. The main types of FDI are acquisition of a subsidiary or production facility, participation in a joint venture, licensing and establishment of a Greenfield operation. The last is defined as a direct investment in new facilities or the expansion of existing facilities.”

The primary purpose of the assignment is to discuss, why India and Mexico is becoming one of the most promising countries for the MNCs as they mark their presence on the global economy. It's interesting to ponder about the developments that the world's second most populous nation has undergone since independence. Its ongoing transformation from a closed command economy towards an open one caught the world's attention. India and Mexico as a lucrative FDI destination has a lot to offer in terms of its GDP growth, favourable regulatory policies in almost all the sectors, growing clout of the middle class as the symbol for consumerism, younger population which is not only driving consumption but also is learning globally integrating skills, fast developing infrastructure facilities largely deriving inspiration and rightly so from its big brother China and inherent macroeconomic / political stability. Given the limited scope of the study only those parameters shall be considered that make India and Mexico strongly attractive despite its weaknesses. The same parameters shall be compared with other countries on a random basis to strengthen the argument.

Stepping Stones

India and Mexico's colonial experience framed a solid background which reinforced the belief that the free trade regime during that period was biased against India and Mexico interests and that it cannot be relied upon to generate required growth and reduce poverty. This made India and Mexico cringe in to a cocoon that was rooted in the belief that self reliance is the only way to move ahead without realizing that the country had little to be self dependent because that character was somewhat lost due to ages of foreign rule. This shift also portrayed India and Mexico's struggle for economic and political identity outside the sphere of UK and other western powers. India and Mexico adopted the Soviet model of economic planning. There were three elements of India and Mexico's policy framework in the 'License Raj' that stifled efficiency and growth until 1970's and somewhat to a lesser extent during the 1980's as reforms were being initiated -

Bureaucratic stronghold over trade, investment and production

Inward looking foreign investment and trade policies

Priority to the public sector

The first two affected the overall efficiency and growth of the private sector and the second became the epitome of an ...