India Economy and Its Prospects

India Economy and Its Prospects for Growth

India's economy continues to grow at one of the most rapid rates in worldwide (Shroff, 2008) with the Gross National Product (GNP) growing at a consistent rate of 6% or more per year. The catalyst of this economic growth has been the investments in education, architecture, and the favorable tariffs to information technologies and high technology investments. These three factors, education, investments in infrastructure, and the Indian governments' approach to lowering tariffs on Foreign Direct Investment (FDI) have all combined over the last twenty years to create the foundation for economic growth they are experiencing today (Chakraborty, Nunnenkamp, 2008).

India is developing strength in software and pharmaceuticals are due to the country's long-term investments in these three areas. Specifically in the area of education and the country's decision to concentrate on turning their universities into the best at engineering, sciences and technology has resulted in other nations outsourcing work to them through their outsourcing firms. The Indian impact on the worldwide software industry particularly shows how a twenty-year investment in education has transformed the country into a global leader (Aggarwal, 2008). The same is the case in pharmaceuticals as well where the companies worldwide are turning to India for R&D of new drug treatments as well.

India's success in it and pharmaceuticals will translate into other areas of the economy providing the Indian government takes a more aggressive approach to lowering tariffs in traditional; manufacturing industries. Today, industries that are dominated by human services including it, consulting and pharmaceuticals have low tariffs. For FDI-based strategies to be successful for consumer products, the multinational corporations (MNC) looking to expand into India will need to be much more culturally aware and sensitive than the it outsourcing companies hiring call center agents, programmers and systems analysts. For a consumer products company to succeed they will need to navigate the many laws and regulations of running a business in India, negotiate for lower tariffs to import products, and build a supply chain in India as well. It is attractive for MNCs looking to expand into India using Foreign Direct Investment (FDI) strategies, yet they must concentrate on the cultural sensitivities of the country first, partner closely with the Indian government, and establish supply chains that immediately infuse local economies in India with capital. The Indian government has become more accepting of FDI by consumer companies expanding there, yet there must be a plan to achieve cultural integration and infuse regions with economic growth quickly if these plans are to succeed (Shroff, 2008).