India,FDI and Infrastructure

Abstract

As India’s FDI experience shows, a 100% open FDI regime can be meaningless if the underlying operating environment is politically and economically unviable. More FDI has gone into Indian telecom despite a continuing FDI cap, than to 100% open sectors such as power, ports and roads. Not only are sectoral reform and robust regulation key to attracting more FDI in infrastructure, they, most importantly, strengthen domestic firms, which tie-up with foreign players to radically improve infrastructure quality and managerial talent. India’s unique political and regulatory environment also appears to be prompting infrastructure multinationals to employ market entry and operating strategies distinct from those used in other developing countries.This is fueling the global integration and competitiveness of Indian infrastructure firms. Finally, the Indian government needs to invest more in public consultation, communication and transparency to facilitate greater inflows of FDI in infrastructure.