India Evaluation For Startup Business Essay

2218 words - 9 pages

Country Evaluation: India

Describe the country of investment. Include the following:

Economic structure, indicators and risk

Throughout India the economic structure differs greatly from state to state. India is known for having one of the fasting growing economies in the world. This has a lot to do with the huge population in India. Capital, labor, and productivity growth have been the main contributors to the economic growth in the country. In recent years the Indian government has made great strides in strengthening the economy. Despite this push by the government there are still several very poor areas and the country still has a lot of uneven economic stability and because ...view middle of the document...

V. K. Goswami, 2013).

India has gone through a large economic change and development since the late 1980’s. Years ago the restrictions and guidelines on importations were so strict that the economy was at a standstill. Recently they have become more liberal and have made many changes including eliminating much of the “red tape” and regulations.

The industrial growth rate had been rising steadily in India and one of the only challenges faced in this area is to finding workers that are educated in the fields that they need such as engineering and manufacturing. In 2006-2007 manufacturing had a growth rate of 12.3%. The major sectors that showed improvement were basic metals, transport equipment, cotton textiles, machinery and equipment, wood, mineral products, rubber, metal products and parts, manmade textiles, basic chemicals, paper and food products. In the agriculture sector India has always been a leader ranking 2nd in the worlds production of farming goods. Other areas such as forestry, logging, and fishing are also very strong employing over 60% of the workforce in India (Dr. V. K. Goswami, 2013).

In recent years India has seen a slowing of growth, especially in Industry. There seems to be little evidence of a strong recovery in this area. Another economic concern in India is the Inflation rate. In 2013 inflation had risen to nearly 10%. By 2014 this had dropped down to about 7% but is still something for foreign investors to keep an eye on. The RBI plans to get inflation down to 6% by January of 2016. India also had a trade deficit of 7% of its GDP. This is mainly due to energy related imports. (GOV.UK, 2015)

Some of the biggest challenges that the country face economically are as follows:

* India's large agricultural subsidies are hampering productivity-enhancing investment.
* Overregulation of agriculture has increased costs, price risks and uncertainty.
* Government interventions in labor, land, and credit markets.
* Inadequate infrastructure and services (Dr. V. K. Goswami, 2013).

Financial structure, indicators and risk

India’s financial structure is regulated independently by the banking sector, the insurance sector, the capital market, competition, and various service sectors. In several of these sectors the government does regulate transactions. Through the government the Ministry of Finance runs the financial sector. Each year an annual budget in presented in the Parliament by the Finance Ministry. After the details are worked out in Parliament, the budget is passed and the budget becomes law.

The country has a two-tiered structure of financial institutions. This is made up of all India financial institutions and state level institutions. The all India institutions are mainly term lending companies that include insurance companies, term-lending companies, and investment institutions. The state level institutions are made up of mainly of banks that provide; project financing,...

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