India today is considered to be one of the major forces in the global economic market. Though India is a developing economy, its economy has a major impact on global trading. The majority of the world's leading developed nations are keen to have or expand their ties with India. This is mainly because in the current scenario of globalization India is seen as a wonderland for investments. Thanks to its huge market base and fast-developing spending habits of middle-class Indians, India is a preferred destination for investors over other major countries, including China, because India has a favorable business environment, a good administrative setup, attractive foreign policies, and an available, abundant skilled workforce as well as provides attractive incentives to investors.
India scores over other places in terms of being an ideal destination for investments mainly due to its vibrant democratic setup, which is aptly underpinned by a broad legal framework and independent judicial system. Apart from these factors, the presence of a vast network of bank branches, financial institutions, and a well-organized capital market contribute to making India a preferred destination over other places by foreign investors.
India boasts a vast network of technical and management institutions that are of the highest international standards. These institutions develop excellent human resources. India also has a strong base of an English-speaking population for business purposes. The strategic location of the country in the context of the third world market in the rapidly growing southeastern Asian markets along with a supportive infrastructure provides India with a competitive advantage over other countries for attracting foreign investments.
The government of India has taken several initiatives to attract foreign investments in India's diverse sectors. It has announced a number of attractive schemes and policies from time to time to lure investments. The individual ministries of different industries have made special attempts to ease the rules and regulations related to foreign investment in the industry. Apart from formulating attractive policies for investors the ministry also provides guidance to the investors with regards to the infrastructure availability, the market structure, and so on. The Indian government also allows foreigners to make direct investments in the country's firms by way of acquiring share and debentures. This favorable government initiative gives India an edge over other countries for investments.
It is often speculated that though India is a developing country, why are foreign investors keen to invest in India and employ the services of Indians? Do the investors lack knowledge about India's poverty and social issues or does India paint a false picture about itself in the world market? The truth is neither the investors are ignorant about the India's social issues nor does India have a false image. The main reason for foreigners to invest in India more than any other country is that India has the knack to produce quality goods and services and provide top-class services at a lower cost.
Labor costs in India rise every year and in certain fields, such as software, employees feel they will not get any further increment on their salaries. This plays a crucial role in protecting the cost benefits of foreign investors and attracts foreign firms to invest in India.
Today, there is hardly any big company in the world who does not have their presence in India in one or the other way. Several companies outsource their accounts and BPO operations to India. This is mainly because regardless of the domestic issues, these companies get excellent service and value for the money they invested.