Indian Industry Trembles
Faces Foreign Domination
The opening of the market has been a mixed blessing for the Indian industry. For one, Indian industry does not have level playing field vis-à-vis foreign investors. Foreign companies have considerable holding power to absorb shocks, such as delays in approvals. They have enough resources to invest on "educating" our politicians and civil servants, getting environmental clearances, and buying out villagers who own lands.
Just liberated from the licence-permit raj, our industry faces high interest rates, liquidity crunch, and usually negative attitude of financial institutions and government agencies. The practices of Indian stock exchanges too are archaic and not very helpful to investors. Finally, every fall in the Indian rupee in relation to the dollar makes the foreign companies more competitive vis-à-vis their Indian counterparts.
As a consequence of the above, some Indian industries are facing serious difficulties. The notable ones are oil solvent extraction, textile, building materials, steel, cement, machinery manufacturing, polymer, packaging and fertilisers.
Urgent attention is needed to bring down wasteful public expenditure to contain inflation, local empowerment to facilitate speedy single window approvals, and modernising financial institutions and stock exchanges to meet emerging needs.