100% FDI in the Construction Sector: A Step to Welcome!
The advent of the concept of FDI (Foreign Direct Investment) has invited much debate on the advantages and disadvantages offered. Volumes have been quoted by some of the most prominent dignitaries about the negative impact that FDI can bring to the Indian economy and how it can pose as a severe threat for the Indian market. However, given the present conditions in the construction industry competition is more likely to enhance the quality of services. The construction industry is faced with numerous challenges further aggravated by prevalent corruption and self-centered approach adopted by the stakeholders. With the globalization that FDI offers will eliminate the monopoly of the existing market. Therefore, the move must be accepted, welcomed and taken with an optimistic frame of mind.
Conceptual frame of Foreign Direct Investment (FDI) & The Challenge
Foreign Direct Investment (FDI), is when an investment is made by a foreign merchant (Multinational company) for certain commercial activity in a country. Control over the proceedings of the company on the native land vests in the hands of the foreign investor.
FDI, is likely to pose challenges to the livelihood to the natives especially in the retail sector. The intervention of retailers like Wal-Mart has been seen as a serious threat. Secondly, the predatory practices of the multinational companies are a big demerit in the path. Another challenge is posed to the urban development and culture. Also, the trade balance may see a set-back with the onset of foreign investments. Price hike is one of the most disadvantageous outcomes.
Present status of the Indian construction industry
The Indian construction industry has suffered vast slow-down lately. Despite being one such industry that attracts ample fiscal movements, construction industry, since last 2-3 years, has seen lack of monetary advantages leading to trimming down of the salaries of the people employed in this sector. The industry is severely hijacked with pre-existing malpractices of the businessmen. Trade balance is already not set in a proper framework. The collapse of the Common Wealth Games (CWG) Bridge in New Delhi in the year 2010 is an example of substandard constructional qualities delivered. At the same time, several ideas and research have been developed in the areas of green and smart buildings that need ample encouragement and monetary backing for fulfillment.
100% FDI allowance in the construction sector: Benefits
Certain determinants attracting FDI include the availability of natural resources and manpower, market conditions, socio-economic and political conditions, government policies and rate of interest.
India, presents an attractive domain for investment owing to the bountiful natural resources enjoyed by the place.
According to the new policy, the two major changes include the removal of constraints on the minimum built-up area and capital investment. It is this feature that claims the spotlight here because they were the key inhibitors of investment. The obvious outcome will be an inflow of finances in the sector thereby raising the gross profits breaking the liquidity crunch. Furthermore, the lock-in period and government approval on the transfer of stakes from one foreign merchant to another without repatriation of investment has been eliminated. Also, it will be possible to quit any time before the lock-in period due to early project completion. Indeed, the policies have been eased, welcoming foreign investors.
Precautions for the Indian marketers
With every opportunity numerous challenges emerge as well.
The best way to compete is to improve on quality. Indian marketers need to focus on efficient and cost-effective ways to building. The people associated with the real estate must keep themselves abreast with the changing market. The motive is to eliminate loopholes of the system and develop a smarter way out from beforehand. Moreover, sustainability remains a cardinal point at all times. Marketing needs to acquire multi-dimensional form so as to effectively communicate their merits to the customers. A diverse range of options will be available to the buyers hence they must develop an in depth understanding about the benefits of various services and not give in to merely visually appealing products or the imported tag.
The global intervention will encourage and motivate the designers, architects and engineers to develop newer and renewable solutions for building that can stand the test of time, to stand ahead in the race. Better options will enable the clients to choose between varieties of alternatives. In contrast to hampering the market, the move will actually generate greater options for employment for the deserving candidates. It will lead to optimum resource allocation. Moreover, skilled personnel will find many companies to put their talents, ideas and abilities into practice. The policy would certainly prove to be beneficial for the construction industry in particular and society at large. People must embrace themselves for this change and get ready to employ the latent research methods that can help them get an edge in the market.[Image Attribute: Kelvin Boyes]