Re: opportunistic Indian cowards destroying our economy!

[Npsingh123@aol.com]

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To hell with the foreign investors. How many of us Indians ourselves are

willing to invest money in Indian real estate, Indian stock exchange or
Indian corporate debt or even bank deposits. Don't we all instinctively
know
that our money is much secure in the U.S. earning 4% interest in dollars
than
earning 8-12% in Indian banks or corporates. There is more money to be
made
in a U.S. econmy in recession than in the Indian economy growing at 8%,
even
after the economic meltdown.

And the reason for this lack of confidence in India is this.

1. We do not have rule of law which enforces our contractual rights in
any
dealing. Police can be bought by the highest bidder and the court system
is
too slow to provide meaningful justice.

2. Our government is always stealing our money by printing more and more

money for deficit financing of populist and politically motivated
projects
resulting in inflation.


I have, through personal experience, come to the conclusion that in
India
only two kind of people can thrive. One is the Mahatma Gandhi and Mother

Teresa kind, who have abdicated all worldly desires and only seek to
serve
without expecting any return and the other are Laloo Prasad or
Jaylalitha
types who have no problem bending the system for their advantage. For
the
rest of us ordinary people India remains a bad choice (if we are lucky
enough
to have that choice) when it comes to putting our money or our efforts
in.
And I am extremely sad to admit that.




In a message dated 11/4/01 9:46:04 PM Central Standard Time,
srinupi@yahoo.com writes:

<< Ministers talk of new measures to increase foreign direct investment,

 which has stagnated at around $ 4 billion a year, and approach
China’s
 level of $ 45 billion.


 It has also abandoned its plan to participate in a huge LNG terminal
 with a 1,800 MW power plant at Ennore.

 The world’s biggest names came into our telecom sector, but today all

 but a few have quit. British Telecom has sold out to Bharti.

 Telstra of Australia, Bezeq of Israel, Shinwatra of Thailand, have all
 have pulled out. Nynex has sold out to its partner Reliance. Others who

 have exited are Vodafone, Bell South, Bell Canada, US West and Swiss
 PTT.

 The few remaining foreign investors in telecom include Hutchison,
 SingTel, and AT&T. Unlike power, telecom is generally considered a
 successful sector, yet foreigners have left in droves.

 Why? First, investors grossly overestimated. Second, bickering between
 the Telecom Regulatory Authority and department of telecommunications
 created uncertainties on the interpretation and enforcement of rules.
 Third, the rules themselves keep changing.

 In one case this benefited foreign investors: They were allowed to
 migrate from an unviable licence fee system to a revenue-sharing
system.

 But in general, foreigners are not used to and cannot manage constant
 changes in rules, unlike Indian businessmen enjoying decades of
 experience with a capricious licence-permit raj.

 Often Indian telecom partners have bought out foreigners. This
 contradicts the traditional wisdom that joint ventures end with
 foreigners swallowing Indians (something that has indeed happened in
 other sectors, mainly because Indian partners could not produce enough
 capital to meet rising losses).

 The Quit India movement of foreign investors is not limited to power
and
 telecom. Cigna, a major health insurance company, has wound up its
 office after months of trying to find a suitable partner.

 Kerry Packer, whose media group made the mistake of tying up with HFCL,

 has quit in disgust. Earlier, Pearson abandoned its losing JV, Home TV.


 Foreign investment has not lubricated success in another
 sector—lubricants. Valvoline has found operations unprofitable and
 decided to wind up. Caltex earlier pulled out of a JV with IBP.

 DuPont faced an unending series of hurdles in producing nylon, first in

 Goa and then in Tamil Nadu, and quit.

 Sinar Mas, a major Indonesian paper company, sold out to Ballarpur
 Industries, but not because of problems in India. Its parent company in

 Indonesia went bust.

 In the pharma sector, German Remedies recently sold out to Cadila.
Astra
 ADL sold out to the Hindujas.

 Foreigners have been quitting this sector for a decade because of price

 controls, as well as a lack of intellectual property rights.

 Rhone Poulenc, Roche, Boehringer Knoll and the research centre of
 Hoechst have all been sold to the takeover king of the pharma business,

 Ajay Piramal.

 This is not a complete list. I am sure readers will know of other
cases.
 I emphasise that foreign investment has been flowing out as well as in,

 and many saying farewell are very big global names indeed.

 What lessons flow from this? First, India remains a country bristling
 with hassles, red tape, corruption, difficulties in collecting dues,
and
 (in the Enron case) unilateral abrogation of contracts.

 Second, many failures are the faults of foreigners, who overestimated
 market demand in India. Many believed that India has a middle class of
 250 million.

 Now, middle class in America or Europe means somebody who owns a car
and
 home. In India, the word has been used to describe anyone that could
 afford a black and white TV set.

 The misunderstanding about what a middle class is, led to exaggerated
 estimates of demand. This was most striking in telecom, but also
 affected estimates of demand for Dabhol’s power, and for many
consumer
 goods sectors.

 Ray Ban found it could not sell enough dark glasses, Kellogs could not
 sell enough breakfast cereals, electronics companies could not sell
 enough TV sets, auto companies could not sell enough cars, Pepsi and
 Coke could not sell enough fizzy drinks.

 In consequence, most foreigner investors have lost a fortune in India,
 and very few have made money.

 Now, I shed no tears for those who overestimated the market, bungled
 their pricing strategies, or failed to adjust their products to suit
the
 Indian taste.

 But in many other cases, India has proved to be a bad, even nightmarish

 place to do business.

 We must improve those conditions, not so much to help foreign companies

 as to help Indian firms harness their full potential.



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