Why does India seems to lag behind countries such as China for FDI?
It is difficult to pinpoint the pluses and minuses of two huge countries which are run on different political models. China has done well: India could do better. Reforms in India have been piecemeal. However, this has been a deliberate policy of the government which did not wish to introduce shock reforms. Reform of exchange controls has been gradual. The policy of the government to privatise certain public sector industries (aluminum, oil) has not been without hiccups. This is partly because the government is facing opposition from within its own ranks; those sections who believe that the only way to maintain these entities as wholly Indian is to keep them in the public sector. Liberalisation has also been influenced by Indian entrepreneurs who, for a long time, had virtual monopolies under the licensing system. Previously, it was government, as the elected representative body of the people, that decided on the entry of FDI. While taking away its own discretion in its liberalising pol
