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Is India selling itself cheap through inflow of FDI? India's foreign exchange reserves rose by US$2.03 billion
International think tanks believe that major reason for growth in Indian foreign exchange reserves is the inflow in terms of Foreign Direct Investment (FDI). While global trade and investments are in general healthy, the problem is that for a developing economy, the inflow can buy and dominate certain sectors easily. The ideal example is IBM India’s massive expansion. The software engineers in thousands are being recruited by IBM India from indigenous companies like TCS.
The inflow of FDI and liberalization of international corporate participation open the door for foreign dominance in certain sectors, which may not be healthy. An international corporation can still come in to India, drive the local indigenous business out from existence through marketing hype and unfair pricing and then dominate the sector like a monopoly.
The Government of India promises to act as a watchdog – but in reality can they?
The forex reserves stood at US$1,42,637 million, a rise of US$2,037 million, during the week under review, according to Reserve Bank of India's weekly statistical supplement released here today.
The rise in inflows is mainly due to revaluation of international currencies and intervention by RBI in domestic forex market to mop up dollars after China revalued its currency Yuan, analysts said.
Foreign currency assets also increased by US$2,079 million to US$136,666 million, it said.
Gold reserves declined by US$58 million to US$4,395 million while Special Drawing Rights (SDRs) remained static at US$4 million, it said.
The country's reserve tranche position rose by US$16 million to US$1,572 million, it said.
BIZ/FINANCE ARTICLES
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