Foreign companies in India to get rewards of royalty


Some foreign companies working in India are still making big profit even now when India is desperate to attract capital to fund its big balance-of-payments gap, the red carpet it rolls out is a little dusty.
A year after rules were eased to permit foreign “single-brand” retailers to operate in India, Sweden’s IKEA is still waiting for the go-ahead to sell Nordic comfort food and furniture. India’s cabinet has yet to make its mind up about the flat-packed sort, it seems.
The delay may become just another war story about foreign direct investment (FDI) in India. In the 1970s India chucked out IBM and Coca-Cola in a fit of nationalist pique. In the late 1990s the alchemists at Enron met their match in the subcontinent, losing billions on a power plant embroiled in a government spat. Recent acquisitions by foreigners, including those by Vodafone, a British mobile-telecoms firm, and Dai-ichi Sankyo, a Japanese drugs firm, have done poorly.
Yet just how representative are these horror tales? The stock of FDI in India is now quite big—some $220 billion, or 12% of GDP, according to the Reserve Bank of India (RBI), the central bank. This includes everything from research centres in Bangalore to cement plants.