Riassunto analitico
India is one of the fastest growing economies in the world, yet it is relatively new on the global economic landscape, having opened its economy to the world only during the first years of the 90s. This paper’s purpose is to analyze whether India may represent today a promising country where to do business for foreign companies, or if positive economic growth figures are not supported by a conducive business-friendly environment, along with an analysis of the current commitment of the Italian companies in the country. A broad economic and political environment analysis is conducted on the Indian context, underlining both the growth perspectives of the economy , and the many challenges the country still poses to foreign firms willing to internationalize. Against the huge market size and the astonishing growth pace of the Indian economy, the country still poses many obstacles, the most important of which are analyzed: lack of infrastructure, bureaucracy, red tape and corruption, cultural barriers which hinder the ease of doing business in the country. The most recent government policies and reforms in the country are broadly analyzed in order to understand if they create a favorable business in order to identify the tangible and intangible barriers to internationalization of foreign firms. The main features and recent developments regarding FDI and trade policies focus on the most recent policy developments, under the ‘Make in India’ initiative sponsored by the Modi Government. The purpose is to understand how effectively they reduce the traditional Indian barriers to internationalization of foreign firms, both analyzing the letter of such reforms and their effective implementation. Finally, economic relations between Italy and India are briefly explored, providing the latest available data regarding the trade between the two countries, and the development of direct investments from Italian companies into India, with the aim to provide a snapshot on the relative importance of India as a country of destination for Italian internationalizing firms. The results of the explorative study show how India potentially offers unrepeatable opportunities to foreign firms, but it brings with it a load of risks and uncertainties, which, combined with geographic and cultural distance from western countries, do not create a favorable context for foreign firms. India is still far to reaching a favorable business environment for foreign firms, and most recent policy reforms are only piecemeal ones, which are unlikely to change the situation in short-medium term. This does not mean, however, that foreign firms should avoid considering India as a country of destination of their exports, or investments. Especially Italian firms should start to look at the many opportunities India can offer, especially in the sectors and activities typical of the Italian manufacturing industry, with serious commitment, in order to avoid the many difficulties and pitfalls an investment in the country may pose. With respect to their European counterparts, Italian companies are showing low interest in the country, and the figures regarding trade flows between the two countries are not encouraging. On the other side, Italian investments in the country are showing a sustained growth, also relative to other investing countries. The main limit of this research regards the lacking of an empirical study on the main motivations and barriers of the investments and exports from Italian firms in India. The research provides a general exploratory review on the main opportunities the country offers, but it lacks the necessary empirical evidence, which may support the partial conclusions of the work. Further studies on this matter, would require in depth surveys and interviews to a sample of Italian firms investing and/or exporting in the country, in order to provide the necessary evidence, which the present work is lacking.
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