By Soumya Priyadarshani

Edited By Shambhavi Singh,Senior editor,The Indian Economist

In order to cope with the depreciating value of the rupee, and also to create employment opportunities in India, Narendra Modi has devised a plan to kill two birds with one stone. Mr. Narendra Modi will divulge in yet another move to propagate his brilliant signature ‘Made in India’ on 25th of September, with a raft of proposals designed to set up shops and industries to make the country a manufacturing power house. He will announce his new plan at Vigyan Bhawan, at an event that will be shown live to a number of industrialists all around the world and to the common man as well. His plan aims to ease the investment process by the foreign countries in India. Currently, the foreign investors call the Indian investment process for setting up factories as a tough task, but at the same time they want to explore the Indian market. And hence, Narendra Modi’s idea will help these foreign investors to a great extent.

Narendra Modi plans to meet and personally talk to thousands of global CEOs and corporate personalities. This program was first discussed by him in his much noted Independence Day speech, which laid emphasis on approximately 25 sectors. With his aim to create job opportunities and skill enhancement for citizens, his idea will boost the Indian Economy and increase the rupee value. He is planning to setup factories in sectors like automobiles, design manufacturing, mining, textiles, biotechnology, pharmacy and electronics. Under the Government’s 100 smart cities project and affordable housing, the foreign investment caps in construction will be eased to enable greater participation from the foreign industries. The ease of FDI caps to 100% and 49% in Railways and Defence production respectively has already helped a lot.

This idea has been intelligently crafted at the right time. This is so because now big companies are seeking an alternative to China for investments as there are high costs and risks existing in China. Also, the Indian market is unexplored with a huge potential and is thus, attracting a number of investors. In olden days, India’s only source of income was agriculture and that too was dependent on monsoons.

India couldn’t become a manufacturing hub under the British Rule, as they took raw material from India at cheap prices, made goods in England, and sold it at a much higher rate in the Indian markets. They earned a high profit, and then even after Independence, India developed mainly in the primary and tertiary sector. The secondary sector i.e., the manufacturing sector was still in its nascent stage. Technically, it has been planned out that the Investor facilitation cell will respond to foreign investment proposal within 24 hours.

To explain in detail about what the benefit of foreign investment for India will be, I will first have to mention the term ForEx.

A foreign reserve is one of the most important factors which affect the value of currency. When a country invests in India, it has to make payments in India and then some of its money comes to India in exchange for goods and services. And this foreign currency constitutes the foreign reserve of India (Also called ForEx – Foreign Exchange).

This ForEx is like an international saving – more the ForEx reserve saving, more the capability of the country to invest in another country. But when the need arises, more the capability of a country to invest, stronger is its economy and higher the value of its currency.

Although this is just one of the many reasons that affect the value of rupee, the problem of foreign investment cannot be ignored. Government is planning to introduce single labour law for small industries and sectors.

It is for sure that if this idea is implemented, it will ensure high growth and employment. But its date of implementation is still not clear. Many see it as a yet another challenge for NaMo.

Posted by The Indian Economist | For the Curious Mind