| Although India attained its freedom more than sixty years ago, the emergence of the Indian economy on the global scene has been a rather recent development. This is because of the realization of the true economic growth potential of India, by the foreign investors as well as business houses. Before this as well the concept f foreign investment in India was not particularly unknown. Since the ancient times, India has been serving as a trading ground for agricultural produce, spices, minerals and natural resource, etc.This was the reason why many of the traders and merchants from all over the world, regularly came to India to invest in to the ever shining glory of the ever booming Indian economy .They aimed at striking out a lucrative deal with the local authorities as well as traders and generate impressive returns.. This saw merchants from countries like Britain, France, Denmark, Spain, Iran etc coming to India and setting up a base here. Even the British East India Company, who ruled over India for four hundred years, came to India as a trading company.Thus, India has been a famous adobe for investment of foreign money since its historical era and the foreign direct investments of today, exploit the same factors of India, as did the merchants and traders in the past.
Having said that the new age foreign investors perceive India as a very lucrative revenue generating ground and a place where they can effectively prosper a business, India could not develop itself as a prominent adobe for investment by foreign investors till the very recent times. One of the major reasons for this was that directly after the independence from the British rule, India fell into the shackles of war as well as political instability. It waged three prominent wars with its neighboring country – Pakistan over a period of sixty years. There were also some tumultuous times within the country where the security conditions lapsed as a result of riots and battles against naxalites.This in turn discouraged any foreign investors to come to India with their money due to severe security concerns.
Apart from this, the post-independence period in India saw it falling into a socialistic, rigid economical ideology. This discouraged any external interference or collaborations, even on the business front. During all these times, the major population of India dwelled in the villages and small towns. As a result of this they were not very financially sound and thus their spending power was not very much. As a result the foreign investors were not very keen to market products in a country were most of the people could not afford it. Another reason that prevented the setting up of the base of foreign investors in India was the stringent code of laws that placed a check on the amount of money that could be invested into the Indian markets. The frame of law also placed a check on the origin of the foreign investors- only investors of Indian origin had the privilege to invest in the country. All these factors kept India away from the boom and the wave of prosperity that foreign direct investment would result into.
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