The Indian economy is a guarded economy. Immense restrictions to foreign investment and disinvestment. This is clear from the restriction placed on the free conversion of the Indian Rupee to other currencies and then the transfer of other currencies out from India.
Basically the Indian Government is saying that you cannot take your money out of India in foreign currency without permission.
In India have heard and spoken to many bankers and managers of banks who say you can take your money out. But in actuallity once your money is stuck in India, the Indian Banks and Indian Government introduce suprise red tape and bureaucracy in moving funds out of India.
So as long as the Indian maket is closed to free foreign currency movenment, the Indian market will never be a safe place for foreigners to invest.
If you think of it the other way, foreigners are free to bring and take money out of western countries any time without any red tape.
So India has to change its policies towared foreigners.
Moreover, there are restrictions on foreigners investing in the Indian Stock Market and that is a big big big danger.
So why should any foreigner bring more money into the Indian maket?
RE:India a Baby-Sitted Economy
by lax on Oct 03, 2007 10:25 PM Permalink
Restrictions on Foreign participation in Stock markets & remittances are well placed. U must understand that the Indian economy is still not as strong as western economies.. any wild gyrations in stock-markets & currencies can pose serious problems... remember the asian-currency crisis.
Even with all these restrictions, the FIIs (foreigners) already corner a sizeable part of Indian stocks. FIIs are basically speculators who are not interested in long-term investing. If free-flow of currencies are allowed without investment limits to FIIs, then they will devastate our economy. India still has a long way to go... & its better to be safe than sorry.
