The Hindu Business Line : Global companies

The editorial “Going global” (Business Line, April 15) highlighted that outward Foreign Direct Investments from emerging economies such as India, China, Brazil and Russia have been witnessing upward trend and that India’s outward FDI was $10 billion in the first nine months of 2007-08, against the $12.9 billion recorded in 2006-07.

In the context of the rising foreign exchange reserves, it is desirable to encourage such FDI to reduce the pressure of rupee appreciation. Particularly, it is desirable to focus our outward FDI on resource-seeking enterprises such as oil and metals exploration in Africa and the Latin American countries to increase our leverage in their imports to reduce inflationary pressures.

The other objectives for outward FDI should be to expand the market for Indian goods abroad and to reduce the prices of the goods manufactured by Indian and foreign companies using economies of scale and technology upgradations. This strategy may help achieve the stiff export target of $200 billion set for the year 2008-09.

P. E. Muthu Mumbai

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