Global With Local Features

Context: Due to GoI’s enabling policy framework, investors have reposed faith in India through a record foreign direct investment (FDI) of $81.72 billion (Rs 6.1 lakh crore) in 2020-21.

Shifts in tenets of the global economic regime due to Covid-19 pandemic

• World is transitioning to a more anomalous setup from the era of the Washington consensus-led market economics,
• Non-market economics has begun to be a factor in global economic and business decision-making.
• Geopolitical realities, and usage of concentrated supply chains as a tool of power projection, have prompted business strategies like ‘China plus one’ and bans on social media applications.

Benefits of FDI 

• Ideological opposition to foreign capital is no longer popular in India: According to CVoter Consumer Tracker ,70% Indian consumers viewing FDI as beneficial to the country, while only about 10% considering it harmful. 
• Despite anti-China sentiments, Chinese apps and mobile phones are popular in India.
• Helps break domestic monopolies and leads to a more competitive economy.
• Role in reviving growth was acknowledged by 82% respondents in CVoter Consumer Tracker. Hence, foreign investors can bank on favourable public opinion for their investments in India.
• Creation of new economic ecosystem of unicorns: Indian founders of unicorns are success stories in popular Indian perception, even if they sell their company off lock, stock and barrel to a global giant of foreign origin.

Challenges 

• Support for FDI tempered by a protectionist impulse that seeks to avoid concentration of market power. According to CVoter Consumer Tracker 
  • Only 10% respondents support a laissez-faire investment policy. 
  • Every second consumer in India wants FDI to be ring-fenced by protectionist measures.
  • Almost every third consumer wants FDI to be subject to strict terms and conditions. 
• Impact of geopolitical rivalries on FDI: Corporations from countries involved in any kind of conflict with India are disliked. Punitive measures announced by GoI against Chinese entities, enjoy popular support.  According to CVoter Consumer Tracker 
  • Almost 90% respondents backed the ban on Chinese apps and social media companies.
  • Almost every third consumer in India is echoing GoI’s anti-China sentiment using a made-in-China instrument.
  • More than two-thirds of Indian consumers believe that a check on Chinese investments cannot hurt Indian interests.
  • 9 out of 10 Indians consider Chinese investments untrustworthy.
• Impact of sectoral dominance: Support for FDI becomes less when foreign investors dominate a certain sector, e.g., ecommerce. According to CVoter Consumer Tracker
  • Only 27% respondents considered the domination of the ecommerce space by giants like Amazon and Walmart-owned Flipkart as good. 
  • 44% respondents categorised  dominance of Amazon and Walmart-owned Flipkart as negative, while the rest considered it as ‘mixed’.
• Higher disapproval of  foreign capital dominance in some sectors like defence ,media agriculture and telecom,aviation ,education and consumer goods etc.
• Support for one entity and unpopularity of the other: US entities enjoy a significant edge over Chinese ones owing to non-market factors of public opinion. 56% respondents in a survey deemed the US trustworthy.

Way forward: Glocal Polibiz

• Public policy connected with localised perceptions: As in a democratic setup, public perception is everything in the decision-making chair of policy framework. 
• Businesses will have to factor in wider public perception to transcends their consumer base: Business may be global, but politics remains anchored in the local. The baseline being that FDI in India is welcome, but subject to constraints of popular democracy.

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