Property prices soar in India

Property prices soar in India

India is a huge market for foreign investors

Walk into any mall or bustling shopping district in Mumbai (Bombay) and it's easy to see why foreign investors are desperate to come to India. Read original article

Foreign investors want access to India's young consumers

Crowds of plump, brightly dressed Indian housewives fill the shopping aisles, peering over new saris, electronic goods and household items.

The consumer truly is king in today's India.

A recent report from global consultancy firm McKinsey says that in the next two decades, India's consumption boom could leapfrog Germany's.

So it is no surprise then that foreign investors are clamouring at the newly-opened gates of India's economy, frantically trying to convince the country's economic gatekeepers they should be allowed in.

But it isn't easy.

British telecom giant Vodafone finally got the green light from India's foreign investment officials last week, after first announcing it had bought a stake in Hutchison Essar, India's fourth-largest mobile phone firm, back in February.

Vodafone is keen to ensure that its experience in India should not be perceived negatively.

"It is the largest ever foreign investment in India - $11bn - so we certainly expected the Indian government to look at it closely," Ben Padovan, the group's public relations head, told the BBC.

Even growth

Eleven billion dollars is a significant investment for a country that is looking to attract $320bn of foreign funds to help it build roads, ports, and airports.

Without this infrastructure, many say India's growth trajectory could be threatened.

Harley-Davidson stalled when met with India's import duties

So why make it difficult for foreign investors to come here?

Rakesh Mandloi, a small shopkeeper in Mumbai, says it is important to place stringent guidelines on foreign investors.

He says he would be out of a job if foreign supermarkets were allowed in without some scrutiny.

"What will happen when a big supermarket with foreign goods opens on this street?" he asks.

"Of course, my shop will have to be shut down.

"I am not against progress, I am not against growth. I just think we need to make sure that everyone is progressing, everyone is growing."

Giant market

Following resistance from small shopkeepers like Mr Mandloi, who make up the bulk of the $300bn retail market here, India has ordered a study on the impact of organised retailers.

European retail giant Carrefour has reportedly decided it will wait to enter India until the study is out later this year.

Deferring its India plans as well is American motorcycle firm Harley Davidson.

Indian motorbike enthusiasts had hoped to see the mean machines on Mumbai's streets this year. But high import tariffs have kept the American company away.

"We want to enter India, as it is a key market, but we don't know when will it be," says Tim Hoelter, vice president, government affairs of Harley Davidson Motor.

'We are looking for some concessions from the government."

Critics of India's foreign investment policy point to this as an example of how unfriendly India can be to foreign investors.

"Officials say that they want more investment, but the reality is it can be very difficult to put your money here," says Ilja Michaelis of consultancy firm Oban.

"If you don't know what your strategy is going to be, then it will be very difficult for you to stay here."

But India does have some advantages for foreign investors, especially when compared with China.

India, being democratic, gives confidence to foreign investors, thinks Ron Summers of the US Indian Business Council.

And its youthful population helps too.

For foreign investors battling to get into India, it's these young consumers and their new buying power that are worth the fight.