General Electric S Success in India Essay

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General Electric in India

Recent economic figures point to the tremendous growth of India as the world's popular investment hub. Foreign direct investments (FDIs) in the country have depicted a surge as investors seek opportunities in the second populous nation in the world (Mishra & Shaopeng, 2013). The country occurs as a close competitor to China, as the preferred investment hub globally. Since independence, India upholds democracy in rule and governance. In the 1970s, India occurred as a preferred hub for multinationals such as IBM. The nation is popular for providing a favorable environment for multinationals to thrive. In this paper, we analyze some macro and micro economic factors that affect the way of doing business for General Electric in India.

Legal/Political factors

Effect of Common law on GE

Historically, India has grown as one of the most preferred investment hubs for multinationals. The presence of General Electric (GE) in India dates back to 1902. GE has managed to stay afloat in the market through various projects in energy, financial services, healthcare, and transportation. India's policy on invitation and facilitation of FDIs takes either the government approval route of the automatic route. The automatic route does not need prior approval whereas governmental approval route requires approval from the Foreign Investment Promotional Board. The presence of General Electric depicts the automatic route as hundred percent ownership traces to the U.S. Law on FDIs prohibits investment in sectors of atomic energy, agriculture, betting, gambling, and lottery.

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GE does not participate in either of the prohibited businesses, an aspect that favors it presence in India (Noronha, 2010).

However, problems may arise with the implementation of legislation in case the government changes policies concerning the operation of FDIs in the nation. In most cases, poor drafting of new laws depicts inconsistencies thereby conflicting interpretations from the government itself. The policies released through press releases or press notes at times give conflicting interpretations of the law. For example, the element of labor legislation has depicted a challenge for GE and other FDIs. Despite the reduction in powers endowed to trade and labor unions, the nation still depicts significant cases of pro-worker legislation. Judicial systems have also depicted challenged due to the presence of archaic pleading systems. It may take long for processing of cases. Most rules in India occur as open to interpretation from authorities such as regulators amongst others.

Economic system

India portrays a market-based economic system characterized by reduced corporate taxes, relaxed restrictions, and removal of price controls. The adoption of this type of economic system favored recovery of the balance-of-payments crisis after the collapse of the Soviet Union. Economic liberalization favored FDIs in the nation with GE capitalizing on the chance to venture into other business and facilitate expandability (Mishra & Shaopeng, 2013). Liberalization has encouraged an increase in the utilization of GE's goods and….....

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