Finance International Investments - Assignment Example

The country is expected to capture 1% of the global trade in the near future. The level of exports has grown to nearly 24% as compared to the last four years (Guenthner). India is expected to be among the largest economies by 2035 (Guenthner). This is the right time to invest in India based on the level of economic growth and future prospects. India is viewed as an appropriate market for investors who have long term objectives. Risks of investing in India Investing in India is considered as a huge risk by a number of investors claiming that the chances of success are equal to those of failure (Canada.com). However, these risks are known to exist in any given business venture in a country.

This concerns the acceptability of the new product in the market (Trade Chakra). The Indian population is at 1.1 billion however only 40 million people frequently use the internet (Guenthner). Funds should be invested in the online sector as it is among the most promising. In the past, the country has experienced a couple of terrorist attacks and this has had negative effect on investor confidence. However, this concern has a short-term impact and it should not prevent investors from investing their funds in India.

Nevertheless, it is a country with high levels of poverty and strict traditions and it may be hard to introduce new products in the market. Its economy has a long way to go before it fully develops and this poses a risk and challenge of growth to any company. Most of the people are employed in the agricultural sector and 30% of the population lives below the poverty line (Guenthner). The country has a poor infrastructure and this may prove to be a challenge to an investment. Long-term potential for growth in India Indian economy possesses immense economic promise and potential.

This has captured a great deal of attention from investors globally. India is said to be an economy with numerous possibilities and can have unpredictable impacts on businesses (Hall and Poloz, 771). The economy is expected to grow at a high rate (12.8% per year) in the near future and this is quite attractive to the investors. The income for Indians is also expected to increase in the coming years. The economy is expected to be among the most powerful in the next two decades. While it is true that the market in India has greater potential than other markets globally, available funds should be invested in sectors with long-term prospective growth such as technology more so the internet.

The funds should be invested in areas where the rate of return is over 15%. Political or economic upheavals that might impact performance of the fund Political stability in any given country is vital since it determines the stability of the business environment. India is considered to be the biggest democracy in the world. The current political situation in the country can be described as fairly stable. The major problem facing politics in India is corruption which is a contributing factor to poor investor confidence.

Citizens feel that democracy is not fully exercised which can lead to an uprising in future leading to political instability. The economic state has been improving over the years as earlier mentioned. In terms of purchasing power and GDP, India is ranked third globally after the US and China (Guenthner). The GDP in 2007 was estimated to be $2.965 trillion and the GDP per capita was estimated to be $2700 (Guenthner). The FDI in 2007 was $16 million while in 2006 it was $5.5 million