Abstract
India is today, considered as the seventh largest, and the world's second most populated country, with 1.1 billions inhabitants. Due to a series of reforms conducted since 1991, India has become the second fastest growing economy with an annual growth rate of around 8% over the last three years, offering opportunities for foreign businesses. India became independent in 1947. At the beginning, government monopolies concentrated more in industrial sectors such as telecommunications, chemical etc., constraining the growth of the private sector. Private companies needed the approval of the government for business activities, called 'License Raj', to diversify a new product. In the mid-1960s, the government decided to strengthen its policy towards foreign investment. Companies like Coca-Cola or IBM chose, at this time, to leave India, preferring not to follow the new strict legislation. Finally, in 1991, the system was unable to deliver any kind of economic progress. The government, facing a grave balance of payments crisis, received loans from the International Monetary Fund, on the condition that it opens up the economy. Manmohan.Singh, then the finance minister, now the prime minister launched a huge economic reforms process, Import and export restrictions were almost banned. Foreign investments were allowed in several areas, such as the telecommunications industry, air transport etc. The 'License Raj' system was banned. The government also introduced a privatization program for India's state owned business, some 40% of which were in crisis in the early 1990s.
