The recent decision to allow FDI in some sectors (aviation, pension etc.) and increase the cap on others (retail and insurance) has unleashed a new wave of hope for corporate India. While the Indian economy grew at 5.5% during the quarter ended June 30th, a nine-year-low, the sentiment is that the recent burst of reforms will show in growth plans. A study published in the International Journal of Business & Management, ‘Impact of FDI on GDP - A comparative study of China and India’ confirms that FDI promotes economic growth, and further provides an estimate that 1% increase in FDI would result in 0.07% increase in GDP of China and 0.02% increase in GDP of India. FDI and human capital availability are complementary, which means that India will need to create a supportive environment for skill upgrading at all levels and employers will need to play an active role to create qualified people to absorb and magnify the growth opportunities that FDI will bring.
This issue’s cover story, ‘The FDI Promise’ explores how FDI will impact employment, wages, productivity, employee-employer relations and the legal infrastructure that the modern workplace is built on. Some of the challenges that need attention to fulfill the promise of the reforms are the availability of talent pools at all levels, the impact that growth will have on wages, the importance of increasing productivity and innovation as costs increase, and the need to build management and leadership layers in these growing industries.
In this issue, we have included a follow-up story on business education; for this story we spoke to employers on the subject of business school rankings, their expectations from rankings and the challenges they face in short-listing institutes for placements. The opinion is unanimous; the current rankings are not serving their purpose and do not evaluate institutes based on the metrics most important to employers but on metrics that are important to students and parents.