Now the world's largest democracy can meet its basic caloric needs with enough to spare for exports. Beginning in 1991, the Indian government embarked on a cautious program of economic reform and deregulation, tentatively opening up a few areas to greater foreign investment and trade. Foreign investment has picked up sharply in recent years, led by American and European businesses. Nomura Securities Co., Ltd. is pursuing a deal to buy a significant minority stake in a local brokerage house. And Itochu Corp. will build and operate a chain of Marriott Hotels in India.
Pitfalls abound, however.
Sony Corp. built a large plant to produce televisions and audio equipment for the local market based on an expected consumer base of 150 million. It since has discovered, however, that far fewer Indians than projected are willing to buy from a foreign maker. Japanese firms thinking of taking the plunge face entrenched domestic and foreign-affiliated players in key markets. Moreover, local firms can put up quite a fight in court against potential foreign competitors. YKK Corp., for one, is proceeding with plans for a zipper plant despite numerous court cases filed by Indian competitors.