Since Berkshire Hathaway (BRK-A, quote) Chairman Warren Buffett first visited India last year in search of investment opportunities, the country has cracked its door ajar for foreign investments from entities such as Wal-Mart (WMT, quote), Nike (NKE, quote) and Apple Inc (AAPL, quote).
Growth in India is now at a two-year low. At double-digit growth just a year ago, India posted a 6.9% increase in gross domestic product for the most recent quarter. India is also suffering from higher interest rates due to 13 increases since March 2010 by the Reserve Bank of India in what seems to be a vain attempt to fight high inflation. As a result of this, the rupee (ICN, quote) has fallen 11% against the American dollar since August.
As earlier reported on Emerging Money, “India changes the game by opening its retail sector,” variety stores like Wal-Mart can now own 51% of an Indian joint venture. Single purpose entities like Apple and Nike can now own 100%.
While it will take years for foreign investment to have an impact in India — a nation of 1.2 billion people — steps like these will move along other needed reforms in land ownership rules, corruption and taxation. The more that companies such as Berkshire Hathaway, Wal-Mart, Nike and Apple do to elevate business practices in India, the better for all around the globe.