This division has been a source of many problems through the years. For example, much to the dismay of the world community, both countries have had nuclear tests in a cold war atmosphere. Also, many...

This division has been a source of many problems through the years. For example, much to the dismay of the world community, both countries have had nuclear tests in a cold war atmosphere. Also, many millions of Indians still live at the lowest level of subsistence, and per capita income is very low. India’s misaligned central and local public finances have contributed to an overall fiscal deficit of more than 10 percent of GDP. In the past, doing business in India has been quite difficult. For example, it took PepsiCo three years just to set up a soft drink concentrate factory, and Gillette, the U.S. razor blade company, had to wait eight years for its application to enter the market to be accepted. In recent years, the government has been relaxing its bureaucratic rules, particularly those relating to foreign investments. In 2000, foreign direct investment exceeded $3 billion and by 2009 had reached $27 billion, making India the third highest recipient of FDI in the world. Although much of this investment has historically come from the United Kingdom and the United States, many Asian investors are also viewing India as an attractive location for new business investment. One reason for this change is that the government realizes many MNCs are making a critical choice: India or China? Additionally, foreign investments are having a very positive effect on the Indian economy.