In India, what the government is trying, is to bring in foreign capital for the economic development of the country. This is not going to help in the long run though in the short term, this is necessary. The government should think of promoting local entrepreneurship by making available the capital through the Reserve Bank Bank of India by printing currency notes. Only where foreign currency is required for import of machinery, raw materials etc. the government should think of foreign capital. For a project which does not require foreign currency the government should not take loan from International organizations like World Bank, IMF etc, or think of Foreign Direct investment, portfolio investment. Bringing foreign capital investment will only lead to printing of fancy notes and depositing foreign currency in foreign countries. This will lead to the same inflationary effect as printing of currency notes without the foreign currency coming into the country. Ultimately foreign exchange outflow will be much more than the inflow which will weaken the Indian Rupee against foreign currencies,
On the other hand, the government should encourage Indian entrepreneurs to invest in foreign countries, where it is more profitable than in India. To assist Indian entrepreneurs to invest abroad, OVERSEAS INVESTMENT PROMOTION COUNCIL OF INDIA should be set up. This council should assist entrepreneurs with all information on opportunities, information on foreign rules, regulations, possible joint venture partners etc in the same way the various Export Promotions Councils/Export Development Authorities are assisting the exporters. This will help not only the individual entrepreneurs but will also help the country as the Indian companies will bring in foreign currency by way of dividends, technical fees, honorarium etc. Foreign exchange inflow will be higher than the outflow which will strengthen the Indian Rupee against foreign currencies.