The new color of gold in India: Black
Employees of a gas station wait for customers in New Delhi on September 2, 2013. India is considering closing fuel pumps at night as one of a number of 'austerity measures' aimed at cutting its ballooning oil import bills, the oil minister said.
It's a road trip for India's oil and gas businesses this week. The government is touring the globe in an effort to convince investors to buy into the country's oil and coal companies. The only catch is that those oil and gas companies are majority-owned by the government.
The government is looking to raise money to deal with immediate budget shortfalls.
India has a growing consumer market and middle class, so it’s been a target for foreign investors over the past decade or more. But so far, efforts to open key sectors to foreign investment have been slow to be implemented, especially in politically-sensitive areas of the economy.
Now, according to Reuters, the Indian government is mounting a road show in the U.S., Europe and Asia, to promote sales in the energy sector before the end of 2013.
India’s state-owned oil company loses money selling transportation and cooking fuels to the public at below-market prices set by the government. Plus, India’s energy industry — especially those enterprises owned by the government — are tainted by corruption.
Still, India hopes to raise as much as $2.3 billion dollars from investors in other countries.
"The Indian government needs to raise funds quickly," says Moyara Ruehsen, with the Monterey Institute of International Studies. "And they're worried about having their credit rating downgraded."
India's growth has slowed in recent years, and direct foreign investment could help boost growth.
"There are about 10 to 12 million people every year coming into the [Indian] workforce," says Alyssa Ayres, a former State Department official working on South Asia, who is now at the Council on Foreign Relations. "So India needs to be generating enough job growth to accommodate people. And the other issue is very large-scale needs for infrastructure development."
Ayres says the rule of law is strong in India, although the legal process can sometimes be long and drawn out. Ruehsen says foreign investors need to keep an eye on issues like corruption in state-controlled enterprises, as well as nationalist political opposition to further opening the economy to foreign ownership and competition.