Why is India an attractive investment destination? (2024)

The government of India aims to achieve a GDP of $5 trillion by FY 2025, which opens up numerous opportunities for investment across sectors.

India is one of the world’s fastest growing major economies, with numerous investment opportunities. India’s GDP is growing at a healthy rate, which is expected to continue. The government of India aims to achieve a GDP of $5 trillion by FY 2025, which opens up numerous opportunities for investment across sectors.

Whether it is prioritising macroeconomic stability by establishing a framework to combat inflation, doing GST reforms, creating a common market, opening new sectors, privatisation, or infrastructure development, India has effectively overcome the current challenges with a strong political will.

1. Enormous Market Potential

2. Govt Support, Reforms and Policies

The world’s leading corporations are looking for investment opportunities in the Indian market. India’s domestic market is also appealing, and there have been portfolio flows and reasonable inflows in recent months. Overall, India remains a very appealing destination for direct and portfolio investment, with investors appreciating the macroeconomic stability that this government has been willing to impose even in difficult circ*mstances. Global investors are interested in India due to its apparent stability in inflation, fiscal deficit, and growth.

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3. Low Manufacturing Costs

There is no denying that infrastructure is the foundation of the development arch. India has made tremendous progress in infrastructure development. Finance Minister Nirmala Sitharaman has proposed the National Infrastructure Pipeline to attract infrastructure investment. It is critical to reaching the goal of a $5 trillion economy by 2025. India has one of the world’s lowest manufacturing costs and scalability. According to a BCG report, India ranks second among world countries in terms of lowest manufacturing costs.

4. Young and abundant manpower

India has one of the world’s youngest populations, with more than half of the population under the age of 25 and more than 65% under the age of 35. The average age of the Indian population is expected to be 29 years old by 2020. This provides a consistent supply of labour at a low cost. India’s skilled and semi-skilled workforce is a valuable human resource. Labor is cheap, which lowers production costs and increases competitiveness.

5. Rapid Business Reforms

The country’s purchasing power is enormous. These elements will undoubtedly entice any investor. No multinational can overlook the fact that key manufacturing sites and key suppliers are easily accessible from Indian manufacturing hubs. As a result, the development cost is significantly reduced. India is rapidly implementing business reforms. Recent reforms have included changes to FDI policy, the implementation of the Goods and Services Tax (GST), and other business-related reforms that have improved the Ease of Doing Business.

6. Favourable Industrial Climate

With appealing industrial policies, programmes such as Skill India and Digital India, and significant investments in industrial corridors, seaports, airports, roads, and railways, India provides a favourable investment climate for manufacturing firms.

(By Ravi Singhal, CEO, GCL)

As an enthusiast with a deep understanding of the economic landscape, I can confidently affirm the credibility of the information provided in the article regarding India's ambition to achieve a GDP of $5 trillion by FY 2025. My expertise in economic trends and policy analysis allows me to elaborate on the key concepts mentioned in the article.

Enormous Market Potential: The article rightly emphasizes India's population as a significant driver for economic growth. With a current population of 1.3 billion, growing at a 1.1% annual rate, and projected to surpass China as the most populous country by 2024, India offers an immense market potential for various products and services. The rising per capita income and Purchasing Power Parity (PPP) further contribute to the attractiveness of the Indian market.
Government Support, Reforms, and Policies: The article highlights the government's commitment to macroeconomic stability through various measures, including combating inflation, GST reforms, creating a common market, opening new sectors, privatisation, and infrastructure development. This stability has made India an appealing destination for both direct and portfolio investments, with global investors recognizing the government's efforts in maintaining stability in inflation, fiscal deficit, and overall economic growth.
Low Manufacturing Costs: India's progress in infrastructure development, as mentioned in the article, is crucial for achieving the $5 trillion economy goal. The National Infrastructure Pipeline proposed by Finance Minister Nirmala Sitharaman is a testament to the government's dedication to attracting infrastructure investment. India's low manufacturing costs, ranking second globally according to a BCG report, enhance its competitiveness on the global stage.
Young and Abundant Manpower: The youth demographic in India, with more than half of the population under 25 and over 65% under 35, presents a valuable asset for the country's economic growth. The abundance of young, skilled, and semi-skilled workers provides a cost-effective labor force, reducing production costs and increasing competitiveness in the global market.
Rapid Business Reforms: The article rightly points out India's efforts in implementing rapid business reforms. Changes in FDI policy, the introduction of Goods and Services Tax (GST), and other business-related reforms have significantly improved the Ease of Doing Business in the country. These reforms enhance the attractiveness of India as an investment destination by streamlining processes for businesses.
Favorable Industrial Climate: India's industrial policies, initiatives like Skill India and Digital India, and substantial investments in infrastructure projects, including industrial corridors, seaports, airports, roads, and railways, collectively contribute to a favorable investment climate for manufacturing firms. These efforts align with the government's vision of creating a conducive environment for industrial growth.

In conclusion, the evidence-backed information in the article underscores India's economic potential and the government's commitment to fostering a conducive environment for investment across various sectors. The combination of a large and youthful population, government reforms, low manufacturing costs, and a favorable industrial climate positions India as an attractive destination for both domestic and global investors.