Indians have a reason to celebrate because India’s economy has been doing really well in the past few years. While other developed countries have been facing challenges with their economic growth, India has been showing impressive progress in terms of its GDP (Gross Domestic Product) growth. Internationally India’s reputation in the world has increased. As a result, more foreign investments are coming into the country, contributing to its economic development.
In 2022, India attracted $49.92 billion in foreign direct investment (FDI), marking an 11.6% rise from the previous year when it was $44.73 billion. However, this followed a significant decline in 2021, as FDI had dropped by 30.51% from 2020 when it reached $64.36 billion. In 2019, FDI was $50.61 billion, showing a 20.17% increase from 2018.
Foreign investment can take various forms:
- Foreign Direct Investment (FDI):
- Equity Investments: This involves buying shares or ownership stakes in a foreign company, giving the investor a direct interest and some control in the business.
- Mergers and Acquisitions (M&A): Foreign companies may acquire or merge with existing companies in another country.
- Foreign Portfolio Investment (FPI):
- Stocks and Bonds: Investors buy stocks or bonds issued by foreign companies or governments without taking an active role in management.
India is experiencing high economic growth, while China and Russia are slowing down. Russia’s growth is affected by the war with Ukraine and international sanctions, while China faces a slowdown in real estate and a loss of global trust after the pandemic.
The nation’s potential for investors lies in its rapid economic development and abundant opportunities.
India aims to become a $5 trillion economy by 2025-26.
India is one of the fastest-growing economies globally. In the fiscal year 2022-23, it attracted $953.143 billion in total foreign direct investment (FDI), with $654.929 billion as FDI equity inflows. Prime Minister Narendra Modi unveiled a $270 billion economic package, equivalent to 10% of India’s GDP, as part of the Atmanirbhar Bharat Abhiyan (Self-reliant India) initiative. The country is expected to experience a GDP growth of 6% to 6.8% in the fiscal year 2023-24. These figures showcase India’s economic momentum and investment opportunities.3
Following table shows the GDP growth rate:
| Sr. No. | Year | GDP Growth Rate |
| 1. | 2018-19 | 4.5% |
| 2. | 2019-20 | 3.7% |
| 3. | 2020-21 | -6.6% |
| 4. | 2021-22 | 8.7% |
| 5. | 22-23 | 7% |
Table reveals increase in the growth rate in the GDP only in year 2020-21 shows negative growth rate due to pandemic. Despite this setback, the Indian economy consistently demonstrates positive growth.
Here is the world’s largest youth
India has the greatest youth population in the world, and between 2011 and 2036, it is predicted to increase by 25.7%, from 121.1 crore to 152.2 crore. Until 2030, this population strength is demonstrated by having one of the youngest worldwide populations. Furthermore, India ranks as the third-biggest center for technicians and scientists. In collaboration with UNICEF, the Ministry of Youth Affairs seeks to mobilize one crore youth volunteers to fulfill the objectives of Atmanirbhar Bharat. The World Bank estimates that 42% of India’s population would live in urban areas by 2030, up from 31% in 2011.
Developed nations struggle in other parts of the world as a result of declining population rates and deserted communities.
Since young people are the source of fresh ideas and the engine for national progress, there can be no growth in the youth population in the near future.
India has a youthful and expanding population, with a large share of people under 35. A sizable and active labor force is provided by this demographic dividend, spurring innovation and economic progress. Investors find India to be a desirable location for long-term investments because of the country’s potential for a strong consumer market and trained labor.
The government’s initiatives to boost investment
To improve the nation’s infrastructure, Smt. Nirmala Sitharaman, India’s Finance Minister, unveiled the National Infrastructure Pipeline (NIP). The NIP includes over 7,000 projects with an investment of INR 111 Lakh Crore, covering industries such as Energy (24%), Roads (18%), Urban (17%), and Railways (12%). With the help of this effort, India hopes to raise $5 trillion in GDP by the fiscal year 2025.
Trade routes are changed
The Indian Ocean Region is becoming the heart of the world’s marine trade, with China and India emerging as the two biggest manufacturing hubs by 2030. Connectivity between Central Asia and Europe via the International North-South Transport Corridor (INSTC) and the Gulf Region via the India-Middle East-Europe Economic Corridor (IMEC) bolsters India’s growing economic power. India is anticipated to have more economic clout in the Asia-Pacific area within the next five years.
Economic Liberalization and Reforms:
In order to liberalize its economy, India has made considerable economic reforms during the last few decades. A more investor-friendly climate has been established by initiatives like the Made in India campaign, the Insolvency and Bankruptcy Code (IBC), and the Goods and Services Tax (GST). These initiatives have also improved transparency and streamlined company operations.
Digital Conversion:
India is experiencing a digital revolution as a result of a rise in smartphone and internet usage. A growing middle class of tech-savvy individuals has resulted from this digital transition, creating an ideal environment for technology-based enterprises. Global global behemoths are eager to capitalize on India’s potential in the digital space, which is encouraging further investment in the nation.
Infrastructure Development:
The Indian government has placed a high priority on infrastructure development, investing extensively in areas like energy, transportation, and smart cities. Enhanced infrastructure not only makes doing business easier but also contributes to overall economic development, which makes India a desirable destination for infrastructure investments. Ease of Doing Business: The Indian government has made significant efforts to improve the ease of doing business. By streamlining bureaucratic procedures, cutting red tape, and putting online systems in place, they have created an environment that is more investor-friendly and have improved India’s ranking on international indices measuring ease of doing business.
Startup Emergence:
India is becoming a hub for startups in a number of industries, including banking, healthcare, and technology. Venture capitalists and investors looking for high-growth possibilities in emerging countries have taken notice of the thriving startup environment, which is bolstered by programs such as Startup India.
Geopolitical Strategic Importance:
India is becoming an increasingly important strategic player on the international scene as geopolitical forces change. In addition to being a booming market, investors see India as a significant actor in the geopolitical arena. Making wise investments in India can give you access to the country’s sizable market and geopolitical clout.
Political stability:
India is the largest democracy. India has political stability. BJP has majority here and government has not change since 10 years. Policies of government regarding the business not change rapidly. Government complete the 5 year term. Coups are not happen in India. Other countries like Pakistan, Myanmar, and other Asian countries suffer from political instability due to military coups happened frequently.
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