From South Korea’s Hyundai to the U.S. Amazon Web Services, India continues to be an attractive choice for foreign investors from all over the world. In 2021, India was named as the world’s seventh-largest recipient of foreign direct investments (FDIs) when it received its highest-ever FDI inflow of $83.57 billion.
Invest India, the most awarded investment promotion agency in the world, breaks down why many foreign businesses are placing their bets in the South Asian nation.
India is one of the world's fastest-growing economies
Comparing India’s FDI inflows from 2000 to 2021, the foreign investments coming into the South Asian nation has increased 20 times. The latest International Monetary Fund (IMF) report also shows that India’s economy is projected to grow at 5.9% this year, or 271% higher than the U.S.’ projected growth rate.
India is set to surpass China to become the world’s most populous nation
The United Nations Population Fund (UNFPA) in its "State of World Population Report” said India will have around 2.9 million people more than China this year. The same report also showed that India has the world's largest number of people between the ages of 15 and 24.
International management consultancy firm Mckinsey & Company supports the numbers in a report, stating that: “One in every five Gen Z-ers in the world lives in India.” Whether as a consumer base or source of talent, India’s large youth population presents an enormous growth opportunity for both domestic and international businesses.
World-class infrastructure
India's robust population and economy have paved the way for major developments in the country’s infrastructure. With the goal of making it as easy and efficient as possible to do business in India, Prime Minister Narendra Modi is set to spend a whopping 1.7% of India’s GDP on transport infrastructure this 2023 — around twice the amount spent in America and most European countries. This includes new bridges, road transport and highways, industrial parks, and multipurpose towers.
According to India’s Department of Economic Affairs, Ministry of Finance and India Investment Grid, India’s commitment to an enhanced and improved infrastructure program will drive economic growth, foreign investment interest, and sectoral competitiveness.
Investor-friendly policies and benefits.
The Indian government has laid out new economic policies that make the country more attractive to foreign investors. Depending on the state and industrial sector, India offers foreign tax deductions, grants, and rebates. It has also lifted prohibitions on full foreign ownership of certain businesses in some sectors.
With India becoming a major global hub for FDIs, it seems like Prime Minister Modi’s vision of turning the South Asian nation into a $5 trillion economy by 2025 is right on track.
