The Indian economy ranks as the seventh largest economy globally and is forging ahead with projected annual GDP growth of over 7% to 2021.
India is the world’s largest democracy and one of its most linguistically and culturally diverse nations. Its survival as a great nation state is a tribute to the pragmatism, initiative and ingenuity of its leaders and its people. These qualities have in recent years been translated into economic success. In contrast to China, India was slow to start liberalising its economy. As a result China’s economy has regularly outperformed India’s since the 1970s. But this is changing, with Indian GDP growth of over 7% in 2015 and 2016 exceeding that of China’s.
India’s economic performance since the 1990s has been impressive. It is now the world’s seventh largest economy (in nominal GDP), and third largest in purchasing power parity (PPP) terms. Its agricultural and manufacturing outputs rank globally second and sixth respectively and its service sector is one of the fastest expanding in the world. Textiles, petro-chemicals, pharmaceuticals and engineering are all growing apace while trade, inward and outward investment are flourishing.
The key factors in India’s growing economic success include:
The IMF recently described India as the bright spot in the global economy, and the prospects for sustaining recent success are generally positive. India has a reforming Prime Minister. Predictions suggest in excess of 7% annual growth to 2021. Further India’s population is predicted to out-strip China’s by 2022, while its middle class will be larger than that in Europe by 2030.
Several recent major international developments will enhance the prospects of the Indian economy leading emerging markets. In February India officially adopted the WTO’s Trade Facilitation Agreement (agreed at the 2013 Bali conference). This could potentially increase global trade by up to $3.6 trillion yearly. But it is also a key step in progressing efforts to make it easier to do business in India.
Moreover an EU-India Summit in late March delivered on a series of major commitments in several key areas, including energy and climate change, trade and investment. This has effectively got the relationship between India and the EU (India’s largest trading partner) back on track. Finally, the recent Indian Government budget announced the intention to introduce further economic and business reforms, especially in the banking sector and financial markets.
Key sectors for business include:
While the current Government is pushing its business reform programme, it will be a long process. Doing business in India can be challenging (India is currently ranked 130th out of 189 countries for ease of doing business). That said India offers great business opportunities for those prepared to make the effort.