What makes India an Attractive Destination for Investments?
The coronavirus epidemic has probably indeed swept the world in a terrible recession. The sudden halt of commercial activity threatens to cause economic suffering so severe and long-lasting that it could take years to recover, with the main reason being that “the pandemic hit the entire world at the same time.” But at that time, too, India remains the favorite investment destination.
India has emerged as one of the world’s fastest-growing economies and a desirable investment destination due to economic reforms and a vast consumer base. According to the second advance estimates (SAE) for 2020-21, India’s real gross domestic product (GDP) at current prices was Rs. 195.86 lakh crore (US$ 2.71 trillion) in FY21. At the same time, the per capita income was estimated at Rs. Rs. 127,768 (US$ 1,765.43) in FY21.
Finance Minister Nirmala Sitharaman told CEOs from leading US corporations that India’s continual wide-ranging reforms made the country an attractive location for foreign investments. But there are many other reasons which make India a preferable destination.
- RELAXATION IN FDI NORMS
The government’s actions on the fronts of FDI policy changes, investment facilitation, and ease of doing business have resulted in higher FDI inflows into India, with a total FDI inflow of US$ 72.12 billion from April to January 2021. In addition, the government has provided relaxation in many sectors and has enhanced the FDI cap in many industries.
- YOUNG LABOR
India has one of the world’s youngest populations, with 47 percent of the population under 25. It translates to a workforce that will remain active and productive for an extended period. When compared to other Asian countries, cost arbitrage still gives the government a significant edge.
- SIZE OF THE MARKET
India’s large and increasing middle class, which is willing to spend, is a massive draw for corporations looking to expand outside developed markets. As a result, India is the world’s third-largest economy in terms of purchasing power parity. For this reason, giant retail behemoths like Amazon, Walmart, and Apple are devoted to the Indian market.
- ECONOMIC PERFORMANCE
The economy is booming, and it’s predicted to keep going for the next two years. The domestic economy is robust enough to keep demand going, and the inflation rate, while higher than the aim of 4%, is still manageable. Rising crude oil prices are a source of anxiety in the United States, but they are also a source of concern worldwide.
According to the Economic Survey 2020-21, India’s real GDP growth for FY22 is expected to be 11%. The WEO anticipates an 11.5 percent growth in FY22 and a 6.8 percent increase in FY23 in January 2021. According to the IMF, India is also expected to become the fastest-growing economy in the next two years.