Top Reasons for India’s Growing Reputation as the Most Preferred Business Destination

India is on the rise. The recent G20 presidency by India was a humongous success. Leading a forum that represents a majority of global GDP and international trade is no simple achievement.

If that’s anything to go by, India is on the verge of transforming into a global superpower creating opportunities, finding effective solutions and encouraging valuable initiatives in the multilateral efforts for a better business world.

In the last decade, the robust economic reforms, pan-India digital initiatives and young working population coupled with a string of programs such as Make In India, Atmanirbhar Bharat Abhiyan and Startup India have propelled business transformation and attracted huge investment.

Amidst the global business landscape impacted by geopolitical disturbances, technology disruption and a lower growth rate, India has emerged as a beacon of light, becoming the fastest-growing large economy in the world.

Further in the blog, discover top reasons supported by statistics that show India’s growing reputation as the most preferred business destination.

Top Stats and Forecasts That Show India’s Rise

Fastest Growing Economy

India is currently the world’s fifth largest economy. It is projected to become the third-largest economy in the near future. Take a look at these stats that support the prediction:

• According to the Department of Promotion of Industry and Internal Trade (DPIIT), India received the highest FDI inflows in the financial year 2021-22 of 83 billion dollars.
• The FDI inflows have increased 20 times in the past 20 years
• According to the Ministry of Finance, India will witness GDP growth of 6-6.8% in 2023-23. At the same time, the International Monetary Fund (IMF) has predicted that global growth will decrease from 3.4% in 2022 to 2.8% in 2023.

Over many decades, India has achieved a stable and growing economy when compared to other large economies. The population of 1.4 billion plus the resultant strong domestic market due to consumer purchasing power makes India a preferred investment destination.
 

Global Supply Chain Leader

The pandemic induced transformations stressed on the need for global diversification of supply chains. Additionally, the shifting geopolitical landscape due to China-US trade war and Russian-Ukraine conflict have led global manufacturing companies to see India as a preferred destination for production.

The Govt. of India is tirelessly pushing for logistics infrastructure growth by planning to invest 1 trillion for the next five years through National Infrastructure Pipeline (NIP). It is aimed at boosting global transport, digital connectivity and turning urban cities smart. The physical and digital infrastructure blend is poised to make India a global manufacturing hub.

Other supportive government policies such as minimized beurocracy and simplified taxes such as GST, pro business regualtions and fast approvals are gaining business trust. The Performance-Linked Incentive (PLI) is a game-changer for pushing exports.

World Economic Forum’s (WEF) White Paper entitled Shifting Global Value Chains: The India Opportunity stated the following:

“India has the potential to contribute over 500 billion dollars in annual economic impact to the global economy by 2030.”

Working-Age Population

A young, talented and energetic workforce is a competitive advantage for any country; and it is so with India.

• A recent report from McKinsey revealed that India is set to have one of the largest working-age populations by 2030.
• United Nations Population Fund in its report, said that India will have the youngest population in the world till 2030.
• The Ministry of Youth Affairs, Govt. of India, is also keen to mobilise the nation’s youth to achieve Atmanirbhar Bharat goals.

An EY report predicts that the share of India’s working-age population to the total population will reach its highest level at 68.9% by 2030. Additionally, India would remain the largest provider of human resource to the business world.

Global Competitiveness and Innovation Index

The last World Bank annual ratings in 2019 showed that India is ranked 63 among the 190 countries in ease of doing business. As for other parameters related to global competitiveness, take a look below:

• India ranks 40 th on the Global Competitiveness Index 2023, as per the International Institute of Management Development.
• In addition, India climbed to 40 th rank in the Global Innovation Index, as revealed by the World Intellectual Property Organization.

India’s Rise as a Services Exporter

EY’s latest reports have shed some light on India’s rise as a services exporter.

• India’s services exports have grown at a CAGR of 14% over the last two decades and reached approximately 250 billion dollars in 2021-2022.
• IT services and BPO services comprise more than 60% of India’s services exports with 157 billion in 2021-2022.

India’s Transformative Business Initiatives

Myriad factors have paved the way for India’s rise to the top. Some of the prominent reasons include the expanding middle-class population, focus on infrastructural growth and favourable demographics.

But one of the chief reasons for India’s transformation - policy reforms in the past decade – has played a vital role, and these are discussed below.

Make In India

The Make in India initiative launched in 2014 led to massive growth in the manufacturing and IT sectors. It has encouraged multiple foreign companies to invest in different regions of India.

More recently:

• Apple started manufacturing the iPhone 15 last month and opened its first official store in India.
• General Electric signed MOU with HAL to make fighter jet engines in India.
• Amazon plans to invest an extra 15 billion dollars by 2030.
• Google aims to build a Fintech centre in Gujarat.

Digital Transformation

India’s digital transformation is powered by the government’s focus on the digitilisation of the economy and continuous investment in digital technologies, driving unmatched growth in different sectors.The soaring internet users and adoption of digital payment systems have facilitated the growth of the e-commerce industry in India.

Significant improvement is recorded in digital inclusion goals with the growth of digital banking.

Jan Dhan Account-Aadhaar-Mobile, referred to as JAM, has revolutionized the financial inclusion initiatives in India by achieving the following:

• 19 crore bank accounts added
• Rs 28, 000 crore deposits done
• 12 crore people attained social security cover

Moreover, Jan Dhan acts as a foundation for achieveing other financial goals such as digital payment ecosystem promotion, involving women in financial inclusion and hassle-free loan such as Mudra.

Digitalization has opened up vast business opportunities in the financial sector, enabling superior customer experience and driving the economy forward.

Startup Environment

Startup India, a flagship program from the Govt. of India, was set up to encourage startup culture and lay a robust platform for ushering an era of enterpreneurship, innovation and growth.

Startup schemes offering regulatory relaxations, tax benefit and funding has revolutionized entrepreneurship in India, paving the way for brilliant business ideas to flourish and contribute to India’s economy.

Others

Tax benefits, subject to conditions, are also available to business entities located in Special Economic Zone (SEZ) and companies belonging to electronics, power and IT industries.

According to the Economic Survey 2022-23, more than 39,000 compliances have been eliminated to promote ease of doing business this year. Launched by DPIIT, administrations across India under the Business Reform Action Plan (BRAP) are working to reduce the compliance burden on businesses.

The Govt. of India has repealed some labour laws existing since the British times and modified others into different categories such as Wage, Social Security, Industrial Relations and Occupational, Safety, Health and Working conditions.

In the future, experts believe that India’s economic influence will grow in the Asia-Pacific region. India-Middle East-Europe Economic Corridor, announced during the G20 summit, will redefine connnectivity and transport, boosting India’s trade opportunities. All these factors have contributed to India’s growing stature as the most preferred business destination.

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