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Why international businesses consider India as the best destination to expand their business
With its robust legal framework, favorable location, advanced infrastructure and varied talent pool, India provides a sustainable environment and a lucrative industry for investors to establish and expand their business. In this article, we explore why India is considered the best destination for international businesses to expand, with primary focus on the growing economy, favorable government policies, forthcoming legislative reforms and the vast market potential.
India: A Growing Economy
India’s economy has proven to be the fastest growing in recent years, throughout the world. The country has become the fifth-largest economy globally and aims at joining the top three global economic powers soon. According to the International Monetary Fund (IMF)[1], India’s economy is expected to grow for the year 2024-2025 at a rate of 6.5% attributable to the vigorous domestic demand and increasing working-age population.
The Indian economy is supported by strong foundational policies laid by the Reserve Bank of India (RBI), which is vital in maintaining stability in the monetary framework. The RBI intends to control inflation, while providing continued and sustainable economic growth, by precisely modifying the interest rates and managing liquidity. Furthermore, the resilience of India’s economy has also boosted the stock market to record all-time highs, reflecting investor confidence in the country’s long-term growth prospects.
Additionally, the economy is pushed forward owing to the country’s dynamic and large population, with 65% of Indians under the age of 35. With an increase in economic growth, businesses tend to expand and attract more investments, which results in a higher demand for a dynamic workforce across various industries. This demographic dividend provides a significant advantage for businesses as they can utilize a pool of young, skilled and cost-effective workforce. The dynamic workforce available in India has attracted various multinational companies to set up base and operate in India, specifically in IT, manufacturing and service sectors.
As per the employment data included in the Periodic Labor Force Survey (PLFS) and the RBI’s KLEMS Data, India generated more than 8 crore employment opportunities from 2017-2018 to 2021-2022[2] which highlights the impact of the effective government initiatives aimed at boosting employment across sectors. While the rise in the economic growth boosts job creation in the nation, it also provides the Indian Government with the incentive and means to enhance the benefits and social security provided to the public which consequently contributes to a more sustainable and successful economy.
Furthermore, with an improved connectivity and a rise in the technological capabilities, India’s digital transformation has been remarkable. The nation’s Information Technology (IT) sector is one of the largest sectors contributing significantly to the Indian economy. The Government’s drive for a digital economy through initiatives like Digital India, has played a key role in the increased digital access and is transforming the country into a digitally empowered society.
Favorable Government Policies
The Government of India has implemented several initiatives and policies to attract foreign investment and create a thriving business environment. The primary objective of the initiatives is to create a strong ecosystem that nurtures and protects businesses and innovation, ultimately generating large-scale employment opportunities and leading to the sustainable economic growth of the country.
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We have listed few of the key government initiatives that contribute to India as an attractive business destination:
Footnotes [1] Press Information Bureau: Ministry of Finance- India shines as IMF upgrades GDP forecast to 7% in FY24-25 [2] Press Information Bureau: Employment Data
- Digital India
- Make in India
- Startup India
- Atma Nirbhar Bharat
- Foreign Direct Investment (FDI) Liberalization
Footnotes [1] Press Information Bureau: Ministry of Finance- India shines as IMF upgrades GDP forecast to 7% in FY24-25 [2] Press Information Bureau: Employment Data