India

Investment & 
Operational
Climate

As the fastest growing large economy in the world and with a population of around 1.4 billion, India’s GDP is currently $3.2 trillion – making it the world’s fifth largest economy. While India’s economic growth is expected to slow to 6% this year, most economists predict growth will remain at that level for the next two decades due to shifting global supply chains, favourable demographics, and rapid industrialization positioning India to potentially become one of the new “factories of the world.” India is expected to become the world’s third largest economy, surpassing Japan and Germany, within the next decade or perhaps even earlier. Prime Minister Modi has set a goal of India becoming a developed country by 2047, the 100th anniversary of Indian independence. While many experts are sceptical that this is possible, virtually all agree it will make substantial progress towards the goal. Whether India realizes this potential will depend primarily on sound macroeconomic and regulatory policy choices, empowering its women, and upskilling its talent. India instituted structural economic reforms in recent years that will improve the business environment, including for international exporters and investors. These reforms include liberalizing foreign investment restrictions, modernizing bankruptcy and labour laws, ending retroactive taxation, and replacing a patchwork of state border taxes with a national Goods and Services Tax. However, continued protectionist measures restrict expansion in bilateral trade and make it more challenging for Indian producers to join global supply chains. Protectionist measures include the highest tariffs of any major economy, increased encouragement of manufacturing localization to promote “self-reliance,” and the use of India-specific standards and regulations that effectively exclude foreign goods and services.