It has always been a debate among the Global business lobby about their expansion plans in India. There have ups and downs, phases of political instability and retrospective amendments and other reasons. Things have changed since the stable Government was formed in 2014 and this is well justified by the foreign investors confidence in Indian economy and influx of Foreign Direct Investment into India. We at KLC & Co. provide a list of Advantages to Register a Business in India or Invest into India, which may help foreign investor calculate the global positioning of India as a favourable destination to invest.
1. Growth Rate
- IMF in 2014 projected Indian Economy is expected to grow at 6.3% in 2015 and 6.5% in 2016 when it is likely to cross China’s projected growth rate
- Recent report by World Bank Report India is set to emerge as the world’s fastest-growing major economy by 2015 ahead of China. India’s Gross Domestic Product (GDP) is expected to grow at 7.5 per cent in 2015, as per the report.
2. India is World’s largest democracy inhabiting 1.2 billion people across its length and breadth
3. Large area with great opportunities: It has a total Land Area of 3.288 million km² and a large size and is ranked 7 in terms of land area in the world.
4. Increasing faith of overseas investors: There is a continuous inflow of Foreign Direct Investment in India, now leniently allowed across several industries. FDI to India
- In January 2014 : US$ 2.18 billion
- In January 2015: US$ 4.48 billion, the highest inflow in last 29 months
On fiscal year basis inflows touched a record high of US$ 34.9 billion in 2015 compared to US$ 21.6 billion in the previous fiscal year, according to a Nomura report. The report indicated that the net FDI inflows reached to 1.7 per cent of the GDP in 2015 from 1.1 per cent in the previous fiscal year.
5. There is a very Stable political environment in India at present with the Bhartiya Janta Party securing above 51% seat in the Lok Sabha. The country also has a very responsive administrative set up. There are Judicial measures to check the implementation of administrative policies with the Right to Informations Act, 2005 amongst other control & check mechanisms.
6. Well established judiciary to enforce rule of law. Indian Supreme court is the Apex Court of the country
7. Land of abundant natural resources and diverse climatic conditions. It has major reserves of
- Oil – 125 Million metric tonne
- Natural Gas – 1,437 billion cubic metres (50.7×1012 cu ft)
- Copper Ore – 1.56 billion tonnes of Copper ore
- Iron Ore – 27 billion tonnes
- Chromite – 200 million tonnes of resource
- Nuclear Reserves:
i. Thorium – 11.93 million tonnes
ii. Uranium – Upcoming mine in Tumalapalli has close to 49,000 tonne of uranium reserves
8. Indian Government has been introducing various investor friendly policies like ‘Digital India‘ & ‘Make in India‘.
9. India’s economy will grow fivefold in the next 20 years (McKinsey).
10. Overall Cost competitiveness with low labour costs: As per a report by Boston Consulting Group, India is ranked number 2 globally on the cost competiveness. China & Brazil which were earlier considered as low cost manufacturing countries have slipped from their positions indicating an eroding of their cost competiveness.
11. India has a Total labour force of nearly 530 million.
12. Large pool of skilled manpower with sound knowledge base and significant English speaking population. As per wikipedia India is 2nd most English Speaking population in the world after USA
13. India is a young country with a median age of 30 years by 2025. Giving it another edge over its counterpart China where the population median is much higher, this in turn makes it a strategic investment partner.
14. The proportion of population in the working age group (15-59 years) is likely to increase from approximately 58 per cent in 2001 to more than 64 per cent by 2021.
15. Huge untapped market potential with a consumer size of 1.25 billion.
16. The urban population of India will double from the 2001 census figure of 290 m to approximately 590 m by 2030 (McKinsey).
17. Tax Exemptions: Special investment privileges like tax exemptions, Progressive simplification and rationalization of direct and indirect tax structures.
18. India has got a well knit transportation system through all the three mediums of Air, Water & Land
- Airports: The Airports Authority of India (AAI) manages a total of 125 Airports
- International Airports: Ahmedabad, Amritsar, Bengaluru, Chennai, Goa, Guwahati, Hyderabad, Kochi, Kolkata,
Mumbai, New Delhi, Thiruvananthapuram, Port Blair, Srinagar, Jaipur, Nagpur, Calicut, Tiruchirapalli,
- Railways: The Indian Railways network is spread over some 64,000 km, with 12,000 passenger and 7,000 freight trains each day from 7,083 stations plying 23 million travellers and 2.65 million tonnes of goods daily
- Roadways: India’s road network of 4.1 million km is the second largest in the world. With the number of vehicles growing at an average annual pace of 10.16 per cent, Indian roads carry about 65 per cent of freight and 80 per cent of passenger traffic
- Waterways: 14, 500 km
Major Ports of Entry: Chennai, Ennore, Haldia, Jawaharlal Nehru Port Trust (JNPT), Kolkata, Kandla, Kochi, Mormugao, Mumbai, New Mangalore, Paradip, Tuticorin and Vishakhapatnam.
19. The improvement in India’s economic fundamentals has accelerated in the year 2015 with the combined impact of strong government reforms, RBI’s inflation focus supported by benign global commodity prices.
20. Massive Troop size: Globally Ranked 3rd out of 166 countries with a total of 1,325,000 active troops and 2nd in size of armed forces. This is another reason why Foreign Direct Investment is now shown a ray of light defence sector.
21. Industrial Production Index: India’s IIP grew by 4.1 per cent in April 2015 compared to 2.5 per cent in March 2015. This growth is majorly credited to the boost in manufacturing growth, which was 5.1 per cent in April compared to 2.8 per cent in the previous month.
22. Telecommunications: India is Ranked 2nd in Mobile phone use
23. Internet Connectivity: India is Ranked 3rd in number of internet users. Further, the Indian Government is proposing to invest in Rural Networking systems to make rural India have internet connectivity.
24. Major Sectors Attracting Highest FDI Equity Inflows: Services Sector, Construction Development, Telecommunications, Computer Software and Hardware, Drugs and Pharmaceuticals, Automobile (as in February 2015).
25. Governments New Policies have indicated a reduction in import tariffs.
26. India has a Full current account convertibility.
27. India is member of WTO.
Sources: Inhouse Research