January 22, 2025
India continues to attract global investors, driven by its demographic advantage and government initiatives like 'Make in India'
FDI has been liberalised, with over 90% of investments flowing via the automatic route, especially in manufacturing
Key sectors for growth include electronics, renewable energy, textiles, footwear, and pharma
India's digital infrastructure, particularly UPI, and the rise of AI present significant opportunities in services and technology
Panellists at the World Economic Forum (WEF) said India’s appeal to global investors remains strong, driven by a young and dynamic workforce and the government’s ongoing emphasis on initiatives like ‘Make in India’.
Speaking at the ‘FDI in India’ panel, Amardeep Singh Bhatia, Secretary of the Department for Promotion of Industry and Internal Trade (DPIIT), noted the government’s success in liberalising foreign direct investment (FDI), with over 90% of FDI now coming through the automatic route. “More than 90% of our FDI is coming via automatic route,” Bhatia said, underscoring the government’s commitment to attracting investments, particularly in manufacturing sectors that cater to both local and export markets.
Key focus areas for India include electronics, renewable energy, and sectors with high employment potential, such as textiles, footwear, and pharma. Neeraj Aggarwal, Asia-Pacific Chair at Boston Consulting Group (BCG), highlighted the growing opportunity for India in global manufacturing, supported by the country’s cutting-edge digital infrastructure, including the Unified Payments Interface (UPI), which has become a global benchmark. “The other thing which is interesting is this whole shift to AI… India, which has historically had a strength in services, could benefit from this change,” Aggarwal noted.
However, while incentives are supporting India’s manufacturing ambitions, challenges remain. Sanjeev Krishan, Chairman of PwC India, pointed out the need for logistics and digital competitiveness improvements. He cited Malaysia and Indonesia as examples of countries excelling in these areas.
A recurring theme among panellists was the need for skill development to leverage India’s demographic advantage fully. “India’s demographic is India’s strength, and we need to harness it, which means there has to be a huge focus on skilling,” Krishan emphasized. The focus on education and skills training is essential to meet the growing demand for a tech-savvy workforce to cater to global companies.
The discussion also touched on India’s rise as a promising market, with Kartikeya Sharma, President of AB InBev India, noting the “exponential scale” of India’s growth potential.
In the real estate sector, Niranjan Hiranandani, Managing Director of Hiranandani Group, highlighted the impact of structural reforms that have made it easier to attract FDI. Hiranandani said the return on investment (ROI) in commercial real estate now surpasses that of the residential sector. He added that if more FDI and internal funds flow into the real estate market, India could see GDP growth accelerate from 6.5% to 10% in the next two years.
Source: Economic Times