Driven by a growth rate of over 6% in the past two years and a 350 million strong middle-class with increasing purchasing power, India is reshaping the world’s economy.
India, officially the Republic of India (Bhārat Ganarājya), is a country in South Asia. It is the seventh-largest country by area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world.
GDP in India crossed the trillion dollar mark in 2007 and is currently in 4th position after US, China and Japan. Following market-based economic reforms in 1991, India is now considered to be in the economic “fast lane”, alongside China.
The economy slowed at the start of 2013, however the Government took steps towards improving the economic environment, with reforms to the retail, airline and financial sectors. It also announced that it will push for further reforms such as the easing or abolition of limits on foreign direct investment in various sectors. Growth picked up in the first half of 2013, as domestic and foreign headwinds eased, with GDP growth averaging 5.2% before picking up to 7.2% in 2014.
Economic snapshot(% annual growth rate)
2011 2012 2013-16
GDP 7.5 5.0 6.9
Export of goods and services 18.3 5.8 10.8
Import of goods and services 18.4 9.8 11.0
Inflation 8.9 9.3 5.3
Short-term interest rates (%) 9.8 8.9 8.0
Exchange rate (per £) 85.39 86.84 78.03
Population 1.3 1.3 1.2
Unit labour cost -0.8 -10.9 0.5
Source: Oxford Economics
As the Asian economy recovers faster than that of Europe and the US, and as more Asian economies develop into middle-income countries, intra-Asian trade will be a key driver of trade growth in India. China is forecast to increase in importance as an export market, with the rapidly emerging Vietnamese economy also climbing up its importance of trade partners.
Europe, the Middle East and North Africa are currently the largest exporters to India with no change in the long term. One fifth of imports into India will originate from the Middle East and North Africa in 10 years time, with growth both supply-chain and commodity-driven.
Opportunities for UK businesses
The Indian infrastructure sector continues to offer great opportunity for UK businesses. The automobile industry in India is one of the fastest-growing worldwide with India predicted to be among the top five vehicle producers. The industry has witnessed an influx of global equipment manufacturers, who are setting up their manufacturing bases in the country.
Sectors of opportunity for UK companies include: agribusiness, biotechnology, pharmaceuticals, healthcare and retail.
Capital – New Delhi
Largest city – Mumbai
Administrative divisions – 28 States
Currency – Indian rupee (INR)
Area – 3,287,263 km2
Population (2012) – 1,210,193,422
Calling code – +91
Official language – Hindi, English