When the rest of the world is crippled by the fear of recession and other calamities, it’s time for India to work towards strengthening its stand on the global level.
It has surpassed the UK’s position by leaving it behind the 5th position. India’s recovery from the pandemic dip was quick as there was support from domestic demand and the raise in capital investments.
Despite the global uncertainties that may result in slower growth, the growth is expected to keep India strong due to the robust domestic demand. Hence the strong view is to be seen.
Foreign Investment in India: A Boost for the Economy
Despite the pandemic-related uncertainties, India continues to remain a favorite destination for foreign investment, with global business heads from developed economies planning to make first-time or additional investments in India.
An increase in FDI inflows implies capital injection and technology transfer thereby creating newer avenues for employment while increasing workforce productivity in general. Foreign investments have been instrumental in dictating the industrial policy directions including high-tech themes such as blockchain and the provision of advanced technology incubation for startups.
This increasing capital stream has allowed India to strengthen infrastructure, acquire advanced technology, mobilize foreign exchange resources, adapt to emerging productivity techniques as well as generate employment opportunities.
For an emerging developing superpower like India, FDI also helps in fuelling the growth by the capital inflow without incurring fixed liabilities like loans that have to be repaid. Strong FDI characterizes real economic growth and is a signature of global trust which in India’s POV is a solution to the deficit that a hungry developing nation possesses.
As the population of India reaches new heights, the domestic demand increases steadily making India the second-fastest growing nation after China, with an annual growth of over 7%. With things going so well, the government must sustain investors’ confidence by ensuring fair trade practices and policies while maintaining a positive market sentiment.
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A Rising Global Power: Expanding Trade Horizons
The rapid growth in the Indian economy is by no means luck but rather portrays the strong underlying fundamentals that the Indian economy is founded on. Globally, all the top nations are betting on India and have forged positive relationships with the nation. Taking a look at the recent developments in trade partnerships suggests the same trend.
India-UAE trade under CEPA has the potential to touch $250 billion by 2030. This is a major milestone for both countries, as it highlights the significance of potential growth in the region. Meanwhile, India and Canada recently held their fifth Ministerial Dialogue on Trade and Investment which suggests a promising sign of the current ongoing partnership.
The trade relationship between India and the US is at an all-time high. The bilateral trade of goods and services between the two nations has almost doubled since 2014, exceeding $191 billion in 2022. This trade relationship is only destined to grow in the years to come.
The current stance of the Indian Trade in the South Asia and Southeast Asian regions is untapped. The World Bank’s latest report highlights the progress that has been made in deepening the linkages between these regions, however, it critically evaluates that there is still more work to be done in this regard.
The country has adopted an aggressive approach to FTA negotiations in dealing with advanced global economies. India-ASEAN Trade is a prime example of this.
Not just that, India also is making investments in renewable energy and recently signed a memorandum of understanding with Belgium in this regard.
The Federation of Indian Export Organization and the Federation of Indian Chambers of Commerce and Industry have signed trade partnership agreements with East Africa.
The QUAD represents a quarter of the world’s population and an estimated GDP of over $30 trillion. India has taken careful steps to shape this agreement which would enable free trade between these nations at large.
As India continues to develop and strengthen its global ties, its potential to continue to ride the growth wave is significant. Some economists believe that India is en route to even surpass Germany and Japan by the end of this decade!
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Investing in the future: India’s Path to Global Competitiveness
India understands that to stay ahead in the chaotic and ever-changing global theater, science, and technology play a major role. This has been witnessed in the past during the industrial revolution. In the current era, making progress in the emerging science and technology sectors requires a lot of investments and human capital to stay ahead and remain globally competitive.
In 2020, the Indian government announced an increase of 13% in science ministries’ budgets, with a focus on building a “new Indian economy” around AI, 3D printing, drones, Agri-tech, and DNA storage.
The government has made consistent efforts in this regard. According to a report by Morgan Stanley, India’s space industry could be worth over $10 billion by 2030. In 2021, ISRO’s commercial arm Antrix Corporation signed an agreement with the US-based satellite constellation operator, Kepler Communications, for the launch of 10 satellites by 2023.
Gross expenditure on R&D (GERD) in India has been consistently increasing over the years and has nearly tripled from Rs. 39,437.77 crores in 2007- 08 to Rs. 1,13,825.03 crore in 2017-18. India’s per capita R&D expenditure has also increased, however, the country needs to remain cautious about the fact that the per capita spending on research is lower compared to the other major economies. The global average is 1.8% and currently, India’s R&D spend to GDP is 0.7%. Boosting GERD to 1% of GDP is a realistic target that the government must aim for.
India’s digital transformation has not gone unnoticed, and the country has emerged as a hub for technology startups. The government has launched various schemes to promote entrepreneurship and innovation, such as Startup India and Atmanirbhar Bharat Abhiyaan. India has also been attracting significant foreign investment in the technology sector, with companies such as Google and Facebook investing in Indian startups.
Ambition in Action: Rise to Global Prominence
India’s strides in recent years are a testament to the values instilled among the capable population of the nation. As of 2022, India’s economy overtook the UK, placing it as the world’s fifth-largest economy. Especially post-BREXIT, the UK has been victim to uncontrollable and rapid inflation which has created a cost of living crisis and may be overlooking an impending recession.
Even though India has become highly populous on the account that the country overtook China, this also means that the net employment needs to grow by 1.5% per year from 2023 to 2030 to achieve 8-8.5% GDP growth. The government has launched recruitment drives aiming to provide jobs to more than 10 lakh people. Between 2019 to 2022, India’s growth rate stood at 3.83% which has been the highest among all major economies.
Prime Minister Narendra Modi has expressed confidence that bright days lie ahead for the Indian economy. “Because of the well-thought-through policies of the Modi government, the Indian economy is expected to cross the $5 Trillion mark in 2026”, he said. “Indian youth aspire to fulfill their dreams in a country filled with opportunities. They want an enabling environment”
India’s accomplishment of becoming the world’s fifth-largest economy is no ordinary feat, according to Modi. “This achievement gave us the confidence to work harder and achieve bigger goals in this Amrit Kaal,” he said.
The strongest economy awaits…
India’s outlook for 2023, is to tether the inflation. For a decade now India wants to be the third-largest economy. Adding to it by 2047 it has a target of achieving to be a developed country. In order to achieve this, it consistently has to grow by 8 percent on average per annum to overtake Germany and Japan which are a few years away.
