India's economy: development, growth and prospects

Market information for companies

India is the most populous country in the world with over 1.4 billion inhabitants. The development of the Indian economy and the enormous population growth make the country an attractive target market for foreign companies. But which economic sectors characterise India and how is the gross domestic product (GDP) developing? Below we provide an overview of the most important facts and figures.</p

Statistics on the Indian economy

Although India is considered an emerging country, the Indian economy is already one of the five largest economies in the world in terms of GDP. Economic growth has remained constant at over 7 per cent in recent years. This means that India's economy is growing faster than China's and is also outperforming growth in Germany. Indian politicians have set themselves the goal of developing the country into the third largest economy in the world by 2025. Although India is often overshadowed by the Chinese economy, the subcontinent offers a wealth of opportunities in various economic sectors.

Economic focus and driving sectors in India

Agriculture is traditionally an important sector. Around 18 per cent of GDP is generated in the agricultural sector. However, around 43 per cent of Indians still work in agriculture, although the sector makes a comparatively small contribution to value creation.</p

In recent years, the IT industry and business-related services in particular have gained in importance. India is regarded as a leading location for the outsourcing of IT services and software-based business solutions. Start-ups in the tech sector are also booming.

Why is India's economy growing?

The steady growth of the population and the improvement in infrastructure are contributing to economic development. In addition, political stability and the introduction of various reforms have encouraged investment from abroad.

Is India a developing country or an emerging economy?

The country is currently undergoing a transformation between a developing country and an emerging economy. The main features that characterise India as an emerging market:

  • Rapid economic growth in recent years
  • Emerging middle class with growing purchasing power
  • Modern sectors such as IT, pharmaceuticals and the automotive industry are strongly represented
  • Political stability and democratic structures
  • Large population with well-educated skilled labour
  • Increasing integration into the global economy
  • Member of the G20 group of the most important industrialised and emerging countries

If growth continues, India could achieve the status of an industrialised country in the next few years.

Why is China considered a stronger economy than India?

China and India are both emerging powers in the global economy, but they differ in several aspects. While China has emerged as the dominant power in the global economy in recent years, India has been steadily gaining economic growth. The main difference lies in the growing role of technology and the industrial sector in China, while in India the focus is more on services and the information sector.

Future prospects

With a gross domestic product of over 3 trillion US dollars and a growth rate of around 7 per cent per year, India can no longer be ignored as an economic factor. Its young population and developing infrastructure make it a promising market for foreign companies.

Market entry for foreign companies: Which Indian sectors are particularly attractive?

There are interesting business opportunities for German and other foreign companies in India in a variety of sectors. For example, the Indian government is pushing ahead with infrastructure programmes for roads, railways, ports and airports. The renewable energy, automotive and information technology sectors have been attractive for some time now. The market for renewable energies in India is growing rapidly and offers enormous opportunities for German technology providers and engineering firms, particularly in the solar and wind energy sector. The automotive industry is also booming, with an increasing demand for high-quality and environmentally friendly vehicles. In the IT sector, German companies can score points with quality and innovation in software development and cloud computing. In addition, the growing prosperity of the middle class is increasing demand for consumer and consumer goods of Western quality standards.

Numerous other sectors are also gaining in importance:

  • Agriculture and food processing: India is one of the largest producers of food in the world. German technologies can contribute to improving crop yields and food quality here.
  • Healthcare industry: The demand for high-quality medical care and technology is enormous. German companies could benefit considerably from this growing market, particularly in the field of medical devices and pharmaceuticals.
  • Water sector: Water management and treatment is a high priority in India. German expertise in this area could contribute to sustainable solutions.
  • Circular economy: Due to growing environmental problems, India is experiencing an increasing demand for efficient recycling and waste management systems, a field in which German companies are already leaders.

    The combination of quality and reliability, for which Germany is known, with the innovative strength and entrepreneurial spirit that prevails in India's economic centres can lead to successful and fruitful partnerships in the long term.

    Investment climate in India

    The Indian government has introduced reforms to make India even more attractive as an investment destination and to position itself as an alternative manufacturing location within international supply chains. To this end, processes are to be made simpler and clearer for companies. With the help of extensive subsidies, the country should become less dependent on imports in the long term and at the same time establish itself as an export hub. You can find out more about the economic prospects on the GTAI country page.

    Market information for companies

    Would you like to venture into India with your company, but lack the necessary information? In the publication "New Markets - New Opportunities: India" you will find information on the business environment and on funding and consultancy opportunities for your entry into the Indian market.

    "New Markets - New Opportunities: India" is a joint publication by Germany Trade & Invest (GTAI), the Indo-German Chamber of Commerce and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, published in September 2021.

    Business opportunities in India on

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    Discover the profitable and sustainable business opportunities of German development cooperation in India here.

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