How India can realize its potential as an investment destination — and how it can raise awareness about its emerging cities.
India is the second-largest emerging country and has demonstrated the ability to grow rapidly. While growth slowed down in 2011–12, this was simply the adverse impact of a global downturn, combined with the emergence of some domestic problems.
The slowdown does not mean a permanent shift to a lower growth trajectory. India has strong basic fundamentals:
- A solid domestic market
- An educated workforce
- Competitive labor costs
There are also some deficiencies. However, the Government recognizes these weaknesses and correcting them is a high priority. The return to faster growth will not happen automatically.
The longer-term perspective is therefore one in which the current slowdown will hopefully be overcome in the next two years, and India will be back to average annual growth of around 8%. This growth should be inclusive, leading to a substantial reduction in poverty and the emergence of many more growth poles across the country.
Six actions to improve India’s investment climate
In order to realize its foreign direct investment (FDI) potential, India needs to improve its operating environment and develop infrastructure. Other priorities should include boosting production, improving the taxation system, easing FDI regulations and increasing awareness about emerging cities:
- Enhance the business environment
- Develop infrastructure
- Advance the factors of production
- Improve the taxation system
- Ease FDI
- Increase awareness about emerging cities