India: fundamentally intact

India features prominently in many of the respondents’ plans for the future according to EY’s 2014 India attractiveness survey. Business investors have found India’s appeal in its competitive labor costs, lucrative domestic market, and its skilled workforce.

The United Nations Conference on Trade and Development had estimated that India’s labor force is expected to rise to 556.8m by 2020 from 498.7m. When it comes to spending, India’s growing middle class at 5% of its population — defined as people earning US$10 to US$100 — is expected to drive FDI success.

Rajiv Memani, Country Managing Partner at EY India and EY Global Chair of Emerging Markets, commented that in the short-term, it is expected that investors will consolidate their existing presence in India.

“2014 will be decisive for new players as the election results come in and expectations are formed in terms of sustaining the pace of reforms and deregulation. Investors are considering India for both their services and manufacturing supply chain, but for investments to materialize, the environment must be more enabling and measures on other competitive issues, including currency stability and ease of doing business, must be implemented,” he said.

Reforms to liberalize the economy, announced in 2012 and 2013, have created a supportive policy environment for FDI. Broadly, India’s reforms work towards two main objectives: developing

an automatic investment route (i.e., without prior government approval) and increasing FDI limits.

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Spotlight on Business | | Issue 1 – 2014 | APAC no. 12000179