Global economic players: opportunities and challenges in India

Since its economic liberalisation in 1991, India has emerged as a major global economic player and is expected to become one of the leading economies of the world in the next decade.

The business environment of India today

The Indian business environment provides a number of opportunities to foreign investors. These include cheap resources, skilled talent, a massive national market (population 1.2 billion) and a middle class exceeding 350 million with increasingly stronger purchasing power, and one of the youngest populations in the world.

India boasts one of the most diverse populations in the world. With a democratic political structure, a free press, and a judicial system, which despite being slow is known to
be robust.

India today has shown the capacity to absorb the global financial crisis ripples, and is characterised by:

  • the enhanced contribution of the private sector
  • indigenous entrepreneurship
  • increased support to encourage both foreign direct investments and entry of
    multinational companies
  • contributions from non-resident Indians to India’s foreign reserves (through
    remittances sent from overseas)
  • increasing global leadership of sectors including information technology, software, business and knowledge process outsourcing, pharmaceuticals, research and development.

The nature of the Indian business environment is changing rapidly. As the Indian
economy grows, businesses are facing critical issues such as growing competition
and increasing pressures to attract and retain talent. Pressure for further reforms; developments in infrastructure; divestments in the public sector; delays in the approval of
proposals of foreign direct investments; union policies and practices, can all have an impact
on business.

India has thousands of miles of coastline and a diverse topography, bordered by unstable
neighbouring countries and border controls, can be prone to illegal immigrants. Potential
investors need to devise project plans and strategies that incorporate more than simple
‘business-oriented’ steps. The key to success in India lies not only in the investor’s own business competencies, but on how best they understand and efficiently function in the business context, which is ingrained into the unique socio-cultural, political, legal and economic milieu of India.

For further information visit the Aston India Foundation for Applied Research (AIFAR) webpages or download issue 2 of Aston Advances.

Investment in India