The Indian economy is the fourth largest economy of the world on the basis of Purchasing Power Parity (PPP). India’s real GDP growth averaged 7.6% per annum during the period 2002-03 to 2006-07. During 2006-07, real GDP growth accelerated to 9.4% from 9.0 % in 2005-06, more than the 5 to 6% average during the eighties and nineties. Growth in key sectors like infrastructure, services and manufacturing continues at almost 12% per annum. Growth in per capita income accelerated from 7.4% in 2005-06 to 8.4% during 2006-07. Per capita income growth averaged 7.1% per annum during the last four years (2003-2007), more than double the 3.4% per annum recorded during the eighties and nineties. The acceleration of economic activity is being supported by a significant rise in domestic savings and investment, and productivity gains.

Fast growing disposable incomes, increased availability and use of consumer finance and credit cards complement the keenness of the average Indian to adapt to and assimilate global trends. This has led to the creation of a rapidly growing consumer base and one of the world’s largest markets for manufactured goods and services.

India - with its consistent growth performance and abundant highly skilled manpower provides enormous opportunities for investments.

The 2007-08 Fiscal Year

The growth process continues apace. As per the estimates released by the Central Statistical Organization, real GDP at factor cost grew by 9 per cent in 2007-08.

• India's foreign exchange reserves increased from US$ 247.76 billion in 2006-07 to US$ 309.72 billon 2007-08. Indian forex reserves stand at US$ 300.01 billion as on August 08, 2008.
• The foreign institutional investors (FIIs) brought in US$ 16.1 billion in 2007-08.
• Foreign direct investment (FDI) inflows during 2007-08 stood at US$ 24.57 billion, up 56.50 per cent compared with US$ 15.7 billion in 2006-07. In fact, FDI inflows into India for June 2008 amounted to US$ 3.93 billion.
• India achieved a record food grain production of 227 million tonnes in 2007-08, registering a growth of 10 to 12 million tonnes over 2006-07. Food grain output grew by 4.23 per cent in 2007-08, nearly double the average annual growth of 2 per cent between 1994 and 2004.
• Overall industrial production grew by 8.5 per cent during 2007-08. Significantly, manufacturing sector grew at the rate of 8.8 per cent and construction at 9.8 per cent.
• Services grew by 10.8 per cent in 2007-08. The trade, hotels, transport and communication segment grew by 12 per cent, while the financing, insurance, real estate and business services sector grew at 11.8 per cent. Community, social and personal services reported a 7.3 per cent rise in GDP in 2007-08.
• While exports grew by 23.02 per cent during 2007-08 amounting to US$ 155.5 billion, imports increased by 27.01 per cent to US$ 235.9 billion in the same period. Further, exports in June 2008 amounted to US$ 14.6 billion while imports in June 2008 amounted to US$ 24.4 billion.

Per Capita Income

Per capita income in India increased from US$ 460 in 2000-01 to almost double to US$ 797 by the end of 2006-07. In 2007-08, India's per capita income is estimated to be around US$ 740. Further, India's per capita income is expected to increase to US$ 2,000 by 2016-17 and US$ 4,000 by 2025. This growth rate will, consequently, propel India into the middle-income category.

Some Highlights

• Over 300 million Indians (63 million households) are expected to have a household income of over US$ 6,000 by 2015 [over US$ 30,000 in purchasing power parity (PPP) terms].
• According to The World Fact Book, India is among the world's youngest nations with a median age of 25 years as compared to 43 in Japan and 36 in USA. Of the BRIC—Brazil, Russia, India and China—countries, India is projected to stay the youngest with its working-age population estimated to rise to 70 per cent of the total demographic by 2030 - the largest in the world. India will see 70 million new entrants to its workforce over the next 5 years.
• India has the second largest area of arable land in the world, making it one of the world's largest food producers - over 200 million tonnes of foodgrains are produced annually. India is the world's largest producer of milk (100 million tonnes per annum), sugarcane (315 million tonnes per annum) and tea (930 million kg per annum) and the second largest producer of rice, fruit and vegetables.
• With the largest number of listed companies - 10,000 across 23 stock exchanges, India has the third largest investor base in the world.
• India's healthy banking system with a network of 70,000 branches is among the largest in the world. In June 2007, the aggregate deposits of commercial banks were about US$ 445 billion (50 per cent of GDP) and the total bank credit stood at US$ 320 billion (36 per cent of GDP). NPA (non-performing assets) levels of banks in India are under 3 per cent, one of the lowest among emerging nations.
• According to a study by the McKinsey Global Institute (MGI), India's consumer market will be the world's fifth largest (from twelfth) in the world by 2025 and India's middle class will swell by over ten times from its current size of 50 million to 583 million people by 2025.
• The number of companies incorporated has increased at an annual average of 55,000 companies in the last two years to 865,000, from 712,000 companies at the end of 2005.
• Twenty Indian companies including Bajaj Auto, Bharat Forge, Cipla, Ranbaxy, Reliance group, TCS, Tata Motors, Tata Steel, Wipro and Infosys have made it to the Boston Consulting Group's 100 New Global Challenger Giants List, 2008.
  
  

India has the most liberal and transparent policies on foreign direct investment (FDI) among major economies of the world. 100% FDI is allowed under the automatic route in all sectors/activities except in few areas, which require prior approval of the Government. Under automatic route, investors are required to only notify the Reserve Bank of India within 30 days of receipt of inward remittances. India is looking for large FDI inflows in the development of infrastructure, technological upgradation of Indian industry through ‘greenfield’ investments in manufacturing, and in projects having the potential for creating employment opportunities on a large scale. Indian government FDI in SEZs during the past 18 months has touched $3 billion. The Indian Government has formally approved 404 SEZs out of which 187 have been notified. SEZs enjoy several tax concessions including income tax exemption for a specified period under the SEZ Act 2005 and subsequent amendments.

Government of India accords high priority to development of infrastructure in highways, ports, railways, airports, power, telecom, etc. Government is actively seeking domestic and foreign private investment, for infrastructure sector development. The draft papers on the 11th Five Year Plan of India envisages that 30% of all investments in infrastructure development during the next five year period would be from private sector. The Indian Government is actively pursuing Public Private Partnership (PPPs) to bridge the infrastructure deficit in the country. Several initiatives have been taken to promote PPPs in sectors like power, ports, highways, airports, tourism and urban infrastructure. In India, services sector, as a whole, contributed as much as 68.6 per cent of the overall average growth in GDP between the years 2002-03 and 2006-07.

India has liberalized and simplified foreign exchange controls. Rupee is freely convertible on current account. Rupee is almost fully convertible on capital account for non-residents. For FDI- Profits earned, dividends and proceeds out of the sale of investments are fully repatriable; Most of the restrictions for resident Indians on capital account on incomes earned in India have also been removed, on account of huge accretion to foreign exchange reserves of India.

To know more information about Investment in India, please visit
    http://dipp.gov.in/
    http://www.dipp.gov.in/publications/fdi_policy_2006.pdf
    http://www.investmentcommission.in/destination_india.htm
To learn about Indian economy in detail, please read the Annual Report published by the Indian Reserve Bank, available at http://rbi.org.in/scripts/AnnualReportPublications.aspx.