Written by Abbas Shah, freelance writer at Milabalyawmi

India’s economic trajectory is poised for substantial growth, with estimates from 6.5 percent increase in the fiscal year 2024-25, reaching 7 percent by 2026. Data from the quarter ending September showcased a robust 7.6 percent year-on-year expansion, positioning India as an enticing foreign investment destination set to surpass China’s growth forecast.

Even the IMF’s conservative projections anticipate India emerging as the world’s third-largest economy by 2027, surpassing Japan and Germany, with a GDP exceeding US$5 trillion. This economic momentum is bolstered by resilient growth and favorable demographics, as India boasts the world’s largest young population with a median age of 28.2 years.

The nation’s recovery from the pandemic-induced slowdown, particularly in domestic demand and household spending, augurs well for business expansion plans. Moreover, India’s large consumer base, rising urban incomes, and the aspirations of its burgeoning youth population contribute to its economic resilience, as highlighted in a recent World Bank report titled “Navigating the Storm.”

India’s robust economic prospects are further supported by a healthy banking system poised to bolster the nation’s economic recovery, leading to an anticipated rise in private-sector investment in the coming years.

This positions India as a bright spot in the Asian business and investment landscape. Specific trends driving increased inbound investment include the desire to diversify Asia presence, access Indian and South Asian markets, supplement China operations, and leverage attractive free trade agreements, production, and market advantages.

The nation’s abundant potential is underscored by its burgeoning population, expected to overtake China as the most populous country by 2024. This demographic dividend provides a vast market for products and services across industries, alongside rising per capita income and Purchasing Power Parity (PPP), further fueling market expansion. Additionally, India’s young working population serves as a key driver of long-term economic growth, with a median population age between 28 and 30 years.

India’s competitive edge in manufacturing is evidenced by its low manufacturing costs and scalability, ranking second globally in terms of lowest manufacturing costs according to a BCG report.

The country’s progress in infrastructure development, exemplified by initiatives like the National Infrastructure Pipeline, attracts investment critical to achieving the goal of a $5 trillion economy by 2025. Furthermore, India’s favorable industrial policies, coupled with investments in industrial corridors, seaports, airports, roads, and railways, create an inviting investment climate for manufacturing firms.

India’s youthful population, with more than half under the age of 25 and over 65% under the age of 35, ensures a steady supply of low-cost labor. This demographic dividend, combined with India’s skilled and semi-skilled workforce, enhances the nation’s competitiveness by lowering production costs and increasing efficiency. Moreover, initiatives such as Skill India and Digital India further bolster India’s appeal as an investment destination by fostering a skilled workforce and digital infrastructure.

In conclusion, India’s compelling economic growth prospects, supported by favorable demographics, competitive manufacturing costs, robust infrastructure development, and a young and skilled workforce, position it as a prime investment destination for companies seeking long-term growth and expansion opportunities in the dynamic Asian market landscape.