In­dia to be­come next Asian hub

Enterprise - - Contents -

In­dia is a sig­nif­i­cant econ­omy to­day. It has grown at an an­nual rate ex­ceed­ing 12 per­cent over the last seven years. Even go­ing by the con­ser­va­tive as­sump­tion that the coun­try will grow by 10 per­cent per year in real dol­lar terms over the next 15 years, it is ex­pected to grow into a $ 5.5 tril­lion econ­omy by 2024- 2025.

With some ex­cep­tions in the agri­cul­ture sec­tor, In­dia is now highly open to trade. Trade in nona­gri­cul­tural goods and ser­vices and the flow of port­fo­lio and di­rect for­eign in­vest­ment are now al­most as free in In­dia as in China. Re­stric­tions on out­ward in­vest­ment by In­dian multi­na­tion­als have also been con­sid­er­ably re­laxed. The re­sult has been In­dia’s rapid in­te­gra­tion into the world econ­omy. Trade in goods and ser­vices as a pro­por­tion of GDP has risen from just 17 per­cent in 1990- 1991 to 53 per­cent in 2008- 2009, and for­eign di­rect in­vest­ment has risen even faster, from $ 0.1 bil­lion in 1990- 1991 to $ 64.1 bil­lion in 2009- 2010. Not just pri­vate In­dian com­pa­nies like Reliance In­dus­tries Ltd. and Tata Mo­tors, but also public sec­tor en­ter­prises such as the Steel Au­thor­ity of In­dia and Bharat Heavy Elec­tri­cals now com­pete against the world’s best, forc­ing them to be ef­fi­cient and pro­duc­tive.

A coun­try’s sav­ings are counted as re­li­able along with in­vest­ments, to re­main a driver of fast growth. As such, there is also a steady climb in In­dia’s sav­ings rate, now touch­ing al­most 33 per­cent from 22.8 per­cent a decade ear­lier.

Im­por­tantly, it is claimed that labour short­ages will not hold back In­dia. Its de­pen­dency ra­tio, de­fined as the num­ber of de­pen­dents per 100 work­ing peo­ple, is con­tin­u­ing to fall.

As In­dia al­lows peo­ple to save a large pro­por­tion of their in­come and raise the coun­try’s rate of sav­ings, ex­perts point to the struc­tural re­forms in the coun­try for boost­ing the num­ber of peo­ple who work and con­trib­ute to growth. With re­form push­ing up pro­duc­tiv­ity per worker, GDP has risen even faster.

This do­mes­tic em­pow­er­ment has led In­dia to con­tinue ex­pand­ing its tech­nol­ogy sec­tor and push into the key mar­kets of US and Europe, along with Mid­dle East and Africa.

Ac­cord­ing to es­ti­mates of the Na­tional As­so­ci­a­tion of Soft­ware and Ser­vices Com­pa­nies ( NASSCOM), rev­enues for In­dia’s in­for­ma­tion tech­nol­ogy and out­sourc­ing in­dus­tries are ex­pected to reach $ 225 bil­lion by 2020. In­for­ma­tion tech­nol­ogy spend­ing rose 4.5 per­cent in the cur­rent fis­cal year, as com­pa­nies re­al­ized they needed to spend ag­gres­sively on adapt­ing to new tech­nolo­gies. The rise in global tech­nol­ogy spend­ing is also a key fac­tor be­hind the in­dus­try’s ex­pan­sion.

In­dia’s in­for­ma­tion tech­nol­ogy and out­sourc­ing in­dus­tries con­tinue to be one of the largest em­ploy­ers in the coun­try. Over 230,000 jobs were added in the cur­rent fis­cal year, bring­ing the to­tal di­rect em­ploy­ment to about 2.8 mil­lion peo­ple.

As In­dia is am­bi­tious to­wards be­com­ing an R& D hub, a greater num­ber of smaller In­dian cities are be­com­ing in­dus­trial cen­tres with an im­proved busi­ness en­vi­ron­ment to at­tract more for­eign in­vest­ment into the coun­try.

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