MARKET RESEARCH COUNTRY REPORT

INDIA

CONTENTS

Main Industry SectorsEconomic OverviewForeign Direct Investment [FDI]FDI Government MeasuresCountry Strong PointsCountry Weak PointsForeign Trade Overview

MAIN INDUSTRY SECTORS

India is the world's fourth agricultural power in the world.

Agriculture contributes to about 20% of the GNP and

employs close to two- thirds of the active population in India.

The main agricultural products are: wheat, millet, rice,

corn, sugar cane, tea, potatoes and cotton.

India is also the second producer of cattle, third producer

of sheep and fourth in fishing production. 

Coal is the country's main energy source

(India is the third largest world producer of coal).

MAIN INDUSTRY SECTORS

In the manufacturing industry, textile plays a

predominant role.

Chemical industry is the second largest industrial

sector (12% of the GNP) in terms of size.

Services sector is the most dynamic part of the Indian

economy and contributes to more than half of its GDP,

and employ but a third of its active population.  

The software sector, which grows rapidly, is boosting

the export of services and modernizing the Indian

economy

ECONOMIC OVERVIEW

India is amongst the world's 10 largest economies.

The average GNP growth rate was 9.4% in average over the period

2006-07.

This growth rate dropped during the global recession, the crisis affected

India by the increase of risk aversion, a withdrawal of foreign capital and the

drop of global demand.  

India was a country that quickly got out of the crisis, its growth was

stimulated by private consumption and by the state's expenditures.  

From 5.7% in 2009, the growth has jumped up and it is expected to reach

9.7% in 2010 according to the estimations. 

ECONOMIC OVERVIEW

The government has established as top priorities to modernize the

economic structure and to fight against poverty.  

key Programs has been initialized for jobs, health, education,

infrastructures and rural communities.  

The pursuit of a re-balance in public finance is also projected, the

objective is to bring the deficit to 5.5% of the GDP. 

India remains a poor country: the GDP per capita is low, almost

25% of the population still lives below the poverty line and the

inequalities are very strong.

FOREIGN DIRECT INVESTMENT [FDI]

Thanks to its many assets, especially a high specialization in services,

with skilled, English-speaking and inexpensive labor force, and a potential

market of one billion inhabitants, India is a country that welcomes more

and more foreign investment.  

The inflow of FDI in India registered a record of  USD 40 billion in 2008,

and the FDI has remained, since then, very stable.  

In the global economy crisis, the foreign investors tried to limit their

exposition in the surging markets. However, there was not a decline of

FDI in India.  

According to the UNCTAD report, India is placed in third position

in terms of FDI inflows in 2009.

FDI GOVERNMENT MEASURES

The government has set up tax and non-tax incentives to establish

new industrial such as energy, ports, highways, electronics and

software.

The government has also created special areas dedicated to export,

called export-processing zones (EPZs) or special economic zones

(SEZs), to encourage foreign investment.

The central government development banks and state industrial

development banks offer medium to long-term loans and sometimes

invest their own capital in new projects.

The government has set sector-specific ceilings on foreign assets in

certain industries, such as basic and cellular telecommunications

services, banking, retail and civil aviation.

COUNTRY STRONG POINTS A three-tiered democratic system with a stable political

environment;

A well developed administration and an independent judicial

system;

A vast geography making India a repository of resources;

An unparallel resource of an educated, hard-working and skilled

work force, which includes engineers, management personnel,

accountants and lawyers;

A ever growing consumer base making it one of the world's

largest markets for manufactured goods and services;

A dynamic and robust financial system consisting of a

comprehensive banking network, a number of financial institutions

both at the national and State levels as well as a vibrant financial

market;

An economy that will continue to grow despite the international

economic crisis.

COUNTRY WEAK POINTS

The corruption (particularly at the federal level)

Political pressures; 

Restricted FDI in certain sectors;

The weakness of infrastructures;

Inadequate security & safety in certain areas. 

FOREIGN TRADE OVERVIEW India was a protectionist state for a long time, but recently the

country has become progressively more open to international

trade.  

India has signed free trade agreements with South Korea and the

ASEAN, and has entered into negotiations with several partners

(EU, MERCOSUR, Australia, New Zealand, South Africa). 

India recorded a high commercial deficit due to the price rise of

raw materials which increased the import invoices.  

India have recorded a lower progression during the last recent

years due to the rise of the rupee in relation to the dollar (most of

the exports are drawn up in dollars) and the decline of the global

demand.

During the economic crisis, exports dropped at a slower rhythm

than imports, creating a reduction of the commercial deficit. 

The main trade partners of India are the European Union, the

United Arab Emirates, China and the United States. 

ADVIKA DWIVEDI

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