India's Expanding Role in the Global Economic Landscape

Sustained economic growth and significant progress in poverty reduction over the past decade have strengthened India's integration into the global economy, reinforcing its position as a major economic force. With its expanding market potential and growing investment appeal, India is increasingly becoming a focal point for global businesses seeking new opportunities. Supported by a favourable demographic dividend, rapid digital transformation, and a strong focus on manufacturing and innovation, India’s role and influence in the global economic landscape continue to expand.

India's Economic Momentum: Powered by Resilience and Global Confidence

• India's real GDP is projected to grow by 7.6% in FY26, compared with 7.1% in FY25, while nominal GDP is estimated to expand by 8.9%.
• Merchandise exports reached an all-time high of USD 441.78 billion in 2025-26.
• Engineering exports rose by 4.86% in FY 2025–26, reaching USD 122.43 billion from USD 116.75 billion in FY 2024–25.
• Cumulative FDI inflows amounted to USD 1.14 trillion between April 2000 and December 2025.
• Total FDI inflows in FY26 stood at USD 94.52 billion, with FDI equity inflows accounting for USD 58.84 billion.
• FDI inflows into miscellaneous mechanical and engineering industries totaled USD 4.92 billion during Jan 2000 to Mar 2026.
• Actual Overseas Direct Investments (ODI) outflows amounted to USD 16.27 billion during 2025-26 (April-October).
• India signed Free Trade Agreements with the UK, Oman, New Zealand marking a significant milestone in strengthening bilateral trade and investment ties.
• India’s ranking in the World Bank’s Logistics Performance Index improved from 44th in 2018 to 38th in 2023, reflecting enhanced trade infrastructure and efficiency.

Advantage India

Business-friendly government

• A reform-oriented government is actively driving growth through a mix of investment-friendly reforms and coordinated monetary and fiscal policies.
• Innovative policy initiatives have been launched to boost business sentiment and attract global enterprises to the Indian market.

Economic progress in recent years

• India continues to be among the fastest-growing major economies, with nominal GDP expanding from USD 1.75 trillion in FY15 to USD 3.91 trillion in FY26 (Second Advance Estimates).
• India has made significant strides in poverty reduction, with 415 million people moving out of multidimensional poverty between 2005 and 2021, according to the UNDP’s 2023 Multidimensional Poverty Index report.

Demographic dividend

• With over 65% of its population under 35, India has a large and dynamic workforce with the potential to drive productivity and economic growth.
• According to the United Nations Population Fund (UNFPA), India is set to remain one of the youngest countries until 2055.
• India's working-age population is expected to grow to 1 billion by 2047, sustaining the demographic dividend well into the next few decades.

Promise for World-Class Infrastructure: Plethora of Opportunities for Global Investors

• India’s infrastructure sector is poised for strong growth, supported by planned investments of USD 1.4 trillion by 2025.
• The National Infrastructure Pipeline (NIP) was launched to mobilise large-scale investments across critical sectors, including energy, roads, railways and urban development.
• Significant efforts have been undertaken to expand and modernise the National Highways network through flagship programmes such as the Bharatmala Pariyojana, which subsumes initiatives including the National Highway Development Project (NHDP) and the Special Accelerated Road Development Programme for the North-East Region (SARDP-NE).
• Under the UDAN scheme, 220 destinations, including airports, heliports and water aerodromes, are targeted for development by 2026, with 1,000 routes planned to enhance air connectivity across underserved regions.
• The USD 1.3 trillion Gati Shakti National Master Plan has emerged as a key initiative to drive integrated infrastructure planning and improve efficiency across the infrastructure ecosystem.
• More than 80% of the country's infrastructure spending has gone toward funding for transportation, electricity, and water and irrigation.
• The Union Budget 2026–27 aims to strengthen India’s long-term growth trajectory through increased public investment, infrastructure development and greater private sector participation, aligned with the vision of Viksit Bharat @2047.

Noticeable Improvement in Business Sentiment

• Over the years, the Indian government has launched several initiatives to strengthen the national economy. These policies and programmes have played a key role in enhancing financial stability for citizens while supporting overall economic growth. India’s rapid economic expansion has significantly boosted its demand for exports.
• A number of the government's flagship programmes, including Make in India, Start-up India, Digital India, the Smart City Mission, and the Atal Mission for Rejuvenation and Urban Transformation are designed to unlock substantial opportunities across the country.
• India ranked 38th among 139 economies in the Global Innovation Index 2025, reflecting its growing innovation capabilities.
• The Production Linked Incentive (PLI) programme has strengthened India’s manufacturing ecosystem by promoting domestic value addition and enhancing competitiveness across priority sectors.
• Under the Export Promotion Mission, the Government introduced key measures to support MSME exports, including a 2.75% interest subvention on pre- and post-shipment credit and collateral guarantee coverage of up to 85% through CGTMSE.

Rising Economic Influence

• The Indian economy continues to rank among the fastest-growing major economies globally, supported by broad-based growth across manufacturing, services and infrastructure, along with steady improvements in industrial and business activity.
• Infrastructure remains a key pillar of India’s economic development, reinforcing its position as an emerging global economic power. The National Infrastructure Pipeline (NIP), along with other strategic initiatives, is playing a critical role in accelerating infrastructure growth and investment.
• India continues to expand its renewable energy capacity and has achieved a significant clean energy milestone by generating 50% of its power from renewable sources, five years ahead of its 2030 target.
• India is advancing towards its Net Zero Emissions target by 2070 through the five-pronged climate action strategy, ‘Panchamrit’.
• India’s external sector demonstrated resilience in FY26 despite a challenging global trade environment.

India at a Glance

Indicators (Calendar-year wise)

Indicators (Fiscal-year wise)

Source: IMF; D/o Commerce, Govt. of India; DPIIT, GoI, *Provisional, @(up-to Nov) (P)

Foreign Trade Policy 2023: A Concrete Plan to Strengthen India's Global Grip

• A unique and more flexible policy with no time limit attached
• Promotes international trade settlement in Indian Rupees
• Focuses on export promotion through coordination among exporters, states, districts, and Indian Missions abroad
• Simplifies SCOMET licensing procedures to ease high-tech and dual-use item exports
• Supports e-commerce exports by planning designated export hubs
• Prioritizes manufacturing growth to enhance export competitiveness
• Special one-time Amnesty Scheme for default in Export Obligations

India's Participation in Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs)

Major investments in recent years

• The electronics and IT hardware sector received the highest PLI budget allocation at USD 1.02 billion, followed by automobiles and auto components at USD 318 million) and pharmaceuticals at USD 275.9 million for FY26.
• Co-working space providers, including Urban Vault, Incuspaze, The Executive Centre and Awfis, are increasing investments in ESG (Environmental, Social and Governance) practices to meet the growing demand for sustainable workplaces.
• Emirates NBD Bank acquired a controlling stake in RBL Bank through a USD 3.0 billion primary capital infusion, marking the largest foreign direct investment in India’s financial services sector.
• In March 2026, Infosys announced the acquisition of US-based Optimum Healthcare IT, strengthening its capabilities in healthcare digital transformation and expanding its presence in the provider segment through AI-powered cloud and consulting solutions.
• Reliance Industries completed the merger of Star Television Productions Ltd (STPL) into Jiostar India Private Ltd, consolidating the ‘STAR’ brand within its media joint venture with The Walt Disney Company in December 2025.
• Jio Financial Services Limited (JFSL) and Allianz, Germany, incorporated Allianz Jio Reinsurance Limited (AJRL) as a joint venture to operate in India’s reinsurance market.
• In October 2025, Chennai-based Trusted Aerospace Engineering (TASE Global) acquired US-based Joined Alloys for USD 12.7 million, enhancing its aerospace manufacturing and specialised process capabilities.
• In September 2025, Tata Advanced Systems Limited inaugurated an advanced armoured vehicle manufacturing facility in Berrechid, Morocco, marking a significant milestone in India’s overseas defence manufacturing presence.
• Wheels India Limited’s expanded into Europe with a capital infusion into its wholly owned subsidiary, WIL Europe GmbH, incorporated in Germany in July 2025.
• Tata Motors has re-entered South Africa’s passenger vehicle market after a six-year hiatus, launching three SUV ranges and a compact hatchback.
• In April 2024, Infosys acquired Germany-based In-Tech, an engineering R&D services provider specialising in e-mobility, autonomous driving and electric vehicle technologies.

Recent Developments

• India ranked 38th among 139 economies in the Global Innovation Index 2025, marking a significant improvement from 81st position in 2015.
• India’s industrial GVA recorded a 7.0% year-on-year growth in H1 FY26, accelerating from FY25, with manufacturing GVA witnessing strong expansion in both Q1 and Q2, reflecting strengthening domestic production capabilities.
• Strategic self-sufficiency efforts have accelerated in critical minerals, semiconductors, shipbuilding, alongside broader resilience across energy and defence ecosystems, reflecting lessons from recent supply-chain disruptions.
• In December 2025, Google announced AI-focused investments and collaborations to accelerate India’s artificial intelligence ecosystem, including USD 8 million in funding for four government-backed AI Centres of Excellence in healthcare, education, urban governance and agriculture.
• As of March 27, 2026, India’s foreign exchange reserves reached Rs. 65,20,745 crore (USD 688.05 billion).

Way Forward

Ambitious targets to facilitate business and to attract investments:

• India is poised to become third largest with projected GDP of USD 7.3 trillion by 2030.
• India has set itself an audacious goal to become a $30 trillion economy by 2047 under the ‘Viksit Bharat 2047’ initiative.
• Merchandise exports is also targeted to reach USD 1 trillion by 2030–31.
• India is also emerging as a significant player in high-value exports.
• The engineering industry has been de-licensed and allows 100% foreign direct investment (FDI).
• India’s automotive industry is worth more than USD 222 billion and is set to become the 3rd largest in the world by 2030.
• India’s machine tools market size is projected to reach USD 3.51 billion by 2034.
• The Indian electrical equipment market is set to experience significant growth in the coming years, with a forecasted incremental growth of USD 76.24 billion at a CAGR of 14.3% from FY24 to FY28.
• India’s digital economy is projected to account for 20% of GDP by 2029-30.
• India’s manufacturing sector continues to strengthen, with the potential to reach USD 1 trillion by FY26.