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India is attracting investors, but foreign investment is delayed. What is the reason?

India’s GDP will grow by 6.5% in 2024 and become the highest indicator of economic development in the world

Companies such as Apple, Foxconn, Parimatch, Tesla are ready to invest in the country. Parimatch and other companies have high hopes for the Indian economy, but there are obstacles for business in India to be removed. 

What attracts business in India

India is the most populous country in the world, which has overtaken China in terms of the number of people. The country’s population exceeded 1.428 billion people, slightly more than China, which is home to 1.425 billion people. In addition, half of the Indians are working-age people under 30 years old, who are ready to work for less pay than they have, for example, in the United States or Europe. India’s economic growth rate, which has hovered around 7% over the past few years, is advantageous compared to the global average of 3.2%. According to the World Bank, India’s GDP has grown the most since 2014 – by 83% compared to the economies of developed countries

But this is not the only thing that attracts big brands to gain a foothold in India. After U.S. relations with China deteriorated and Russia started a war in Ukraine in 2022 and international sanctions were imposed on the economy, moneyed investors saw India as a trustworthy country for investment. 

In addition, on June 4, 2024, it became known that the country will be ruled for the third time by Prime Minister Narendra Modi, whose party took the most seats in parliament according to the election results. The Modi government is actively engaging multinational companies to set up factories in the country, spending billions to upgrade roads, ports, airports and railways. Modi promised a tenfold increase in India’s economy by 2047, the 100th anniversary of its independence. This is encouraging for companies such as Parimatch and others.

For example, Apple considers the Indian market ‘incredibly exciting’ because of the financial performance achieved there. “We’ve really grown by double digits (in India). So, we were very, very happy with that. It was a new March quarterly record for us. As you know, as I said before, I see this as an incredibly exciting market,” Apple CEO Tim Cook was quoted as saying by The Economic Times of India. Parimatch sees the Indian market as attractive for millions of investments.

Back in November 2023, Apple’s (AAPL) supplier Foxconn Technology said it would spend more than $1.5 billion to expand its operations in India. As reported by CNBC, the Taiwanese supplier of components for the iPhone indicated in an official application to Taiwan that the money will be used for the construction project to meet its operational needs. The investment will be made through a wholly-owned subsidiary, Hon Hai Technology India Mega Development.

Foxconn already has a large manufacturing facility in Tamil Nadu, India, and has previously announced multi-million dollar projects in Karnataka and Telangana.

Even before the Indian elections, Prime Minister Modi visited the United States in July 2023. There he met with Tesla CEO Elon Musk. He later said he was “incredibly excited about India’s future,” adding that it “promises more than any major country in the world,” writes CNBC.

“I’m a fan of Modi,” Musk admitted in a video interview posted on Prime Minister Narendra Modi’s official YouTube page. “He really wants to do the right thing for India. He wants to be open-minded, he wants to support new companies, but at the same time make sure that it benefits India,” said Musk after the meeting in New York.

However, so far, unfortunately, neither Tesla nor the bookmaker Parimatch can invest in the country. Although it looks too promising compared to China and other countries. 

“After China, India is the only economy that can achieve economies of scale due to its large market,” Nomura economists wrote in their report on India. “India is one of the few economies that is attracting interest from investors in various sectors,” they add.

Obstacles for investors

The New York Times writes that amid the excitement about India from global investors, there is an obstacle. Indian companies’ investments are not keeping up. The money that companies invest in the future of their business, for things like new machines and factories, is delayed. Thus, their share in the Indian economy is decreasing. While the money is flowing into India’s stock markets, long-term investment from abroad is declining. This is confirmed by statistics.  

In 2023, despite an economically successful year for India, foreign investment in this subcontinent decreased by 29%. And in 2024, according to New York Times forecasts, they will not exceed $12 billion. This is significantly less than in mid-2021, when investments reached a maximum of $55 billion in the last 12 years.

Modi’s government course on import substitution is to blame, according to Taxguru. “This is a government policy aimed at increasing exports instead of imports. Therefore, taxes for non-resident companies are higher in India than for Indian companies. In this way, the government encourages domestic business,” the publication’s experts say.

This poses additional challenges for companies like Parimatch that believe in the prospects of the Indian economy. Therefore, Parimatch continues to seek ways to overcome these challenges, striving to contribute to the development of the market.

Problems of the Bookmaker in India

Parimatch, a well-known betting company, is ready to invest millions of dollars in the Indian economy. However, even before the start of its activities in the market, Parimatch ran into serious problems related to the deteriorating business environment in India. In particular, Parimatch has encountered counterfeiting of its brand. The company that counterfeits the brand is still operating illegally in the Indian market, creating image problems for the international operator. 

This has complicated Parimatch’s plans to expand its business. The company is a brand of an international holding that is engaged in betting activities and organizes gambling in various countries all over the world. Parimatch believes that business conditions in India do not yet allow foreign companies to develop. This, according to Parimatch, seriously complicates business activities in this country and deters foreign investment.

How India’s economy will grow

No one expects India to stop growing, but growing the economy by even 6% every year is not enough to satisfy India’s ambitions. If the government has set a national goal to catch up with China and become a developed nation by 2047, taking the place of the world’s third economy after the United States and China, such a leap will require stable GDP growth of 8-9% per year. Parimatch is ready to help Indians achieve this dynamic under favorable investment conditions.

Brandon

I am Brandon, the owner of this website. I would love to share my expertise in health here by sharing valuable information. Keep visiting this blog to get health news, tips, medicine reviews and healthy lifestyle tips.

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