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India Competitive Position

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India Competitive Position

India Competitive Position

India’s economy has strong fundamentals and is host to several eminent global corporate giants that are leader in their respective fields. According to Global competitiveness report which covers 144 countries, India holds the 71th position. The country ranks higher than many countries in key parameters such as market size (3rd) innovation (49th).

At present India considered being one of the major forces in the global economic market. Though India is a developing economy, its economy has a major impact on Global trading. Many worlds’ leading developed nations are keen to have or expand their ties with India because India is seen as a wonderland for investment. Because of favourable business environment, a good administrative setup, attractive foreign policies and an available abundant skilled workforce as well as attractive incentives make India is as the most preferred destination over other major countries including China.

The Government of India has taken several initiatives to attract foreign investments in India’s diverse sectors. Ministries of different industries have made special attempts to ease rules and regulations related to foreign investment in the industry. Apart from formulating an attractive policy for investors, the ministry also provides guidance to the investors with regards to infrastructure availability, market structure etc.

As per Global competitiveness report (2015-16) India has achieved progress in various pillars vis-à-vis institutions, macroeconomic environment, labour market efficiency and now rank 55th. Red tape seems to be less of an issue than it had been, and government efficiency is equally improving.

(Ranks)

Economy

Ease of Doing Business Rank

Starting a Business Registering Property Getting Credit Protecting Minority Investors
India 130 155 138 42 8
Germany 15 107 62 28 49
Sri Lanka 107 98 153 97 49
China 84 136 43 79 134
Bangladesh 174 117 185 133 88

 

As per World Bank group India’s ranking in ease of doing is way behind China and Germany but India is much ahead in case of getting credit to the investors (42nd) and protecting the interest of Minority investors (8th).

India and China created headlines for the World Bank and the other international organizations by advocating that trade liberalization leads to economic growth. While China opened up its market in 1980s, India followed the suit of its neighbour in 1990s by liberalizing the economic policy and allowing foreign direct investment (FDI) by setting up of Special Economic Zones (SEZs) and InvestorsExport Processing Zones (EPZs). However this magic of liberalization, privatization and globalization (LPG) along with the trade policy reform has not only influenced industries but also the labour force of those countries more particularly in the developing economies which were not prepared enough to abreast the subsequent changes of this deregulation of market.

India’s contribution in GDP through agricultural and service industry is higher than the China which accounts 9.2 and 48.2 in agriculture and service sector respectively. In case of employment generation from different sector India’s major employment generation still comes from agricultural sector followed by services sector which constitutes 49% and 31% respectively. On the other hand in China the service sector contributes 48% to the country’s GDP but constitutes 36 % employment generation which is slightly higher than India’s employment generation in service sector.

India’s relatively lower level of private sector debt and comparatively faster growing population may lead it to outperform China, which has dominated growth among emerging economies. India’s demography helps in boosting a strong economic growth and it can be expected that India will outperform China in terms of economic growth rates over the next few decades.

Sector India China
Agricultural 49 33.6
Industry 20 30.3
Services 31 33.6

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