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Investments in these Sectors Help India Become a $5 Trillion Economy   

To achieve this target, the government emphasised on developing and infusing money in several sectors viz. infrastructure, finance, agriculture, and MSME.
BY Jaspreet Kaur
Feature Writer, BusinessEx
Aug 21,2019

In Union Budget 2019, the Indian government pronounced to make India a $5 trillion economy in the next 5 years. To achieve this target, the government emphasised on developing and infusing money in several sectors viz. infrastructure, finance, agriculture, and MSME. An important thing, which was overlooked by the government, was how to surge global investment in the country's economy.   

According to the database company, Trading Economics, Foreign Direct Investment (FDI) in India stands at $7,001 million currently. There has been a whopping increase in FDI as in the first quarter of 2019, where an FDI of $4,676 million was recorded.  

Surging global investment, in turn, is creating a positive impact on the Indian economy and strengthening its growth prospects. Apart from backing homegrown Indian startups, foreign companies need to focus on other sectors as well. In contemporary times, major issues such as joblessness, gender inequality, and suffering middle classes should be addressed by the Indian regime. Besides, global investors should infuse in sectors, which could increase employment and emanate other positive changes.

Three Areas to Focus for Achieving a $5 Trillion Economy 

To enhance the Indian economy, investment should be made in three specific areas--infrastructure, bourgeoisie class, and technology. A rise in the economy can be witnessed if investments are made in these areas.  

 

1. Infrastructure Sector 

 

In the present time, the Indian government is widely spending in the infrastructure sector. According to IBEF (India Brand Equity Foundation), “the Government of India has given a massive push to the infrastructure sector by allocating INR 4.56 lakh crore (US$ 63.20 billion) for the sector.”  

Further, the IBEF’s report states that the government allocated INR 83,015.97 crore in road transport and highway in Union Budget 2019-20. To surge capacity of Green Energy Corridor Project along with wind and solar power projects.

The government is now shifting focus on producing more solar energy. “India has expanded its solar generating capacity eightfold since 2014 and achieved the target of 20GW of capacity four years ahead of schedule. India plans to catalyse $200–$300 billion of new investment in renewable energy infrastructure over the next decade,” according to the business magazine, Harvard Business Review (HBR). 

Seeing future prospects in the infra sector, many foreign companies have participated in this sphere--JCB, AECOM, and Cummins, to name a few. For achieving a five trillion dollar target, the government would have to enable foreign investment in this domain. With the increment in FDI, high-tech infra solutions and economic growth can be possible.

  1. Bourgeois in India 

For becoming successful in the Indian market, foreign companies, which primarily deal in the consumer market, need to focus on the middle class. Firstly, companies grapple coping with the Indian economy as the country is a developing nation. So, the business strategies, which are deployed in the developed nations, could not work well in India. Thus, before making investments, overseas companies need to study the Indian marketplace and apprehend the needs of the common masses. 

In the past, many overseas companies have used this strategy and in turn, create their marks on the Indian land. Foreign companies viz. Samsung, Amazon, Xiaomi, and Renault have understood the consumer market and then created products concentrating on bourgeois classes. On the other hand, companies, which have not apprehended the Indian market, employed similar strategies that they use in developed nations. American technology firm Apple forayed in India a decade ago. Over the period, the company has aimed at affluent consumers rather than middlemen. Therefore, “Apple’s iPhone has a 2 per cent market share, while Samsung and Xiaomi lead the market with 23 per cent each,” according to the international magazine, HBR.   

HBR’s report further stated, “challenging as India is, the bigger challenge for most global companies is learning to adapt their approaches to other markets rather than copying and pasting their developed market models across the world. To succeed in India, companies must be willing to take a clean sheet of paper and start designing to the middle of the pyramid.” 

  1. Technology Startup Companies 

India has one of the largest startup ecosystems in the world. Amid this ecosystem, tech startups are booming and coming up with innovations. Several factors are contributing to the rise of tech startups in the Indian business ecosystem. Firstly, the creation of “India Stack” has led to a surge in digital payments. According to the database company, Statista, “the market's ( Indian market) largest segment is Digital Commerce with a total transaction value of US$58,812m in 2019.”

Secondly, with the advent of Reliance Jio, availing the internet has become easier for middle-sized consumers now. Further, investment in technology helps resolve various problems in the nation such as financial services, healthcare services and education. 

 

Foreign investors need to realise the growth potential of the above-mentioned sectors and accordingly, make FDI investments in India. 



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