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- India is developing into an open market economy, the country's growth has accelerated since the early 1990's, which has averaged more than 7% per year since 1997. India's diverse economy encompasses traditional village farming, modern agriculture, handcrafts, a wide range of modern industries, and a multitude of services.
- In 2010, the Indian economy rebounded robustly from the global financial crisis, in large part because of strong domestic demand and growth exceeded 7% year on year.
- However, India's economic growth in 2011 slowed because of persistently high inflation and interest rates and little progress on economic reforms.
Gross Domestic Produce (GDP)
- The economy of India is the 11th largest in the world by nominal GDP and one of the fastest growing economies in the world. India has a recorded growth of over 200 times in per capita in a period from 1947 to 2011.
- The growth was led primarily due to a huge increase in the size of the middle class consumer, a large labour force and considerable foreign investments.
- Economic growth rate stood at around 6.5% for the 2011-2012 fiscal year however has been sharply declining.
Statistics
| GDP | $4.457 trillion (PPP: 3rd; 2011)[1] |
|---|---|
| GDP growth | 6.5% (FY 2012)[2] |
| GDP per capita | $3,694 (PPP: 129th; 2011)[1] |
| GDP by sector | agriculture: 18.1%, industry: 26.3%, services: 55.6% (2011 est.) |
| Inflation (CPI) | 7.55% (May 2012)[3] |
Population
Imports and Exports
- India is currently the world's second largest country with 1.21 billion. India crossed the one billion mark in 2000, one year after the world's population crossed the six billion mark.
- India represents a full 17% of the earth's population, India is expected to surpass the population of China, which is currently the most populous country in the world, by 2030.
- At that time, India is expected to have a population of more than 1.53 billion while China's population is forecasted to be at its peak of 1.46 billion.
- India's population has tripled since the country's independence from the United Kingdom sixty years ago in 1947, when the country's population was a mere 350 million.
- in 1950, India's total fertility rate was approx 6 children per woman, however since 1952 India has worked to control its population gowth. In 1983, the goal of the country's national health policy was to have a replacement value total fertility rate of 2 by the year 2000; which did not occur.
- India's high population growth results in increasingly impoverished and sub standard conditions for growing segments of the Indian population.
Imports and Exports
- The value of India's international trade has increased sharply with the contribution of total trade in goods and services to the GDP rising from 16% in 1990-91 to 47% in 2008-10.
- India accounts for 1.44% of exports and 2.12% of imports for merchandise trade and 3.34% of exports and 3.3.1% of imports for commercial services trade worldwide.
- India's major trending partners are the European Union, China, USA and UAE.
- Major export commodities included engineering goods, petroleum products, chemicals and pharmaceuticals, gems and jewellery, textiles and garments, agricultural products, iron ore and other minerals.
- Major import commodities included crude oil and related products, machinery, electronic goods, gold and silver.
| Exports | $303.7 billion (2011 est.) |
|---|---|
| Export goods | petroleum products, precious stones, machinery, iron and steel, chemicals, vehicles, apparel |
| Main export partners | US 12.6%, UAE 12.2%, China 8.1%, Hong Kong 4.1% (2010) |
| Imports | $488.6 billion (2011 est.) |
| Import goods | crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals |
| Main import partners | China 12.4%, UAE 6.5%, Saudi Arabia 5.8%, US 5.7%, Australia 4.5% (2010) |
- In November 2010, exports increased 22.3% year on year (US $16.97 billion), while imports were up 7.5% at (US $24.96 billion).
Percentages of Export Sectors
Current Economic Factors
- Goldman Sachs predicts that from 2007 to 2020, India's GDP per capita in US dollars will quadruple and that the Indian economy will surpass the United States by 2043.
- In spite of the high growth rate, the report sated that India would continue to remain a low income country for decades to come.
Unemployment
- India's unemployment decreased in 2008 despite the global slowdown, however this then increased rapidly in 2010.
- Agricultural and allied sectors accounted for about 52.1% of the total workforce in 2009-10. While agriculture has faced stagnation in growth, services have seen a steady growth.
- Government schemes that target eradication of both poverty and unemployment (which in recent decades has sent millions of poor and unskilled people into urban areas in search of livelihood) attempt to solve the problem, by providing financial assistance for setting up businesses, skill honing, setting up public sector enterprises, reservations in governments etc.
Year - Unemployment Rate
2002 - 8.8%
2003 - 9.5%
2004 - 9.2%
2005 - 8.9%
2006 - 7.8%
2007 - 7.2%
2008 - 6.8%
2009 - 10.7%
2010 - 10.8%
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
| 2005 | 5.7% | 5.3% | 4.8% | 4.5% | 4.5% | 5.1% | 5.3% | 4.9% | 4.8% | 4.2% | 4.0% | 3.3% |
| 2006 | 3.5% | 3.4% | 3.2% | 3.2% | 3.5% | 4.3% | 4.8% | 5.0% | 4.9% | 4.2% | 4.3% | 3.9% |
| 2007 | 4.5% | 4.2% | 4.1% | 4.1% | 4.5% | 5.7% | 6.4% | 6.7% | 7.0% | 6.2% | 5.9% | 5.9% |
| 2008 | 6.2% | 6.0% | 6.2% | 5.9% | 7.1% | 8.1% | 9.1% | 9.7% | 9.8% | 9.0% | 9.2% | 9.1% |
| 2009 | 10.2% | 10.6% | 11.1% | 11.0% | 12.1% | 13.3% | 14.5% | 14.9% | 14.5% | 14.0% | 13.3% | 12.8% |
| 2010 | 13.4% | 13.0% | 12.8% | 12.5% | 12.8% | 13.8% | 14.6% | 15.6% | 14.5% | 13.6% | 13.5% | 13.5% |
| 2011 | 12.8% | 12.2% | 12.0% | 11.8% | 12.4% | 13.4% | 14.0% | 13.9% | 13.4% | 12.5% | 11.8% | 11.1% |
| 2012 | 10.8% | 10.2% | 9.8% | 9.9% | 10.4% |
Inflation
- India's Inflation rate (CPI) stood at 7.55% as of May 2012.
- Historically, from 1969 until 2002, India's inflation rate averaged at 8% reaching an all time high of 34.7% in September of 1974 and a record low of -11.3% in May of 1976.
- A joint venture refers to a business agreement in which parties agree to come together and work together on a project.
- India is witnessing a revolution both in the context of liberalization and globalization of the Indian economy and transacting business through Joint ventures set up with foreign partners across various industry sectors.
- All the joint ventures in India require governmental approvals.
Advantages of joint ventures
The following are the advantages of the Joint Venture structure for a foreign investor:
The following are the advantages of the Joint Venture structure for a foreign investor:
- Established distribution/marketing channels of the Indian partner.
- Available financial resources of the Indian partners.
- Established contacts of the Indian partners which help smoothen the process of setting up operations.
- A JV also offers parties an opportunity to jointly manage the risks associated with new ventures. Through a JV they can limit their individual exposure by sharing the liabilities.
- JVs offer many flexible business diversification opportunities to the partners. A JV may be set up as a prelude to a full merger or only for part of the business.
- Certain market sectors remain restricted for foreign investment and a local partner with a certain shareholding in the company is a regulatory necessity for commencing business and making investments.
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