A $5 trillion market: Why are investors attracted to India
India is planning to become a $5 trillion economy by 2025. Why is Parimatch in no hurry to invest?
The Indian companies Reliance Industries, TATA Consultancy Services, Hindustan Unilever (HUL), Infosys, and LIC India are the country’s largest businesses, annually investing millions of dollars in its economy. Parimatch contemplates bringing new competitive products to this market, but barriers to doing business in India interfere with this intention.
India’s largest companies and their contribution to the country’s economic development
India is a fast-growing economy and home to some of the world’s most valuable companies. Its potential of becoming a $5 trillion market makes many enterprises consider the prospects of doing business in the country, and the international betting company Parimatch is no exception.
The said enterprises operate in various sectors of economy, including technology, finance, and consumer goods. According to Forbes magazine, such giants as Reliance Industries, TATA (TCS), HDFC Bank, ICICI Bank, Bharti Airtel, State Bank of India (SBI), Infosys, LIC India, Hindustan Unilever (HUL), and ITC India have an aggregate market capitalization of INR 96.58 trillion.
Source: Forbes India
Let us take a look at the factors that make India’s market an obvious investment destination.
GDP and economic growth
During the last three years, India’s GDP has never fallen below 4% and is expected to reach 7.75% in Q4 2024, Business Today reports. This shows the resilience and dynamism of the country’s economy.
Source: Business Today
Foreign direct investment
In 2023 and 2024, the total foreign direct investment (FDI) inflow in India has reached USD 990.97 billion, proving international investors’ interest in the country’s market, Invest India states. These investments contribute to the development of various sectors of the economy and the creation of new jobs, which, in turn, drives further economic growth.
Infrastructure investments
The Indian government puts big effort in infrastructure development. It has initiated the National Infrastructure Pipeline (NIP) program, which is to attract investments amounting to over $3 093.51 billion in various economy sectors, such as power, urban infrastructure, road and railway construction. This is an important step towards the goal of becoming a $5 trillion economy by FY2025.
India’s youth population
India has the world’s largest population of teenagers and young adults. By 2030, the country’s population is expected to be one of the youngest in the world, creating great potential for economic growth and innovation. To top it off, India has the third-largest pool of scientists and engineers globally. This gives the country a significant competitive advantage in terms of innovation and technology, which also is an important factor for investors. Parimatch recognizes the attractiveness of India’s market, even though the company has not entered it yet.
Source: Invest India
Global competitiveness
India has been ranked 39th on the Global Competitiveness Index 2024 and 38th on the World Bank’s Logistics Performance Index 2023. These figures show the country’s growing competitiveness in the global market.
Global Innovation Index 2023
India’s ascent to 40th position on the Global Innovation Index indicates the high level of innovation activity in the country. According to Tesla owner Elon Musk, the high-tech company would also like to make its own innovative products in the India’s market. Unfortunately, neither Tesla nor the Parimatch betting company are able to invest in the country, even though it looks much more promising to these companies than China and many other states.
Economic impact on the global stage
By 2030, India and China will become the world’s largest manufacturing hubs, shifting the center of global maritime trade from the Pacific to the Indian Ocean region. Over the next five years, India’s economic influence in the Asia-Pacific region will grow, making it a major player on the global economic stage.
Obstacles for investors
All the excitement about India among global investors comes with a hitch, the New York Times notes. Investment by Indian companies is not keeping pace. The money that companies put into the future of their businesses, for things like new machines and factories, is stagnant. As a fraction of India’s economy, it is shrinking. And while money is flying into India’s stock markets, long-term investment from overseas has been declining.
In 2023, despite it being an economically successful year for India, the volume of foreign investment in the subcontinent decreased by 29%. According to the New York Times forecasts, in 2024, it will not exceed $12 billion, which is significantly less than in mid-2021, when the investments reached a 12-year high of $55 billion.
According to Taxguru, the government course on import substitution is to blame. “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. To that end, the company keeps looking for ways to overcome these challenges.
Issues Parimatch faces 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, it ran into serious problems related to the deteriorating business environment in India. In particular, Parimatch has encountered counterfeiting of its brand. The infringing company 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 the country and deters foreign investment.
India’s desire to overtake China
India is a promising market for investment. Companies like Parimatch recognize the great opportunities their products and services can enjoy in the country, in turn helping further strengthen India’s economy. As a reminder, the government of Prime Minister Modi, who recently won the national elections, has announced its intention to catch up with China and aims to make India the world’s third-largest economy after the US and China by 2047.
