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Successfully investing in India

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​​​​​​​​last updated on 3 September 2025 | reading time approx. 4 minutes

 

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How do you assess the current economic situation in India?

India, which recorded economic growth of around 6.7 percent in the first quarter of 2025, has extremely positive prospects. The country is now the fastest growing economy in the world, ahead of China. The current annual GDP of just under US dollar 3.91 trillion is set to rise to US dollar 10 trillion by 2030 and to US dollar 30 trillion by 2047. India’s emergence as a rising economic power is both impressive and strategically important. The country has come a long way in the last decade, evolving from the "fragile five" to an emerging economic power. India's current account deficit has fallen to 1.2 percent of GDP in 2024, and current inflation stands at 3 percent. Since April 2000, foreign direct investment in India has totalled over US dollar 1 trillion. By December, the country recorded FDI inflows of around US dollar 40.7 billion in 2024 - an increase of 27 percent year-on-year and a clear sign of continued international investor confidence. The important "three Ds" – data, digitalization and demographics – are the main reason for this growth trajectory.

 

How would you describe the investment climate in India? Which sectors offer the largest potential?

The investment climate in India is promising and India is keen to attract even more investment, particularly in key sectors. The expansion of public infrastructure has great potential, as the structures that India has created in recent years are sustainable and designed for further growth. Government agencies have also been created at national and state level to provide structured analyses and data to foreign investors. They are intended to promote direct investment and are also available for a dialog with foreign investors on individual investment options and opportunities. The MAKE IN INDIA initiative is a consistent long-term strategy of the Indian government to promote increased value creation in the country through foreign investment, particularly in the domestic manufacturing sector, and MAKE IN INDIA MITTELSTAND is a platform specifically tailored to the German economy. 
India's fastest growing and therefore most important economic sectors are currently:
  • IT, financial services, telecommunications
  • Healthcare industry 
  • Consumer goods
  • Infrastructure

What challenges does a German entrepreneur face when doing business in your country?

India's ranking in the "ease of doing business" category is improving year on year and the framework conditions for investment in 2025 have improved dramatically in most areas of the Indian economy in recent years. For example, the government has made massive progress in digital administration and the provision of public services. Nevertheless, challenges remain, which vary significantly depending on the sector, location and size of the planned company. 

To successfully master these challenges, it is important to strategically plan market entries or changes to the existing business model, to subject any existing structures used to a thorough due diligence and, in any case, to be patient and committed to the entire process. 

Some of the common challenges that foreign investors regularly face in India are as follows:
  • Lack of reliable infrastructure – Although significant progress has been made, India's public infrastructure, including roads, railroads, airports, seaports, electricity and telecommunication networks, poses a significant challenge to the country's growing economy and its public administration. In order to close the gaps that still exist in this regard, the Indian government continues to allocate significant portions of its budget to infrastructure projects.
  • Shortage of well-trained workers – The search for suitable talent continues to be a challenge, especially for small and medium-sized companies. A skilled workforce contributes to economic growth and India's national education policy aims to provide vocational training to around 50 percent of all students by 2025. In addition, the "Skill India Mission", a flagship initiative of the Indian government, has been teaching market-relevant skills to the country's youth since 2015 and thus aims to promote a productive workforce. 
  • Highly diverse market environment – The sheer size and diverse fragmentation of the Indian market can be a challenge for investors and companies. The diversity of Indian states, cultural and legal differences and varying interpretations of applicable laws must be recognized and mastered, although many states are seeking to establish relevant regulations and policies for foreign investment beyond their own borders. However, the intense competition in the Indian market in various sectors is often balanced out by the continuing massive economic growth.
  • One-stop permitting – Bureaucratic hurdles and delays in obtaining necessary permits, licenses and approvals for numerous business activities continue to impact companies. Dealing with these inefficiencies can slow down decision-making processes and increase operating costs. However, even in this context, the Indian government's reform efforts in recent years are making themselves felt and a positive development can be anticipated. 

In summary, sound local knowledge of laws and best practices as well as persistence and disciplined follow-up are proven strategies for the timely implementation of investment and expansion plans in India. In combination with an appropriate lead time and a suitable choice of location, even complex "greenfield" investment projects can be completed within a timeframe comparable to European projects and, in many cases, even faster than in Germany.

Product certifications are becoming increasingly important: how important is BIS certification in India in this context?

BIS certification is now mandatory for the market access of numerous products in India. The Bureau of Indian Standards (BIS) is the central authority for standardization, product safety and certification in the country. The certification requirement applies to both imported and locally produced goods – although local manufacturers can generally go through the process more easily. Without valid BIS certification, the import, sale and labelling of such products is not (or no longer) permitted in India. The background to this new requirement for many foreign exporters is the aforementioned MAKE IN INDIA initiative, with which the Indian government aims to strengthen domestic industry. For European companies, however, BIS certification is not only a regulatory hurdle but can also represent a strategic competitive advantage - especially if competitors are not (yet) certified.

A current example of the extension of the certification obligation is the new "Scheme X" procedure, which was originally scheduled to apply to a large number of technical products from August 28, 2025. These include pumps, compressors, centrifuges, filter and cleaning machines, cranes, transformers and switching and control devices. However, the Ministry of Heavy Industries has since extended the effective date of this regulation to September 1, 2026, providing manufacturers and exporters with additional time to comply. Scheme X is an extended certification process that involves a comprehensive application, product testing in accredited Indian testing laboratories and factory inspections by BIS inspectors. Only after successful completion is a license to use the BIS mark issued.

Companies should take into account the sometimes-long processing times and submit their applications early in order to avoid delays in market access. BIS certification is therefore a key regulatory requirement and hurdle that must be considered when exporting technical products to India. 

   

How do you think India will develop?

India will continue to develop dynamically. The economic growth rate is unlikely to fall below 6 percent per year, and the inflation rate is also increasingly moving towards a healthy level. German and European companies continue to recognize the enormous potential that India offers as a production and procurement location. As a result, many German companies are currently investing more heavily in India, as India remains one of the global markets of the future and is therefore an extremely attractive location for internationally active companies.  
Conclusion: India is on the verge of another economic boom and is a great market for German companies that should definitely be explored. However, it is usually not enough to develop market strategies based on the "lessons learned" from other countries. The Indian market offers unique opportunities but also places equally unique demands on companies willing to invest. If internationally active companies are prepared to accept these, India offers enormous potential that numerous companies of all sizes have successfully demonstrated in recent years and decades.​

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