Successfully investing in India


​​​​​​​​last updated on 7 June 2024 | reading time approx. 4 minutes




How do you assess the current economic situation in India?

India, pegging the last quarter growth over 7 percent, reflects promise of a bright future. The country has become the fastest growing economy in the world, ahead of China. It is set to increase current annual GDP of close to 3.5 trillion US dollar to 10 trillion US dollar by 2030 & to 30 trillion US dollar by 2047. The picture of emerging India is not just enviable but immensely transformational. From fragile five to first five, the country has come a long way in last decade to become an emerging economic powerhouse. India’s Current Account Deficit has narrowed to 1.9 percent of GDP in 2022/23 and current inflation stands at 5 percent. India received 71 billion US dollar FDI in 2022/23 & was among the top three FDI recipients. The important three Ds – Data, Digitalisation & Demography are the chief reason towards this growth path.


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

The investment climate in India is promising – India is looking to attract more investment in core industries. Infrastructure has good potential as the models that India has adopted are sound. At national and at state level, the country has created agencies providing structured research and data for foreign investors. The investment facilitation institutions are also available for a dialogue with investors to provide information on investment options and opportunities. MAKE IN INDIA is a consistent long term government strategy, encouraging increased value addition in the country by foreign investors. 

The fastest growing and key sectors in India today are:
  1. IT
  2. Healthcare 
  3. FMCG and 
  4. ​Renewable Energy


What challenges do German companies face during their business ventures into India?

India's ranking in “ease of doing business” is improving every year, and the practical realities of 2024 in most fields are drastically better compared to ten or even five years ago. The government for example has improved digital administration and delivery of services. Challenges remain nonetheless, depending on the industry, location, and size of the company. 
In order to successfully navigating these challenges, it's essential to plan strategically, perform due diligence, and exhibit patience and commitment to the process. 
Some current common challenges that are faced are:
  • ​​​Good reliable infrastructure – Though progress has been made, India’s infrastructure of roads, railroads, airports, seaports, power grids, and telecommunications infrastructure present challenges to its growing economic status and ability to deliver public services. The government has been is allocating significant portions of its budget to infrastructure projects to bridge this gap.
  • Well trained manpower – Finding the right talent continues to be a challenge for small and mid-sized businesses. A skilled workforce contributes to economic growth and thus the National Education Policy (NEP) plans to provide vocational education to 50 percent of all students by 2025. In addition, the Skill India Mission a flagship initiative of the Government of India since 2015 has been imparting market-relevant skills to the youth of the country, aiming to create an empowered work force. 
  • Market Competition –The sheer size and fragmented nature of the Indian market can present a challenge for investors and businesses. The diversity of the Indian states, cultural differences and interpretation of the prevailing laws must be understood and navigated. Never the less, the States are in progression of incorporating comprehensive regulations, rules, and policies for foreign investments across their borders. India’s market is highly competitive across different sectors, however only anticipated to grow.
  • Single window permissions – Bureaucratic hurdles and delays in obtaining permits, licenses and approvals for various business activities continue to hamper businesses. Dealing with these inefficiencies can slow down decision-making processes and increase operating costs. However this is changing at an enormous speed and things are turning around for the good. 
As mentioned above, local know-how of the regulations and processes, persistence and disciplined follow up are tested strategies to ensure a timely implementation of investment and expansion plans. Combined with suitable advance planning and location selection, also complex greenfield investment projects can be completed in a time window similar to investments in Europe. 

Supply chain due diligence is becoming highly relevant for German companies. How is India as an investment destination placed in this framework?

Supply chain due diligence for Indian subsidiary companies can rely on a detailed legal framework for the areas relevant for such diligence.

Business operations in India are governed by a detailed framework for environmental protection and employee rights and welfare. A structured and legally compliant set up of a business will initially result in the need to navigate bureaucratic steps. At the initial stage as well as during the operations, environmental impact, worker rights, safety and welfare have to be planned and documented in detail. At the later stage this however is a robust basis for documenting a compliant business set up and compliant business operations. Any supply chain diligence process will require an individual approach, in India the existing structures can be utilized as important elements in this important field. 


In your opinion, how will India develop?

India will continue to have a dynamic development. The growth rate will probably not drop below 5.5 percent per annum but one will have to keep inflation under check. German and European companies are continuing to recognize the enormous potential that India is offering as a production and sourcing hub. As a result, many German companies are currently investing in India at increased scale, as India remains one of the focal points and an extremely attractive location for International companies.
Conclusion : India is set for a boom and is a great market for German companies to explore. Preparing strategies based on what works in other countries may not be a good idea/approach. The Indian workforce and market has unique needs and it is only by addressing them that MNCs can realize the enormous opportunities, like many companies of all sizes have successfully shown over the past years and decades. 


Contact Person Picture

Martin Wörlein

Partner, Head of India practice

+49 911 9193 3010

Send inquiry


Deutschland Weltweit Search Menu