INDIA (Commonwealth Union)_The World Economic Forum’s promenade, covered with fresh snow, is clogged with billboards and pavilions from firms and governments chasing attention or negotiations. There are the IT titans, the major consulting firms, and Middle Eastern representatives.
This year, though, representatives from India have taken over at least eight stores in Davos, appealing to the elite gathering’s political and business classes.
“Every ten steps, there will be either us, a state government, or a private firm,” said Deepak Bagla, CEO of the national investment promotion agency Invest India. Bagla quipped that one investor had referred to the road as “Little India.”
For good cause, India has shown up in force. As global recession fears linger, the country is predicted to outperform any other major economy in 2023. The World Bank predicts 6.6% growth, compared to 0.5% in the United States and 4.3% in China.
According to a Centre for Economics and Business Research projection, India would replace Germany as the world’s fourth largest economy in 2026, knock Japan out of third place in 2032, and become only the third country with a GDP of $10 trillion by 2035 if current trends continue. India’s GDP is currently worth approximately $3.5 trillion, ranking it fifth in the world.
Geopolitics has bolstered the rationale for investing. As Western business leaders discuss “nearshoring,” or shortening supply chains to decrease risk, and “friendshoring,” or increasing economic collaboration with countries that share similar values, the world’s largest democracy offers a clear alternative to China. This year, India is expected to overtake its mighty neighbour as the world’s most populous country.
“I see a lot of firms, a lot of companies turning to India as an investment destination as they want to diversify away from other countries, especially China,” said Gita Gopinath, deputy managing director of the International Monetary Fund, in Davos. “It is very much on the international scene.”
India is not immune to global economic concerns, as high interest rates and inflation, as well as persistent uncertainty over Russia’s war in Ukraine, bring the world to the verge of recession.
“India’s economy has been extraordinarily resilient to the deteriorating external environment,” World Bank country director Auguste Tano Kouamé said in December, citing the country’s enormous domestic market as a buffer. “However, as bad global developments remain, constant vigilance is essential.”
Last year’s 11% depreciation of the Indian rupee against the US dollar increased the cost of imports and put pressure on government budgets. Foreign investment has also suffered. From April to September 2022, a government gauge of foreign direct investment inflows declined 14% compared to the same period in 2021.
However, India’s energy minister, R.K. Singh, told CNN that he has had a lot of interest from investors this week, which gives him hope for the future.
“I’ve never had to seek for funding,” Singh explained. “Money has just poured in.”
That assurance is on display at Davos. The states of Maharashtra, Telangana, and Tamil Nadu, as well as Tata Group and IT behemoth Infosys, have rented major real estate in the ski resort (INFY). The event’s main India Lounge has served popular lunches to fund managers and bankers, while two distinct pavilions highlight the country’s green energy efforts and the stories of local artisans.
The chief minister of Maharashtra, India’s wealthiest state with a population of 120 million people, stated that preliminary deals worth 1.37 trillion rupees ($16.8 billion) were inked early this week. A memorandum of agreement was signed with auto system producer Belrise Industries and Taiwan’s Gogoro — dubbed the “Tesla of two-wheelers” — to invest $2.5 billion in battery swapping infrastructure. Horace Luke, CEO of Gogoro, told CNN that India is a “main growth market” for the company.
