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Explore India's latest macroeconomic trends and forecasts to inform business strategy and pinpoint opportunities and risks

India: Macroeconomic Country Outlook

According to GlobalData, India’s economic growth is forecast to expand by 6.7% in 2022 and an annual average growth rate of 5.6% during 2023–24
India was ranked 59th out of 152 nations in the GlobalData Country Risk Index (GCRI) Q2 2022
Industrial production grew by 7.1% in April 2022, compared to a growth rate of 133.5% in April 2021

The Indian equity market has shown tremendous improvement over the years under the active regulation of Securities and Exchange Board of India (SEBI), the country’s regulator of the securities market. The equity market in India has become world class, largely due to the push towards liberalization and solid regulation, which have made the market more attractive. According to the World Bank, the market capitalization of listed domestic companies as a percentage of GDP increased from 80.8% of GDP in 2019 to 97.3% of GDP in India in 2020, surpassing China (83.2%) and the Euro area (54.5%) during the same year. The stable government and investment-boosting acts as a solid driver of sustaining growth in the equity market of India.

Key findings

India’s stance on Russia’s invasion of Ukraine: War between Russia and Ukraine placed considerable moral responsibility on India since the nation is one of the world’s largest countries with its most populous democracy. India has neither condemned nor condoned the Russia’s invasion of Ukraine. They have a strong relationship with Russia, with Prime Minister Modi calling Putin a ‘dear friend’. Large amounts of India’s military equipment are of Russian origin. Moreover, both the nations maintain a bilateral trade relation. India was one of the 34 nations in the UN to abstain from a vote condemning Russia’s invasion.
Robust international ties: In July 2022, India signed a memorandum of understanding with Maldives on judicial cooperation through a platform to tap benefits of Information Technology for court digitization. In June 2022, Singapore-based IGSS ventures announced to invest $3.5 billion over the next five years to establish a high-tech semiconductor park in Tamil Nadu, India. The project is estimated to create direct employment to 1,500 persons and indirect employment to 25,000 persons. In June 2022, India signed a MoU with the US for development of new, improved and innovative biomedical tools and technologies. In June 2022, India and Vietnam signed a MoU on mutual logistics support. In June 2022, India and Australia signed MoU for technical cooperation in urban water management. The MoUs with other nations would boost sectoral development in India.
India is ranked 63rd out of 190 countries in World Bank’s doing business ranking in 2020: According to the World Bank, Doing Business Report (2020), India scored 71 out of 100. India’s score is higher than the South Asian average of 67.5, but lower than China (77.9). It takes 18 days in India to start a business as compared to the South Asian average of 14.5 days. The country ranked 13th in terms of protecting minority investors, 25th in terms of getting credit and 22nd in terms of getting electricity (out of 190 countries) in 2020.
Free trade agreement between India and the EU: On June 17, 2022, India's Commerce and Industry Minister Piyush Goyal, and Executive Vice-President of the European Commission Valdis Dombrovskis re-launched negotiations for free trade agreement (FTA) at an event held at the European Union headquarters in Brussels after nine years since the earlier negotiations were left off in 2013 due to difference in scope and expectations from the agreement. If the deal is finalized, it will help to diversify and secure supply chains, enhance economic opportunities for business and significantly benefit people.
Rule of law in the country: According to the World Justice Project, Rule of Law Index (2021), India ranked 79th out of 139 nations. The country ranked 93rd and 95th out of 139 nations on the indicators of fundamental rights and absence of corruption, respectively. In addition, India ranked 121st out of 139 countries on the parameters of order and security. Lastly, the nation ranked 110th out of 139 countries on civil justice indicator, which measures whether civil justice systems are accessible, affordable and free of discrimination, corruption, and improper influence by public officials.
Step toward renewable energy in the country: In February 2022, the country allocated INR19,500 crores ($2.6 billion) for the development of solar modules in order to achieve the target of 280GW of installed solar power by 2030. Additionally, the government also announced CO2 savings of 38 MMT per year along with plan to establish four pilot projects for coal gasification and conversion into chemicals for the industry. In March 2022, the country issued $3.3 billion in green bonds since the nation is shifting towards a low-carbon economy. As of February 28, 2022, according to the Union Ministry of New and Renewable Energy (MNRE), the country installed renewable energy projects of 152.9GW capacity, which includes 50.8 GW from solar, 40.1 GW from wind, 10.6 GW from bio-power, 4.8 GW from small hydropower and 46.5 GW from large hydropower.

Key fundamentals

Sectoral outlook

Revival for travel and tourism industry: India’s tourism sector is one of the highest contributors to the services sector. In June 2022, India Tourism Development Corporation (ITDC) and the Ministry of Tourism launched Tourism Awareness Programme (T.A.P) for taxi, cab, and coach drivers to offer behavioral and soft skill training. The program aims to enhance the learnings of 'saarthis' and provide them with the right skill set to effectively and efficiently present themselves and serve tourists exploring India. In July 2022, the Indian Railway Catering and Tourism Corporation (IRCTC) announced a plan to build and operate budget hotels across the country, primarily focusing on tourist destinations, where the first phase of the project would get an investment of INR500 crore ($67.6 million). According to the World Economic Forum, Travel and Tourism Development Index (2021), the country secured 54th rank out of 117 nations, the country is the top scorer in South Asia. According to the World Travel and Tourism Council, in 2021, travel and tourism contributed 5.8% to GDP and the sector created 32.1 million jobs, which is equivalent to 6.9% of total jobs. According to GlobalData, international arrivals to the country is forecast to reach 7.2 million in 2022 and 8.6 million in 2023.
Robust e-commerce market in 2022: Alternative payment methods such as mobile and digital wallets completely dominate the e-commerce space in India. According to GlobalData, the payment method has displaced cash and cards to emerge as the most popular online payment method, accounting for two-thirds of India’s e-commerce market in 2022. India’s e-commerce market value is set to increase at a compound annual growth rate (CAGR) of 22.9% from INR2.2 trillion ($29.5 billion) in 2017 to INR6.2 trillion ($82.7 billion) in 2022, driven by an increase in internet and smartphone penetration, a rise in disposable income and growing digital literacy in the country. The COVID-19 pandemic has accelerated the shift from offline to online channels. As a result, e-commerce payments in India are forecast to grow at a CAGR of 16.1% between 2022 and 2026 to reach INR11.2 trillion ($150.3 billion) in 2026.
Positive outlook of technology of the country: In February 2022, the Department of Science and Technology of the Republic of India signed a MoU with the Ministry of Trade and Industry of the Government of the Republic of Singapore on Cooperation in the fields of science, technology and innovation. In June 2022, the Government of India approved 5G spectrum auctions, which aim to launch 5G services in the country. In June 2022, the telecom ministry of India anticipated 5G deployment will commence in 20-25 cities and towns of the county by the end of 2025. India is expected to start deployment of the 5G network in from August–September 2022. In July 2022, Bharti Airtel company announced a successful trial of India's first 5G private network at Bosch Automotive Electronics India (RBAI) facility.

GlobalData Country Risk Index (GCRI) – Q2 2022

India was ranked 59th out of 152 nations in the GCRI Q2 2022. The country’s risk score is in the manageable risk nations band (30–40). India’s overall risk score (39.3) was lower than the world average (44.0), but higher than the Asia-Pacific region’s (29.0). India has a relatively high score in terms of environmental risk as compared to the regional average and World average due to high frequency of natural calamities. The country's score in terms of macroeconomic, legal and technology and infrastructure risk was lower than the World average in Q2 2022.

GCRI Methodology

GlobalData’s unique Country Risk Model determines the existing and future level of country risk by assessing various qualitative and quantitative factors. The index is designed to help firms formulate their global business strategies based on historical developments in an economy.

The Country Risk Index incorporates the latest available macroeconomics, political, social, technological, environmental, and legal data from a range of recognized national and international statistical sources and incorporates proprietary data from GlobalData. Asia Pacific nations in this publication include India, China, Hong Kong, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Thailand, Vietnam, Taiwan, Australia and New Zealand.

About the report

GlobalData Macroeconomic Outlook report is designed to provide detailed macro-economic analysis which will help clients in their business planning, investment and strategic decisions, and analysis. It also provides a quick view of the current situation and the risk score of the country in comparison to region and world based on the proprietary risk framework. The report also highlights key strengths, weaknesses, opportunities, and threats in each of the pillars of PESTLE, economic growth prospects, and key events which can impact the country’s future outlook.

More details: Macroeconomic Outlook Report: India

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