The boosting economic growth of the country is projecting India to be the world’s fastest growing economy for the rest of the decade. The combined growth in the population and the economy will soon make India the fifth largest economy in the world, overall. Out of only two developing countries to attain a position in the top 10 in A.T. Kearney’s Foreign Direct Investment Confidence Index, India became one and the only country with a per capita GDP of less than $5000 to be ranked at all. According to Kearney, India is perceived as ‘competitive’.

Various sector and industries have put in their contribution to drop India at a position where international market entry is considered feasible for the industrial giants. The Indian economy is boomed by the long-awaited recovery in consumption that has helped cut down slack in the economy and underpinned sales in all the sectors.

Have a detailed look at which sectors contribute how much and in what ways in the growth of the country’s economy.

• The Automobile sector- The Indian Automobile industry became the 4th largest in the world with its sales increasing 9.5 percent year-on-year to 4.02 million units in the year 2017. In the year 2017, India became the 7th largest manufacturer of commercial vehicles. The country is known to have emerged as an auto export hub for both small and heavy vehicles, along with establishing itself as a prime destination for automotive manufacture. While the demand for automobiles is broadly based across various markets, the major concentration of the demand is from the rural part of the country. Indian rural areas deliver a high demand for two-wheelers and tractors, which is strongly affecting the sales of companies like Maruti Suzuki and Ashok Leyland in a positive direction. Between FY13-18, the domestic automobile production in India increased at 7.08 per cent CAGR. The domestic automobile sales increased at 7.01 per cent between FY13-18 with 24.97 million vehicles getting sold in FY18. The Indian Automobile industry has attracted Foreign Direct Investment worth US$19.29 Billion during April 2000 to June 2018.

• The Oil and Gas sector- India is experiencing a ferocious demand to power the growing fleet of trucks, cars, and motorbikes. With the expanding middle-class needs, the country’s appetite for energy is surging. The government is continuously encouraging the use of cooking gas for cleaner air. This, as a result, is driving refiners and attracting global major to enter the Indian market, setting up their business in India. The Indian energy demand is known to be growing at the fastest rate among all the major economies, making it the third largest consumer of oil in the world in 2017, with consumption of 4.69 mbpd of oil in 2017 as compared to 4.56 mbpd in 2016. India’s energy demand as a percentage of global energy demand is expected to rise to 11 per cent in 2040 from 5.8 per cent in 2017. According to Department of Industrial Policy and Promotion, the Indian petroleum and natural gas sector attracted FDI worth US$ 7 Billion between April 2000 and June 2018.

• The FMCG sector- Think-tank India Brand Equity Foundation has ranked India as the fourth- largest in the economy for its rapid growth in the fast moving consumer goods sector, with Household and Personal Care accounting for 50 per cent of FMCG sales in the country. India is known as the world’s largest producer of generic medicines accounting for 20% of the global volume. The widespread availability of raw materials and the presence of highly skilled workforce have both catapulted India to the top, establishing it as the research and manufacturing hub for pharmaceuticals. The Indian Food Processing, bringing together the country’s agriculture and industry is vital to the country’s development. The Revenue of the FMCG sector reached 3.4 lakh crore (US$ 52.75 Billion) in FY18 and is estimated to reach US$103.7 Billion in the year 2020. The Indian FMCG sector witnessed FDI inflows of US$ 13.63 Billion during April 2000 to June 2018.  

• The Steel and Cement Sector- The Steel industry contributes to almost 2% of the GDP is witnessing increasing local demand and higher prices. According to the data from the Steel Ministry, Tata Steel Ltd.’s sales climbed 8 percent during April through June 2018, driven by automotive and special products’ demand. On the parallel, JSW Steel Ltd. recorded a growth of 11 percent in the group sales. These figures were considered the highest in five years in the year ended March, as per the data from the Steel Ministry. India’s finished steel consumption grew at a CAGR of 5.69 per cent during FY08-FY18 to reach 90.68 MT. According to DIPP, the Indian metallurgical industries attracted Foreign Direct Investments (FDI) of US$ 10.84 Billion during April 2000 to June 2018.

• The Aviation sector- The Indian Aviation sector has continuously observed double-digit traffic and capacity growth, as more people take to flying. The country’s RPK (Revenue Passenger Kilometre) rose to 16.6% in the month of May 2018. The passenger demand has continued to grow at a remarkable rate over the years, further resulting in an increased number of airport connections. The country’s Aviation sector is estimated to witness investments of around $15 Billion in between the financial years of 2016-17 to 2019-20. Out of this figure, $10 Billion is expected to come only from the private sector.

The overall growth in the country’s economy enables global giants to look up for mergers and acquisition firms in India and reap the benefits of the rapidly growing Indian market.  

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