India is set be the fastest growing economy in the G20 grouping of large nations. After rapid economic growth of 7.2% in the 2022-23 fiscal year, India's GDP growth rate in the fiscal year 2023-24 is forecast to be 6.9%. GDP growth remained buoyant in the July-September quarter of 2023, at 7.6% year-over-year (y/y), after growth of 7.8% y/y in the April-June quarter.

Rapid growth in the size of the domestic consumer market has made India an increasingly attractive location for multinationals across a wide range of industries, with foreign direct investment inflows (FDI) having reached a new record high of USD 85 billion in the 2021-22 fiscal year. In FY 2022-23, the state of Maharashtra accounted for the largest share of total FDI inflows, at 29% of the total. Karnataka accounted for a further 24% of FDI inflows, while Gujarat and Delhi were also major recipients of FDI inflows.

India's rapid economic growth continues in 2023

The Indian economy grew at a pace of 7.6% y/y in the July-September quarter of 2023, compared with growth of 7.8% y/y in the April-June quarter of 2023, according to data released by India's National Statistical Office.

After two years of rapid economic growth in 2021 and 2022, the Indian economy has continued to show sustained strong growth during the 2023 calendar year. The near-term economic outlook is for continued rapid expansion in 2024, underpinned by strong growth in domestic demand.

The acceleration of foreign direct investment inflows into India over the past decade reflects the favourable long-term growth outlook for the Indian economy, helped by a youthful demographic profile and rapidly rising urban household incomes. India's nominal GDP measured in USD terms is forecast to rise from USD 3.5 trillion in 2022 to USD 7.3 trillion by 2030. This rapid pace of economic expansion would result in the size of the Indian GDP exceeding Japanese GDP by 2030, making India the second largest economy in the Asia-Pacific region. By 2022, the size of Indian GDP had already become larger than the GDP of the UK and also France. By 2030, India's GDP is also forecast to surpass Germany.

The long-term outlook for the Indian economy is supported by a number of key growth drivers. An important positive factor for India is its large and fast-growing middle class, which is helping to drive consumer spending. The rapidly growing Indian domestic consumer market as well as its large industrial sector have made India an increasingly important investment destination for a wide range of multinationals in many sectors, including manufacturing, infrastructure and services.

The digital transformation of India that is currently underway is expected to accelerate the growth of e-commerce, changing the retail consumer market landscape over the next decade. This is attracting leading global multinationals in technology and e-commerce to the Indian market.

India is expected to continue to be one of the world's fastest growing economies over the next decade. This will make India one of the most important long-term growth markets for multinationals, thanks to a strong leadership and a growing economic muscle. 

These are interesting times to be living in India.

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