Over the past few decades, India has steadily enhanced its role in global trade and investment. Currently ranked as the world’s fifth-largest economy, India remains one of the fastest-growing major economies. Its strategic location, vast consumer base, and ongoing policy reforms make it a critical player in global trade.
Additionally, initiatives like ‘Make in India’ and the Production Linked Incentive (PLI) scheme are driving exports and attracting foreign investment.
Let’s explore how India’s evolving trade and investment landscape is shaping the global market and what it means for the Indian economy and investors.
What’s Happening?
India has significantly contributed to global trade and investment in recent years. In FY23, India’s total trade volume surged to USD 1.63 trillion, a sharp rise from USD 660.20 billion in FY17. On the exports front, India recorded USD 776.68 billion in FY23, with key sectors including engineering goods, pharmaceuticals, and textiles.
India’s trade policies are focused on deepening its presence in international markets. The country has established strong trade relations with ASEAN, the European Union (EU), and the Gulf Cooperation Council (GCC), while also exploring newer markets such as Africa and Latin America.
Trade Ties with the USA and the European Union
The United States remains India’s largest trading partner, with total trade reaching USD 119.71 billion in FY24. This includes major exports in engineering goods, electronics, and pharmaceuticals. In FY24 alone, India’s exports to the USA amounted to USD 77.52 billion.
Prime Minister Narendra Modi’s recent visit to the USA further strengthened bilateral relations, with both nations setting a target under ‘Mission 500’ to boost trade to USD 500 billion by 2030.
Meanwhile, India’s trade with the European Union has also seen robust growth, making it the country’s second-largest trading partner. In 2023, India-EU trade reached USD 129 billion. Ongoing negotiations for a Free Trade Agreement (FTA) aim to further boost sectors such as clean energy, technology, and manufacturing.
India’s Trade Relations with ASEAN and the Middle East
India’s trade with ASEAN exceeded USD 110 billion in 2023, making it the country’s fourth-largest trading partner. Additionally, India and Japan are collaborating on key infrastructure projects, including the Delhi-Mumbai Industrial Corridor and the bullet train project.
India’s trade with the Middle East (GCC countries) has also expanded, surpassing USD 240 billion in 2023. The country relies heavily on Saudi Arabia, the UAE, and Qatar for crude oil and natural gas imports.
Under the India-UAE CEPA agreement, bilateral trade grew by 15%, reaching USD 83.6 billion in FY24, up from USD 73 billion in FY22.
What’s in It for Investors?
India is rapidly becoming an attractive destination for global investments. Foreign Direct Investment (FDI) in FY24 reached USD 70.94 billion, nearly doubling from USD 36 billion in FY14.
The PLI scheme has successfully drawn major global players like Apple, Samsung, and Tesla, encouraging them to expand manufacturing in India. Between April and October 2024, India’s iPhone production alone touched USD 10 billion, with 70% of output exported and the remaining USD 3 billion produced for the domestic market.
Additionally, the PLI scheme is expected to generate over 6 million jobs by 2026, creating new opportunities in logistics, export-driven industries, and infrastructure development.
What’s Next?
India’s trade strategy is multidimensional, focusing on innovation, diversification, and sustainability. The government is emphasising clean energy and digital infrastructure, aiming for 500 GW of non-fossil fuel capacity by 2030.
With its ‘China Plus One’ strategy, India is emerging as a major global supply chain hub. Policies like ‘Make in India’ and the PLI scheme are solidifying its status as a prime investment destination for multinational companies — driving economic growth and creating opportunities for investors.
*The companies mentioned in the article are for information purposes only. This is not an investment advice.
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