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India - Overview

Contents extracted from the comprehensive atlas of international trade by Export Entreprises

Introduction

Capital:: New Delhi
Area:: 3.287 km2
Total Population:: 1.236.687
Annual growth rate:: 1.00%
Density:: 416.00/km2
Urban population:: 32%
Population of Mumbai (Bombay) (21.200), Delhi (16.713), Kolkata (15.420), Chennai (7.330), Bangalore (6.562), Surat (6.347), Hyderabad (6.290), Ahmadabad (6.168)
Official language: Hindi (spoken by more than 50% of the country’s population) and English.
Other languages spoken: 18 regional languages are recognized by the Constitution of India: Hindi, Urdu, Bengali, Nepali, Telugu, Marathi, Tamil, Gujarati, Malayalam, Kannada, Oriya, Punjabi, Assamese, Kashmiri, Sindhi, Manipuri , Konkani and Sanskrit. Around 2000 dialects have been identified.
Business language: English
Ethnic Origins:: Indo-Aryan 72%, Dravidian 25%, Mongoloid and Others 3%
Beliefs: Hindu 80.5%, Muslim 13.4%, Christian 2.3%, Sikh 1.9%, other 1.8%, unspecified 0.1%.
Telephone codes:
To make a call from: 0
To make a call to: +91
Internet suffix:: .in
Type of State::
India is a federal Republic state based on parliamentary democracy.
Type of economy::
Low-income economy, Emerging Financial Market
Second greatest population and largest liberal democracy in the world. Importance of agriculture and the IT sector in the economy.

Economic overview

The Republic of India is one of the tenth largest economy in the world. In 2013, the country experienced weak growth (3.8%) due to the unfavourable international economic situation and weak performance of its manufacturing and mining sectors. Better results are expected in the fiscal year 2013-2014 (4.9%) thanks to good performace of the agricultural sector which should stimulate consumption.

The populist measures adopted in 2008 destabilised state finances. the Government's priority is therefore to reduce its budget deficit and current accounts deficit. The aim of the 2013-2014 budget aims to achieve "inclusive growth" by increasing public spending by 16%. It provides €140m to create a fund for the security and empowerment of women, establish a bank reserved for women, increases the defense budget as part of the modernization of the Indian Army; a tax increase of 10% for the richest parts of the population, a tax increase on certain luxury goods and tobacco and an expansion of the "direct cash transfer" program for the poor. The interim budget for 2014-2015 (adopted in order to cover the government's expenses until its mandate ends in May) plans to reduce the deficit to 4.6% of the GDP and then to 4.1% in the following year. It confirms the goals of budget consolidation, boosting growth and strenghtening the manufacturing sector. The central bank's priority is to control inflation as well as attract foreign capital and limit capital outflow. Industry remains the country's weak point since the sector is struggling with frequent power cuts, a difficult acceess to property and an excessively rigid labour legislation. The finance minister P Chidambaram has also announced a ten-point agenda to make India the third largest economic power by 2043. In parallel, the role of economic growth as a driver of development has been questioned, especially regarding the healthcare and education sectors.

India remains a poor country: the GDP per capita is low, almost 25% of the population still lives below the poverty line and the inequalities are very strong. Half of the children under 5 years of age suffer from malnutrition. Unemployment affects around 7% of the workforce.

Main industries

India is the world's fourth agricultural power. Agriculture contributes to about 14% of the GNP and employs over 60% of the active population. The main agricultural products are: wheat, millet, rice, corn, sugar cane, tea, potatoes and cotton. India is also the second producer of cattle, third producer of sheep and fourth in fishing production. 

Coal is the country's main energy source (India is the third largest world producer of coal). In the manufacturing industry, textile plays a predominant role. In terms of size, the chemical industry is the second largest industrial sector (12% of the GNP).

The services sector is the most dynamic part of the Indian economy. It contributes to more than 55% of its GDP, and it only employs over a fourth of its active population (approximately 471 million workers). The software sector, which grows rapidly, is boosting the export of services and modernizing the Indian economy.

Foreign trade overview

India was a protectionist state for a long time, but the country has become progressively more open to international trade. It has recently signed free trade agreements with South Korea and the ASEAN, and has entered into negotiations with several partners (EU, MERCOSUR, Australia, New Zealand, South Africa). India is the world's seventh largest exporter and importer of commercial services. Trade represents almost 50% of the country's GDP.

The country has a trade deficit. India imports nearly 80% of its energy needs, and rising oil prices also increased its import bill. In 2013 the deficit diminished significantly due to a drop in imports - especially of gold - and a rise in exports encouraged by the devaluation of the currency against the dollar. In January 2014, the deficit stood at 120 billion USD, as opposed to nearly 170 billion USD for the same period in the previous year. 

The main trade partners of India are the European Union, the United Arab Emirates, China and the United States.

FDI

According to the 2013 World Investment Report published by UNCTAD, India is the 15th largest recipient of FDI. Thanks to its many assets, especially a high specialization in services, with skilled, English-speaking and inexpensive labor force, and a potential market of one billion inhabitants, India generally receives more and more foreign investment. However, in the recent years, Investment fell due to the debt crisis in the euro zone, a number of corruption scandals and a political standstill which harmed business confidence. Reforms to attract more FDI have been implemented in order to stimulate growth (including opening the retail sector to foreign investment). In 2013, FDI to India grew by 6% in value compared to 2012.
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