The Indian economy has grown at a good pace ever since the beginning of the economic reforms in 1991. These reforms have had a broad impact on the economy, as manifested by the government’s investor-friendly policies and the contribution of the private sector. Today, India has developed into a trillion-dollar economy on the back of a self-sufficient agricultural sector, a broad industrial base, and a stable financial and services sector.

Presently, India is well placed on the global map in terms of its gross domestic product (GDP) growth. The country’s GDP posted a compound annual growth rate (CAGR) of 7.9 per cent for the 10-year period ending 2012–13, according to the Economic Survey 2012–13.

India has a young population with around 65 per cent in the age group of 15–64 years and a median age of about 26.7 years which is lower than many countries in the world. India benefits from the burgeoning domestic demand created by this young demographic whose consumption is driving the middle class. By 2025, the country is expected to become the world’s fifth-largest consumer market. Urbanisation and innovation, too, have had a say in the consumption patterns of the populace. The percentage of urban population in the country increased from 25.5 per cent in 1990 to 30.9 per cent in 2010, and is expected to touch 38.9 per cent in 2030.

These characteristics make India an attractive destination for foreign direct investment (FDI). India is the third most attractive global destination for FDI, as per the UNCTAD’s World Investment Prospects Survey 2012–14. FDI into India increased by 8 per cent year-on-year to US$ 24.3 billion in FY 14, a growth of 8 per cent over the previous fiscal (US$ 22,4 billion), as per data from the Department of Industrial Policy and Promotion (DIPP).