This essay is about two critical data points that tell us which way India's economic future is going. The country recently clocked more than USD 500 billion in foreign direct investment in the last eight years and hit a record USD 400 billion in exports.
These two numbers are important because they encapsulate a transition in the Indian economy - from an informal-driven, loose, investment destination of great potential, and a domestic consumption-driven framework to a more structured, formal, streamlined, stable investment destination that is continuously pushing the boundaries of its exports.
The USD 500-billion number suggests something particularly important at this moment of great global turbulence. The world is unravelling and fracturing. The certainty of an older order is giving way to a time of transition, conflict (even in parts of the world that can scarcely believe that war has returned to their neighbourhood) and a churning of many a system arrogantly considered irretrievably 'global'.
This would be bad enough on its own, but it is made infinitely worse by global warming, which is already - years ahead of schedule - making summers in many major cities unbearable and any work in the open is increasingly impossible to contemplate.
Investors are seeking safe refuge in such an environment where growth of a certain measure at the very least is guaranteed both by political stability, positive policies and demographic predictability.
India is consistently seeking to build such policies across the board, whether it is through tax breaks or consistently chipping away at the compliance burdens (around 22,000 outdated compliances have been removed in recent years) or providing an ecosystem for new ventures including in start-ups to thrive. The world'’s third largest start-up ecosystem in India is an attractive destination for investors seeking growth in a conducive regulatory environment.
The other number is equally important. India aims to hit USD 1 trillion in exports in the coming years and has already touched a record USD 400 billion in merchandise exports for the first time.
This is a change in the India story. For a long time, the propellant in the narrative was domestic consumption and services exports. But the dynamic growth in merchandise exports is now shaping new possibilities. Many economists had argued in the past that India has missed the manufacturing and export-driven growth bus, but this is clearly not true.
A renewed push towards 'Make in India' and programmes like the production-linked incentive (PLI) schemes have helped change the direction of the narrative and shown how much pent-up potential exists for exports. The latest PLI scheme in textiles for instance has cleared proposals from 61 companies with an investment potential of more than Rs 19,000 crore, with a projected turnover of over Rs 1,84,000 crore, and proposed employment for more than 2,40,000 people.
Hitting USD 400 billion in exports has eliminated the question of whether India can achieve export-driven growth; hitting USD 1 trillion will show the kind of potential the country always had in manufacturing, and which was being held back due to structural and policy hurdles.
As Apple starts to manufacture its latest iPhone 13 in India, it is a sign that in a world seeking shorter and stable supply chains, our nation is one of the biggest destinations able to provide the business continuity that investors seek. As conflict grows around the world and demand for business resilience becomes paramount, our country has a unique opportunity to offer a promise, we can perhaps call it, the India promise.
This promise is based on providing a business climate that is unlikely to dramatically change - after all what business needs more than anything else is certainty. Business decisions are based on what will happen tomorrow, not what is happening today.
This promise is also based on being able to provide a large domestic, and democratic, consumer base, greater intellectual property right protection, and a world-class manufacturing base to export to other nations from India.
This promise is based on - to highlight but two numbers - the 400/500 formula. These numbers illustrate neatly that this is only the beginning of the India growth story.
(The writer is Vice President & Head of Research at Invest India, GoI's national investment promotion agency and can be reached at hindol.opinion@gmail.com)