In 2022, India was ranked as the top recipient of Foreign Direct Investment (FDI) worldwide by UNCTAD. This highlights India’s increasing attractiveness to foreign businesses in India, particularly as an option for manufacturers and the diversification of supply chains. Driven by its labor force and consumer base, cost-effective operations, and strong connections to key global markets, India offers significant advantages for international companies looking to invest and expand.

Numerous factors contribute to India’s appeal as an investment hub:

• Strong Economic Performance: Despite the challenges posed by the India’s economic expansion and significant market reforms have positioned it as a desirable destination for foreign investments. 
• Market Accessibility: Most sectors in India are open to FDI creating a environment for potential investors. 
• Growing Digital Market: With over 300 million internet users India’s digital economy presents opportunities, for expansion. 
• Significant and growing middle-class: The growing middle class population, in tier 2 and tier 3 cities is creating opportunities across sectors like consumer goods, automobiles, healthcare and digital services.  
• Improving ease of doing business: Efforts to streamline business operations through initiatives like single window systems and electronic platforms have sped up the setup process. States in India are actively competing to offer services, which can greatly influence market entry decisions. 
• Seventh largest country in the world by land area: India being the country by land area provides transparent information on land availability through an online GIS based industrial land bank that includes vacant plots and industrial parks. 
• Long term vision for foreign trade: The Foreign Trade Policy (FTP) 2023 of India focuses on establishing export hubs and implementing measures for sectors such, as e commerce, dairy and apparel. The policy also supports the internationalization of the rupee to facilitate trade payments. 

Upgradation of manufacturing capabilities and incentives 

For businesses exploring or already involved in manufacturing activities, in India, the Production Linked Incentive (PLI) Schemes provide benefits to manufacturers across 13 sectors. These incentives are linked to their investments, product innovation, expansion of the existing value chain and increased sales of their finished goods. 

The main aim of the PLI schemes is to boost manufacturing increase exports and attract foreign direct investment (FDI) by motivating both international and local companies to establish, conduct R&D or expand their manufacturing activities in India. Companies currently taking advantage of the PLI schemes—whether from abroad or within the country—are candidates for partnerships like ventures, business collaborations supply chain partnerships, private equity investments and other types of financial support. The duration of coverage under these PLI schemes varies from four to six years based on the sector involved. 

The geographic locations where these sector beneficiaries operate may provide conditions, for setting up operations depending on the type of business. 

Strategic location with superb connectivity 

India holds a position, at the forefront of the Indian Ocean serving as a link to regions like the Middle East, Europe, West Africa on its west coast and Southeast Asia East Asia on its east coast. This strategic location allows Indias sea routes to act as a bridge between Europe and East Asia. Additionally India boasts the coastline along the Indian Ocean.

Furthermore India has made progress in enhancing its connectivity. The country possesses the worlds road network, the fourth largest railway network and is home, to seven international airports. 

China +1 strategy 

Many businesses are now embracing the “China Plus One” strategy to cut costs diversify their workforce and supply chains and explore markets. This approach helps them avoid risks related to supply chain disruptions, currency fluctuations and tariffs. By spreading out their operations across countries companies can swiftly adjust if one country faces challenges. 

India once seen as an alternative, to China compared to Asian nations is now attracting renewed interest from businesses that had previously focused on China. 

Extensive Double Tax Avoidance Agreements 

India boasts a network of tax treaties aimed at preventing taxation and tax evasion. The country has signed Double Tax Avoidance Agreements (DTAAs) with than 85 countries. 

These agreements aim to establish a system for dividing tax rights between the countries where income originates and where taxpayers reside. 

DTAAs offer protection against taxation for taxpayers promoting international trade flow, investment opportunities and technology exchange, between nations. Foreign companies based in countries with which India has a DTAA can benefit from provisions and rates provided either by the Income Tax Act or the DTAA itself. 

Reforms to corporate income tax regime and incentives 

India has recently reduced tax rates setting a 22 percent rate, for established companies and a 15 percent rate for domestic manufacturing firms. When factoring in surcharges and cess the total tax burden, on these businesses comes to 25.17 percent. 

Businesses choosing the reduced corporate tax rate are also exempt from tax obligations. This move brings Indias tax rates in line with those of Asian investment destinations and manufacturing centers like China, Vietnam, Malaysia, Singapore and South Korea. 

Incentives 

In terms of incentives India provides a range of both tax related and non perks to enterprises. These include exemptions, reductions, lower rates, refunds, rebates and credits across categories:

• Tax benefits designed for qualifying businesses- 
• Tax perks, for investments in sectors- 
• Incentives aimed at Special Economic Zones (SEZs) and 
• Tax incentives provided by states, across India- 

Fastest growing economy 

In 2022 India surpassed the United Kingdom to claim the title of the worlds economy as reported by the International Monetary Fund (IMF). With a projected growth rate of 7.2 percent, for FY 2023 India is strengthening its position. 

Despite obstacles India is poised for growth fueled by strong demand within its expansive domestic markets. The recent World Bank report titled “Navigating the Storm” applauds Indias resilience in a context surpassing many other prominent emerging market economies (EMEs). 

With a banking system supporting economic recovery efforts, an uptick in sector investments is anticipated in the upcoming year further solidifying Indias role as a significant player, in Asias business and investment arena. 

Availability of skilled and presence of a large English-speaking workforce 

India is known for having the population of people globally a trend that is expected to continue until 2030. The country also boasts the community of scientists and technicians worldwide. Interestingly 10 percent of the populace speaks English, which is one of its official languages. 

India has established itself as a player, in the field of information technology with the IT industry employing around 3.9 million individuals making it a significant source of private sector employment in the nation. 

Efficient legal system 

India operates under a law system with a written constitution that blends unitary elements. This framework ensures a distribution of executive powers between the central and state governments while upholding a unified judiciary. Legislative authority is shared between state legislatures. 

The regulatory landscape in India is well defined with companies governed by the Companies Act of 2013 and limited liability partnerships regulated by the Limited Liability Partnership Act of 2008. The government has introduced initiatives to enhance business ease. 

The primary legislation addressing trust concerns, in India is the Competition Act of 2002. 

This law covers (a) agreements that restrict competition, (b) use of a market position and (c) business combinations such, as mergers, takeovers and splits. 

Entry options for foreign companies