The face of economic environment in the Indian economy has changed dramatically since 1991. Previously, pricing in India was governed by managed price mechanisms, but market forces today govern prices. Economic environment supported by extensive reforms in the last decade, India’s economic growth has been robust. A vibrant middle class with a growing purchasing power has emerged, and a new generation of industrialists and entrepreneurs has begun to compete globally. With the Gross Domestic Product (GDP) in nominal terms of US $ 692 billion in 2004, India is now the tenth-largest economy in the world.
The country’s external position is also significantly stronger. Exports, specifically of services, have grown substantially in the year 2004-2005. The growth of services has been largely driven by the rise of information technology in which India has become a world leader. Some of the key factors of India’s new economy are the following:
- India is the fourth-largest economy in the world in terms of APP today.
- It is an attractive destination for global FDI. Almost all the major multinationals in the world, from GM and GE from the USA. Even Sony and Samsung see their future in India.
- India is emerging as a global manufacturing center. More and more companies are establishing their manufacturing units in India. These include Apple, Nokia, Samsung, GM, Hyundai, Audi, BMW, Posco, Ispat, Lafarge, Holcim, Toyota, etc.
- India is today labeled as the administrative office of the world. As India is becoming the main outsourcing theater in the world. India controls more than 30% of the world’s outsourcing business. Indian companies are working for almost all the world’s leading companies such as GM, GE, Microsoft, Oracle, etc.
- India is also considered as a custom software factory in the world. Almost all the major software companies in the world have their operations in India. The list includes players such as Microsoft, Oracle, HP, IBM, etc.
- India is also emerging as the world’s R&D center. Companies like GE have six R&D centers outside the USA. And the first one was established in India under the name of Jack Welch Center. Similarly, many multinationals have established their R&D centers in India and note many others are following his example.
- Indian companies are earning laurels in terms of quality, previously considered a major drawback of Indian companies. But in recent years, India has won a fair amount of important awards for its quality.
- “In the past seven years, many Indian companies have featured prominently on the list of winners of the Deeming Prize. It is not Japan, but India. Since Sundaram – Clayton became the first Indian company to win the prize in 1998, and 11 more Indians firms have earned it. ” (Business Today, January 29, 2006)