The US and India are the world’s oldest and largest democracies, and fastest-growing economies; they are “natural allies”. The US is the third-largest contributor of foreign direct investments (FDI) to India as of December 2020. Likewise, the US is the second-largest recipient of outgoing FDI from India.
More than 2,000 American companies run successful operations in India while the bilateral trade has exceeded the value of USD 149 billion and American investments in India have surpassed a remarkable USD 42 billion.
The broad-based and multi-sectoral relationship between US and India is defined by cooperation in areas like defence, commercial relations, energy, environment, technology, and health. As a testimony to these priorities, India and the US have collaborated extensively during the ongoing public health crisis. They have also spearheaded efforts in vaccine development to fight Covid-19.
Invest India in its report A Natural Partnership: US-India FDI Perspectives aims to bring out the many possibilities that exist for the mutual growth of US and India through sustainable economic collaborations. Here are the highlights:
AUTO & AUTO COMPONENTS:
4th largest automotive market in the world after China, USA and Japan. Vehicles totalling nearly USD 10.4 Bn were exported from India to the U.S. while imports from the U.S. totalled USD 5.6 Bn in the last five years. Along with the reduction in import duty on various categories of electric vehicles, 100 percent FDI is permitted through the automatic route.
BANKING, FINANCIAL SERVICES AND INSURANCE
India has 12 public sector banks, 22 private sector banks, 46 foreign banks, and 43 regional rural banks. Mobile wallet industry in India will grow at an estimated CAGR of 150 per cent to reach USD 4.4 Bn by 2022. Mobile wallet transactions will touch USD 492.6 Bn during the same period.24 Digital payments market is expected to reach USD 1 Tn and digital lending in India is expected to be USD 100 Bn by 2023. FDI caps in BFSI industries:are as follows banking at 74 percent, finTech at 100 percent , insurance at 74 percent, and insurance intermediaries 100 percent.
India has the 5th largest defense budget in the world, at USD 66.9 Bn USD 15 Bn allocated for capital expenditure. Defense production has seen a 80 percent increase in the last five years, touching 12 Bn in 2019 . 74 percent FDI allowed through the automatic route and 100 percent through government route
Opportunities for Investments
India’s ed-tech industry, with 327 companies, is the second-largest in the world, after the U.S. Even so, at the end of 2019, ed-tech platforms in India had only 10 million subscribers despite a school-going population of 250 million. Therefore, there is scope for tremendous growth.
The digital health market in India is projected to be worth USD 505.4 Bn by 2025, from USD 86.4 Bn in 2018, growing at a CAGR of 29.6 percent.
India’s e-commerce market is set to grow at a CAGR of 30 percent for gross merchandise value to be worth USD 200 Bn by 2026 from USD 38.5 Bn in 2017. It is expected to surpass the U.S. to become the second largest e-commerce market globally by 2034.71 The government has also permitted 100 percent FDI through the automatic route in the e-commerce marketplace model (in B2B ventures).
Artificial Intelligence (A.I.) has the potential to add USD 957 Bn, or 15 percent of India’s current gross value in 2035.76. The manufacturing sector in India could grow its share-of-profit by 39 percent by incorporating A.I.-powered systems. India already has the third-highest penetration of A.I. in the workforce. It also has the third-highest early A.I. adopting companies, at 19 percent.
You can read the full report here: https://www.investindia.gov.in/siru/natural-partnership-united-states-india-fdi-perspectives?utm_source=twitter&utm_medium=social&utm_campaign=generic&utm_content=generic&utm_term=
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