According to the Economist Intelligence Unit’s (EIU) Business Environment Index, India is the third most rapidly improving market. This index evaluates the business landscape of 82 countries and territories, assessing their attractiveness for investment and growth. India is a market that the EIU highlights as having a strong demographic advantage and being well-positioned for significant growth over the next five years (2024–2028).

According to the EIU, India is the “only single-country market that offers a potential scale comparable to that of China.” This distinction makes it a prime destination for global investors, particularly those adopting the China+1 strategy to diversify operations and reduce over-reliance on China. India’s growing prominence stems from its large and youthful population, rapid economic growth, and a proactive policy environment.

The EIU’s index uses 91 indicators across 11 categories, such as political stability, macroeconomic factors, market opportunities, tax policies, labour dynamics, and infrastructure quality. These metrics offer a detailed view of each country’s business conditions for both the past (2019–2023) and projected future (2024–2028).

India’s ascent in the rankings is attributed to:

  • Policy Reforms: Improvements in FDI regulations, foreign trade policies, and a streamlined tax regime.
  • Ease of Doing Business: Continued government efforts to enhance investor confidence and business operations.
  • Infrastructure Development: Investments in both physical and digital infrastructure, improving connectivity, and reducing operational costs.

Growth-Driven Policy Landscape

The report emphasizes that India’s rise in the rankings is not merely about economic growth but also about significant policy and infrastructural advancements. “The geographies that see the biggest improvements in score in our index are places where we expect the most significant policy improvements, infrastructure investment, or growth in market opportunities,” the EIU notes.

India is grouped with other high-performing economies like Greece and Argentina, reflecting its potential to attract foreign direct investment (FDI), drive investment spending, and achieve a steady rise in GDP per capita.

The majority of the population in Singapore (79%), Indonesia (70%), and India (69%), the top three most optimistic markets, felt that their nation was headed in the right direction (Indonesia had surpassed India from the previous wave in ranking). In stark contrast, only 38% of people worldwide said they thought their nation was moving in the right direction, with pessimism rampant. Furthermore, Peru (8%), South Africa (20%), South Korea (21%), and Turkey (21%) had the lowest levels of optimism toward the future.

Demographics and Digital Transformation

India’s youthful population and rapidly expanding digital infrastructure are pivotal to its business appeal. The EIU highlights that India’s demographic dividend promises strong consumer demand and a plentiful labor supply. Coupled with robust economic fundamentals, the nation’s digital transformation is creating new opportunities for businesses.

Government initiatives aimed at enhancing digital infrastructure—such as the rollout of 5G, a unified digital payments ecosystem, and advancements in e-governance—have positioned India as a leader in leveraging technology for business innovation.

Promising Future for Global Investors in India

The EIU report paints a positive outlook for India, suggesting that the combination of favourable policies, strategic infrastructure development, and a tech-ready workforce will continue to enhance the country’s business environment. With consistent improvements, India stands out as a scalable, competitive, and attractive market for global investors seeking growth and diversification.

As global businesses look to navigate an increasingly complex economic landscape, India’s proactive approach and evolving market dynamics are likely to keep it in focus as a preferred destination for investment and expansion.