Geopolitical Risk

India Country Report

Country Report Dec 2023

Country Risk Report – December 2023

GDP (2021)

$4.23 trillion
$33,815.30 per capita – 1% growth

State Department Travel Advisory Level

Level 1 – Exercise Normal Precautions

Corruption Index Score (2022)


Anti-Money Laundering/Terrorist Financing

FATF Member

Property Rights Index


Freedom House Ranking


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Country Risk Report – February 2024

GDP (2022)

$3.42 Trillion

State Department Travel Advisory Level

India- Level 2: Exercise Increased Caution

Corruption Index Score (2022)


Anti-Money Laundering/Terrorist Financing


Property Rights Index


Freedom House Ranking

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Infortal Worldwide Geopolitical Risk Summary  

India’s economic diversity and size offer significant opportunities for businesses and investors. 

India is the second most populous country in the world, with a massive and continuously growing population, offering an extensive consumer base and nearly limitless human capital. 

India enjoys relatively warm relations with Western powers, including the US. It will be a key player in the shifting global geopolitical landscape, which features increasing polarity between China and the United States. 

Despite its familiarity with the US and its allies, India maintains a strategy of ‘multi-alignment’ where it is party to several international organizations and agreements, including alliances with Russia and China. 

Although India offers unique and exciting opportunities for companies and investors, it also has a complex domestic environment and various security issues, posing risks to businesses and investors operating in the sub-continent. Therefore, country risk analysis that considers local risks is required before investing. 


Political Update 

India’s ‘multi-alignment’ strategy has kept them relatively insulated from geopolitical conflict between major world powers. They are party to multiple international organizations and agreements, including the Indo-Pacific Economic Framework for Prosperity (IPEF), which includes Japan, Australia, and the US, and BRICS (Brazil, Russia, India, China, and South Africa), a bloc of major emerging economies. 

Although India stands mainly in a position of neutrality regarding major geopolitical rivalries and contention, China’s growing presence in the Indo-Pacific region has pushed it to align more with the US and its allies regarding policy and strategy. This, along with the increasing polarity between the US and China, has raised suspicions about the sustainability of India’s current international strategy. 

Domestically, India faces various challenges, including a fragmented political structure that makes policy reform difficult. India is considered a functioning democracy as it routinely participates in democratic elections and has relatively peaceful transitions of power between administrations. 

Despite this, political power tends to be entrenched with politically elite families, demonstrating the lasting effects of India’s caste system. Populist appeals to voters, including welfare schemes, dominate party rhetoric and policymaking. This has encouraged polarization between ethnic groups and different regions in India and hindered policymaking aimed at long-term growth and development. 

Other challenges include gender and income inequality, border disputes with China and Pakistan, terrorism and violence, health and sanitation issues, and environmental issues. These risks must be understood and planned for when seeking to do business or invest in India. 


Economic Update 

Financial analysts predict that India’s economy will grow to be the third largest in the world by 2027, with a GDP reaching as high as $5 trillion and potentially up to $10 trillion by 2030. 

India is experiencing higher-than-average growth rates for comparable economies and is emerging as a world economic power. India’s economic growth can be traced to several factors, including financial reforms under Prime Minister Modi, markets and manufacturing shifting away from China, and India’s growing population. 

Modi’s administration has passed several economic reforms which have helped spur economic growth. Some notable policy changes include reducing the corporate tax rate from 30% to 25%, ending retrospective taxation of cross-border investments, modernizing labor laws, and reducing limitations on foreign investment into the defense and insurance industries. 

While China has been experiencing severe economic challenges in handling the COVID-19 pandemic, demographic issues, and capital flight, India has emerged as an alternative manufacturing destination in Asia. 

Since Prime Minister Modi took office in 2014, economic reforms have increased the scale of India’s economy. In fact, it is expected to outpace growth in China’s economy by nearly 2% in the next financial year. 

Building on this emerging shift in the Asian economy, India launched its ‘Make in India’ campaign in 2014, seeking to grow its manufacturing capacity through infrastructure development and attracting foreign investment.


Key Investment Sectors 

India’s massive and diverse economy offers many investment opportunities covering dozens of industries and subindustries. Some of the most notable industries, due to their size and amount of investment opportunity, are:

  • Electronic manufacturing: one of India’s largest and fastest-growing industries, valued at $570.59 billion. The government has been pushing for expansion in this industry to solve domestic and global supply chain shortages of microchips, protect its national security interests, and reduce its reliance on imports.
  • Railways, roads, and highways: Internal infrastructure development has been a priority as it is critical to economic growth. The construction of railways, roads, and highways alone is valued at over $650 billion, and investment opportunities abound. Inland waterways and public transportation network development account for an additional $200+ billion dollars.
  • Electricity and power: India relies mainly on coal-generated electricity, which accounts for nearly 75% of electricity output. As a result, pollution, particularly in major urban environments, is a primary concern. Significant financial resources and effort are being invested into alternative power sources, including hydro and nuclear power, offering boundless investment opportunities in the energy sector.
  • Textiles: textile manufacturing is one of India’s largest industries, valued at over $350 billion, and one of their most significant exports.
  • Real estate development: India’s rapidly growing population and crowded urban centers have led to high demand for housing. The real estate industry is valued at $262.84 billion and is quickly growing.
  • Waste, water, and pollution management: India’s enormous population, reliance on coal power, large, impoverished communities, and lack of environmental regulations have led to pollution, waste, and water management being a primary concern for the Indian government and foreign businesses and investors. Significant investment is required to create, update, and expand these services.


Recommendations for Companies and Investors  

India presents extensive business and investment opportunities for foreign firms. Understanding how to tap into the enormous potential will require patience, business risk due diligence, and an emphasis on understanding local customs and business practices. 

Government-led efforts to develop India’s economy and internal market have focused on attracting manufacturing, reducing reliance on imports, and harnessing India’s domestic workforce. Understanding this is important as firms seek to set up businesses in India. 

Partnering with local suppliers and manufacturers may lead to your firm cashing in on government incentives aligned with the ‘Make in India’ and other policies. However, it will be essential to understand who you are doing business with to avoid any hidden corruption or criminal risks

Partnering with locals will also help companies navigate market intricacies such as consumer preferences, cumbersome bureaucratic hurdles, and distribution channels. 

Finally, remaining compliant with shifting regulations can be difficult in India. Having local counsel with the requisite expertise may be required to maintain your ongoing business operations.  

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