As of July 2024, India's economic momentum remains strong, reinforcing its status as one of the world's fastest-growing economies. The newly elected government has reaffirmed its commitment to structural reforms, digitalisation, and infrastructure development, while actively engaging in global climate initiatives, which is crucial for sustained growth.
In the first quarter of 2024, India's GDP grew by 7.8%, fuelled by strong performance in the industrial and services sectors. The country's total market capitalisation has surpassed $5 trillion, making India's economy the fourth largest globally.
Trade
Following the recent election of the Labour government, the proposed Free Trade Agreement (FTA) between India and the UK will once again be on the agenda. The FTA will aim to promote service exports and deepen cooperation in areas like security, education, technology and climate. The FTA talks began in January 2022 but stalled for elections in both India and the UK. The bilateral trade between the two nations increased to $21.34 billion in 2023-24 from $20.36 billion in 2022-23.
Business
Private equity investments in India hit $3.64 billion in April-June 2024. This represents a 75% rise on the $2.08 billion recorded in January-March 2024 according to LSEG Deals Intelligence. Private equity firms remain focussed on India for its robust economic growth and vibrant startup ecosystem. The main sectors attracting private equity investment are internet-specific, financial services and computer software companies. These sectors have accounted for almost 50% of the total private equity investments into India in January-June 2024.
M&A activity with Indian involvement grew 4.4% in the first half of 2024 to $37.3 billion according to data from LSEG Deals Intelligence. This is the highest first half period activity since 2022. This is despite the total number of deals being down by 18% year-on-year, falling to 1,262. The first half of 2024 has seen at least six deals above $1 billion including the merger between Walt Disney and Reliance Industries Ltd's Indian media assets.
Climate Action
In 2024, India has made significant strides in its climate action, committing to sustainable development and environmental protection. With GDP growth projected at 6.6% for fiscal year 2024-25, India aims to reduce the carbon emissions intensity of its GDP by 45% by 2030. These climate change policies go beyond reducing greenhouse gases, including reducing air pollution, cost savings and ultimately providing a better quality of life for its residents.
Last year, India set an ambitious target of 500 gigawatts of renewable energy capacity by the 2030, aligning with its pledge to reach net-zero carbon emissions by 2070. Faith Birol, executive director of the International Energy Agency praised this net-zero goal as a "significant step in fighting climate change", remarking India's rapid growth in renewable electricity.[1] During 2022, extreme heatwaves were recorded during 80% of the year, leading to rising electricity demands, hence, the Indian Government is focused on renewable energy and storage solution. India is attempting to reap the benefits of these harsh weather conditions by its rapid expansion of solar panels, co-founding the International Solar Alliance (ISA) with France and currently, being the world's fifth largest solar market. This marks a large step in achieving India's long-term goal of reaching net zero by 2070.
Despite these positive steps, India still faces challenges in reducing its reliance on coal, having the world's second-largest coal pipeline and coal being its primary source of fuel. International support will be crucial for India to align its growing energy needs with its long-term climate goals. Ernst & Young ranked India the 7th most attractive market for new renewable power projects in the world, sparking investments such as $1.5 billon from the World Bank to support the development of new renewable power generation capacity. As India surpasses China as the country with the largest population, its efforts of driving global action on climate change will hopefully continue to exert influence on other major economies.
Looking Forward
With a new Government in place, India is poised to continue its economic ascent, leveraging reforms, digital growth, and infrastructure development to cement its status as a global economic powerhouse.
