Israel - India Business Guide | 2025

E conomic Environment I ndia, the world's third-largest economy and most populous country , continues to show strong economic performance. While India and China showed similar growth rates of around 6 % on annual average in the past decade ( 2015 - 2024 ), the next two years reveal a diverging economic trajectory: India is projected to grow at 6 . 5 %, significantly outpacing China's expected 4 . 3 %. The Indian economy benefits froma large and developing local market, a young and skilled workforce, and ongoing economic reforms. The forecast points to a decline in inflation from 6 % to 4 % and an expected easing of monetary policy to support local demand and growth. I ndia is a democratic country with a decentralized political system that reduces governance risks. However, its federal structure creates challenges, as state autonomy and coordination complexities hinder national-level reforms. Under Prime Minister Modi's government (NDA) since 2014 , there has been progress in improving the business environment, though bureaucratic challenges persist. S imultaneously, India is strategically positioning itself by cooperating withWestern countries through the Quad alliance (USA, Japan, Australia) whilemaintaining balanced relations with Russia. This approach, especially amid growingWest-China tensions, enhances India's appeal as a strategic partner, despitemarket operational challenges. S WOT Analysis of India's Economic Trends for the Coming Years S trengths ●● Very large domestic market that provides significant support for local demand and rapid economic growth ●● Skilled and cheap labor allows the country to export significant services to the global economy. Particularly young workforce with over 50 % of the population under 25 years old W eaknesses ●● Despite rapid economic growth, India remains a very poor country . The International Monetary Fund estimates that GDP per capita will reach $ 2 , 850 in 2024 , about a quarter of China's ●● About two-thirds of the population depends on agriculture for their livelihood, leaving the economy exposed to seasonal fluctuations and weather impacts like low monsoon rains ●● India faces ongoing budget and trade deficits , with a significant portion of state revenues directed to mandatory payments instead of infrastructure investments T hreats ●● India's dependence on oil imports is a central challenge, affecting the deficit and inflation when global oil prices rise ●● India is at risk of severe environmental problems . Many cities suffer from heavy air pollution and river pollution, raising doubts about the ability to maintain rapid growth over time O pportunities ●● Growth of the middle class and its impact on the economy: The developing middle class in India is expected to increase demand for new products and services. A wealthier society, alongside tax reforms, will help alleviate fiscal pressure ●● Economic reforms and digitization: The government is promoting fiscal reforms, including the Goods and Services Tax plan from 2017 and recent digitization initiatives. These steps are expected to strengthen state revenues ●● Competitiveness in global manufacturing: Due to rising Labor costs in China, India is in a strategic position to grow in global manufacturing. With a young and competitive workforce and the 'Make in India' program, the country is attractingmultinational corporations and strengthening local manufacturing 15