India’s economy is booming. Stock prices are through the roof, among the best performing in the world. The government’s investment in airports, bridges and roads, and clean-energy infrastructure is visible almost everywhere. India’s total output, or gross domestic product, is expected to increase 6 percent this year — faster than the United States or China.

But there’s a hitch: Investment by Indian companies is not keeping pace. The money that companies put into the future of their businesses, for things like new machines and factories, is stagnant. As a fraction of India’s economy, it is shrinking. And while money is flying into India’s stock markets, long-term investment from overseas has been declining.

Green and red lights are flashing at the same time. At some point soon, the government will need to reduce its extraordinary spending, which could weigh on the economy if private sector money doesn’t pick up.

The biggest wild card is whether India can grab a significant share of global business from China. The highest-profile example is Apple, the $3 trillion megacompany, which is slowly moving some of its supply chain away from China. Its pricey iPhone has barely 5 percent of the Indian market. But currently about 7 percent of the world’s iPhones are made in India — and JPMorgan Chase has estimated that Apple intends to get that to 25 percent by 2025. At that point, all kinds of things become possible for India.

“We should keep our minds open,” Mr. Subramanian said.

https://www.nytimes.com/2024/01/02/business/india-economy-foreign-direct-investment.html

posted by f.sheikh