India is becoming a new alternative for investment in Asia

According to a UNCTAD report, India has moved up in the ranking of countries attracting the largest inflow of foreign investment (FDI), ranking 15th in 2024 (up from 16th in 2023).

With the ongoing trade war between the United States and China, investors are increasingly looking to other countries as potential locations for foreign direct investment (FDI). One of the biggest beneficiaries of this geopolitical change is India.

Production migration

Apple, together with Taiwan’s Foxconn, announced the relocation of their iPhone production to India. The new factory in Bengaluru is to serve primarily the American market. Google is also considering similar decisions, planning to move some of the assembly of its  Pixel smartphones from Vietnam to India. Another example is the joint project of the Taiwanese company PSMC and the Indian company Tata, which aims to build the first semiconductor factory in India.

Record-breaking greenfield investments

According to data from fDi Markets (an analytical platform owned by the Financial Times Group), greenfield projects worth a total of $108 billion were announced in India in 2024 – almost three times more than in China. The greatest interest of investors is in the industrial sector, which in the last decade attracted almost half of all greenfield investments. The further places were occupied by the research and development sector and electricity production. Companies from the United States, Japan and China remain the main investors.

Factors which attract investors

India’s attractiveness is not limited to its role as an alternative to China. It is the result of a favourable combination of several key factors: the size of the market, the high dynamics of economic growth and a young and large population.

With a nominal GDP of $3.91 trillion, India is the fifth largest economy in the world. According to purchasing power parity, they account for 8.53 per cent of global GDP. Forecasts for 2025 indicate GDP growth of 6.2 percent, and by 2030 the country has a chance to overtake Germany and Japan, becoming the third largest economy in the world.

An additional advantage is the demographic structure. India is the most populous country in the world, and as many as 624 million inhabitants are under  the age of 25. The median age is 28.8 years. Labour costs in industry are on average half that of China. The growing middle class, which already covers about 30 per cent of the population, creates additional opportunities for investors looking for both production facilities and a receptive market.

Polish investments in India

According to NBP data , the value of direct investments of Polish companies in India in 2023 amounted to over  PLN 80.6 million.

In total, Polish investments in India in 2011-2023 were worth approx. PLN 1.41 billion.

Polish Companies present in India

• Toruń Dressing Materials Plant (TZMO) – since 2005 a factory (Tamil Nadu) and a logistics centre,
• Can-Pack Poland – a plant producing metal packaging in Aurangabad,
• Geophysics Toruń,
• Famur Group, Solaris (manufacturer of environmentally friendly buses),
• Ecologist (wastetoenergy technologies) – operate in various industries on the Indian market,
• Boryszew Group – factory of air conditioning systems for cars in Karnataka,
• ICEA Group – recently a branch in India offering services for the e-commerce sector,
• Elimen Group – a company designing advanced electric drives, whose license was taken over by an Indian company for the production of electric motors for vehicles.

Challenges of investing in India

Despite its growing attractiveness, doing business in India still comes with significant barriers. Persistent bureaucracy, regulatory volatility and restrictive import regulations pose challenges, especially for companies in the industrial sector.

In addition, investors point to the rigidity of the labour market and the large number of active trade unions – in 2022, almost 38,000 organizations of this type were registered. As a result, the operational flexibility of companies may be limited, which reduces India’s competitiveness compared to countries such as Vietnam, which effectively attract investments relocated from China.

Nevertheless, India is clearly gaining importance as a destination for foreign investment, especially in the high-tech and industrial sectors.

Sources:

• UNCTAD, World Investment Report 2025
• PFR TFI – article „Indie – daleko, ale coraz bliżej” (pfrtfi.pl)
• Indian Embassy Warsaw – „Polish Investments in India”
• NBP
• fDi Markets