India turns 3rd most improving market in business environment ranking: EIU Report

India’s youthful demographic profile and growing digital infrastructure further contribute to its ranking as a business destination.

India has emerged as the third most-improving geography in terms of business environment, shows the latest Business Environment Index released by the Economist Intelligence Unit (EIU). The ranking, which assesses the attractiveness of doing business across 82 countries and territories, identifies India as one of the most promising markets for business growth over the next five years to 2028 due to favourable policy reforms, infrastructure investments, and a dynamic demographic profile.

India is the "only single-country market that offers a potential scale comparable to that of China" that makes it an attractive destination for global investors looking to diversify their operations away from China, particularly under the China+1 strategy, the EIU report said.

The EIU’s rankings encompass 91 indicators across 11 categories to provide a comprehensive overview of business conditions worldwide. The categories include aspects such as political stability, macroeconomic factors, market opportunities, policy towards free enterprise and competition, as well as tax policies, labour market dynamics, and infrastructure quality. Each indicator is scored for the years 2019–23 and projected for the 2024–28 period.

India’s improvements in FDI policy, foreign trade regulations, and tax regime are primary contributors to its rise in ranks. In recent years, the government has implemented numerous policy shifts aimed at attracting foreign investment and enhancing the ease of doing business.

“The geographies that see the biggest improvements in score in our index in the next five years (2024–28) compared with the past five years (2019–23) are not the same economies that will see the fastest real GDP growth in 2024-28 — although Qatar and India will grow very strongly — rather, they are places where we expect the most significant policy improvements, infrastructure investment or growth in market opportunities,” the EIU report said.

India, ranked just after Greece and Argentina, is anticipated to experience a substantial uplift in its business environment. The report suggests that these improvements are likely to support enhanced growth in real GDP per capita, higher investment spending, and an uptick in FDI inflows.

Demographic dividend and digital infra 

India’s demographic advantage and growing digital infrastructure further contribute to its ranking as a business destination. The EIU highlighted: “India’s youthful demographic profile promises both strong demand and good labour availability. Alongside solid economic fundamentals, digital infrastructure, and favourable demographics, more policy support is being introduced to attract manufacturing investment.”

The combination of a young workforce and burgeoning consumer demand positions India as a viable alternative for businesses seeking scalability on a par with China. The emphasis on improving digital infrastructure, along with the China+1 strategy many companies have adopted, could propel India’s market potential in the coming years.

With consistent policy improvements, infrastructure development, and a growing tech-ready workforce, India appears well-positioned to build on its recent business environment enhancements, the report said.