"There's a lot of positive sentiment towards India," said IMF Deputy Managing Director Gita Gopinath even as she highlighted areas that need more reforms to attract more manufacturing FDI.
Speaking to CNBC-TV18, she said a lot of businesses and companies are looking towards India as an investment destination as they try to diversify away from countries including China.
"India is doing relatively well when you compare it to other economies in the world," Gopinath said in the interview at the WEF in Davos.
"In terms of our growth numbers, we have 6.8% for this fiscal and 6.1% for next."
She said the time good for India to draw more of the global supply chain.
She hailed India for making progress on improving both the physical and digital infrastructure. "Both of those are making India more attractive," she said.
Two critical areas that India needs to work upon are labour markets and land.
"More Labour force participation certainly from women, reducing the youth unemployment. Getting labour markets to be more flexible and more resilient would be very helpful."
She cautioned against growing fragmentation in the world and said this could chip away from the global GDP.
"Pandemic and war has made countries much more concerned about national security and economic security. That’s causing them to undertake policies that could lead to greater fragmentation."
On the world economy, Gopinath said that the year is going to be tough but there are pockets of resilience. Things would start looking up from the latter half, she added.