India is a socialist democratic republic. It has a federal
form of government, comprising 29 states and six union territories. The Indian
parliament is the supreme legislative body and is essentially based on the
British parliamentary system. There are two houses: The Rajya Sabha (Council of
States) and the lok Sabha (House of the People). The national executive power
is centered on the Council of Members (Union Cabinet), led by the Prime
Minister.
India has been one of the best performers in the world economy
in recent years with GDP growth exceeding 9 percent in 2008 and 2009. India is
the fourth largest world economy ranked by purchasing power parity, and the
second fastest economy by GDP growth. India’s economy has recovered from the
global financial crisis faster than other regional economies with growth
expected to be approximately 8 percent in 2010.
Besides its economic credentials, India’s demographic
profile makes it an increasingly attractive investment destination for foreign
investors. India’s substantial and expanding middle class and youth populations
– over 40 percent of its population are over 21 – are hungry for consumer
goods. India, therefore, represents an enormous market for foreign investors
with potential for increased growth over the next two decades.
Since 1991, there has been significant deregulation and liberalization
in India. This has opened up many sectors of the economy to private investment,
including foreign direct investment. Competition is actively encouraged and the
recent re-election of the National Congress Party, with a mandate to implement
investor-friendly economic reforms, has been a positive development for foreign
investors.