Reforms, policy barriers hinder investments: Moody’s

New Delhi: India’s GDP has crossed $3.5 trillion in 2022 and will be the fastest-growing G-20 economy over the next few years, but reform and policy barriers could hamper investment, Moody's said on Tuesday. In a research report, the US-based rating agency said bureaucracy could slow approval processes in obtaining licences and setting up businesses, prolonging project gestation.

“India’s higher bureaucracy in decision-making will reduce its attractiveness as a destination for foreign direct investment (FDI), especially when competing with other developing economies in the region, such as Indonesia and Vietnam,” Moody’s Investors Service said. It said a large young and educated workforce, increasing nuclear families and urbanization will fuel demand for housing, cement and new cars.

Government infrastructure spending will bolster steel and cement, while India's net-zero commitment will drive investment in renewable energy, it said. "While demand across the manufacturing and infrastructure sectors will grow 3-12 per cent annually for the rest of the decade, India's capacity will still rank well behind China's by 2030," Moody's said.