Socialist George Fernandes (1930 to 2019) was the Indian industry minister in 1977 who enforced the law that foreigners could not own more than 40 per cent of an Indian enterprise. Coca-Cola and IBM fled India rather than comply, especially, in Coca-Cola’s case, when New Delhi demanded the company tell Indian shareholders the secret syrup formula.

Such anti-foreign attitudes stemmed from a mentality that economic self-sufficiency was required to protect political freedom in post-independence India. Such thinking after the British left in 1947 led to a bloated public sector atop a nationalised economy. Officials implemented five-year plans, ran a permit system for business (the ‘Licence Raj’) that could require approvals from up to 80 public agencies. They oversaw the ‘small-scale industry’ scheme whereby only smaller businesses could make certain items. The result? An uncompetitive country, a corrupt bureaucracy and listless economic growth.

How things can change. India, displaying growth rates above eight per cent, is the world’s fastest-growing economy of note and foreign investors have noticed. On 23 January this year, India’s stock market capitalisation reached a record US$4.33 trillion, to leap over Hong Kong and become the world’s fourth-biggest stock exchange on the combined value of listed stocks. Such is the country’s glow, New Delhi’s bonds are poised to enter the Bloomberg and JP Morgan Chase emerging-market debt indices.

Reforms installed after a balance-of-payments crisis in 1991 are reaping benefits now for India’s 1.4 billion people – 400 million of whom have escaped poverty since 2005. Among decisions of note, the government scrapped import quotas, slashed tariffs, abandoned investment licences, welcomed foreign investment, privatised state companies and deregulated trade and industry.

Hopes are high that the world’s most populous country can power the world as China did from the 1990s – when it overlook India’s economy in size and is now about five times larger (US$3.5 trillion for India versus US$17.8 trillion for China).

Prime Minister Narendra Modi came to power in 2014 with a pro-business agenda and he can boast successes. His achievements? India’s economy has almost doubled and became the world’s fifth largest in 2022. The stock market has jumped threefold. The number of people earning at least US$10,000 a year has soared from 24 million to a forecast 100 million by 2027. The national highway network is 50 per cent longer. Ports, mobile and rail networks are more developed. Domestic air passenger numbers passing through modern airports have doubled. Several hundred million people have opened their first bank accounts. The government has standardised overlapping federal and state taxes, to simplify doing business in India. New Delhi has inked free-trade deals with Australia, European countries and the United Arab Emirates.

A Modi priority is to spend nearly 20 per cent of New Delhi’s budget on capital goods to attract foreign manufacturers to India, which, like Vietnam, is benefiting as companies move towards a ‘China-plus-one’ supply strategy. Modi’s reforms include a Made in India 2.0 package that seeks to boost manufacturing from 16 per cent of GDP to 25 per cent (about where it sits in China). The aim is to put 100 million more Indians in secure higher-paying jobs.

On top of a go-for-growth government, India holds five other advantages for business. One is that investors like the country’s liberal demographic political system. Rule of law, an independent judiciary, property rights, an unfettered media and other traits of free societies offer them more certainty compared with a dictatorship. The world’s biggest democratic election is taking place from April 19 to June 1. Modi is almost assured of a third term.

A second advantage is favourable demographics. India’s average age is about 28 compared with 38 in China and 47 in Germany. The country is expected to add another 200 million workers over the next 25 years, by when India is predicted to be the world’s largest economy after the US and China.

Another plus is India is poised to enjoy a virtuous economic circle. Economic growth has expanded the middle class and driven urbanisation – the world’s ten fastest-growing cities over the coming decade or so are likely to be found in India. Both trends boost the consumption that drives economies.

A fourth advantage is India already has thriving financial and technology sectors and world-class companies. That primes the country to attract more foreign investment, especially as a Western-friendly alternative to China.

Another potential boost is how the entrepreneurial spirit of Indians could be further unleashed if New Delhi further enhances infrastructure, chops more red tape, fosters better ties with international development bodies and invests in its people. India can reap quick productivity gains if it spends more on education and employment skills, improves health and nutrition – about one-third of infants are malnourished – and boosts female workforce participation rates from 24 per cent, among the lowest level in the world due to a lack of jobs and a conservative culture. Same too, if authorities encourage businesses to adopt a more export-orientated mentality and tap into India’s diaspora of 18 million.

The best way to view India is that it’s an emerging economic power that could soon be the world’s biggest driver of growth.

India does face numerous challenges, however. Modi’s Hindu-laced authoritarian nationalism diminishes India’s democratic glow; some even call his government a ‘dictatorship’. But not compared with China. About 80 per cent of Indians are Hindu and tensions with minority Muslims can turn violent. Corruption is unbeaten. Inequality is growing. Per capita income is low. Many workers are underemployed. Youth joblessness is about 45 per cent. Indians are reluctant to move within their country to where jobs are found. Public debt at about 85 per cent of GDP is high for an emerging country. Inflation, at 5 per cent, is a perennial problem. Private investment lags. From an Australian perspective, India may not match China in demand for commodities.

But people need not look hard to see the country’s promise either. India rates better than ever on many barometers. Government finances have stabilised. The Reserve Bank of India is viewed as a credible fighter of inflation. The rupee is steady. Household savings are being ‘financialised’. Foreign investment is arriving. And, of course, the economy is booming.

How’s this for proof the self-sufficiency mentality epitomised by the industry ministry under Fernandes is history?

Coca-Cola returned in 1993 and India is now the company’s fifth-biggest market by sales volume.