India’s Rise As A Strategic Investment Hub For France


India's expanding middle and upper-middle-income population, coupled with a growing preference for branded and high-end products, presents an attractive landscape for French businesses looking to tap into one of the fastest-growing consumer markets in the world.
Image: ShutterstockIndia’s expanding middle and upper-middle-income population, coupled with a growing preference for branded and high-end products, presents an attractive landscape for French businesses looking to tap into one of the fastest-growing consumer markets in the world.
Image: Shutterstock

On a bustling Mumbai street, a young professional scrolls through her phone, adding luxury skincare products to her online shopping cart. Across the city, a middle-class family books their first international vacation, while a startup founder finalises the purchase of a high-end electric car. These everyday moments reflect a larger transformation—India’s consumer market is evolving at an unprecedented pace, fueled by rising incomes, urban aspirations, and digital convenience. India’s consumer market is on track to become the second-largest globally by 2030, driven by rising incomes, rapid urbanisation, and a young, growing workforce. According to an Edelweiss Mutual Fund report, consumer spending is expected to surge from $2.4 trillion in 2024 to $4.3 trillion by the decade’s end. The country’s demographic advantage is a key driver—India’s median age of 28 years is significantly lower than China’s 39 years and the US’ 38 years, ensuring a sustained rise in consumption.

With a projected working-age population of 100 crore by 2030, India is poised to become a powerhouse of global demand. Additionally, a declining dependency ratio, increasing female workforce participation, and the rise of dual-income households are bolstering spending on premium and discretionary goods. The digital revolution, marked by widespread e-commerce adoption and improved financial inclusion, further transforms buying behaviours, creating lucrative opportunities for global businesses. However, challenges such as income inequality, inflation, and the rural-urban consumption divide persist, requiring nuanced market strategies. Despite these hurdles, India’s expanding middle and upper-middle-income population, coupled with a growing preference for branded and high-end products, presents an attractive landscape for French businesses looking to tap into one of the fastest-growing consumer markets in the world.

To bolster foreign investment across key sectors, the Indian government has introduced a series of strategic initiatives to foster a business-friendly environment. In the aerospace sector, major deals with Dassault (Rafale fighter jets) and Airbus (C-295 transport aircraft) emphasise technology transfer and local manufacturing under the ‘Make in India’ and ‘Atmanirbhar Bharat’ programmes. The Defense Procurement Policy (DPP) further mandates local production, encouraging private sector participation in defence manufacturing. Luxury retail has also witnessed significant policy support, with relaxed FDI norms allowing 100 percent foreign direct investment (FDI) in single-brand retail, attracting global brands like Ladurée and Chanel. GST reforms have streamlined taxation, while initiatives like the ‘National Retail Policy’ enhance regulatory clarity for international brands. The Production-Linked Incentive (PLI) scheme has also boosted investment in defence, automobiles, and consumer goods. The Strategic Partnership Model (SPM) under ‘Atmanirbhar Bharat’ facilitates collaboration between domestic firms and global defence manufacturers. The PLI scheme supports electric vehicle (EV) and component manufacturing in the automobile sector, drawing interest from industry giants like Tata Motors and Mahindra. Similarly, the PLI scheme for white goods incentivises local production of air conditioners and LEDs, reducing import dependency and strengthening India’s manufacturing ecosystem. The government continues positioning India as a prime destination for foreign investment across diverse industries through these targeted measures.

Geopolitical realignments are also crucial in redirecting French and broader European investments toward India. Rising economic tensions between the West and China, coupled with concerns over supply chain security and over-reliance on a single manufacturing base, have prompted businesses to explore alternative markets. The European Union’s de-risking strategy, aimed at reducing dependence on China, has made India a preferred destination due to its stable political environment, strong economic fundamentals, and growing consumer market. Additionally, France and India share a strategic partnership, with collaborations spanning defence, technology, and infrastructure. Initiatives like the India-EU Trade and Technology Council (TTC) and bilateral trade agreements have further encouraged investment flows. With India’s commitment to maintaining an open economy and strengthening diplomatic ties with Europe, French companies increasingly view it as a reliable partner for long-term investments. However, challenges such as bureaucratic hurdles, infrastructure gaps, and regulatory complexities still need to be addressed to capitalise on this geopolitical shift entirely.

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India’s economic trajectory today shares striking similarities with China’s rise in the early 2000s, making it an attractive destination for global investors, including French companies. Both countries have experienced rapid economic growth fueled by liberalisation, export-oriented policies, and large-scale infrastructure investments. India’s GDP growth, averaging around 7 percent in the early 2000s, mirrors China’s growth trajectory during the early years of its economic boom. Another key parallel is the demographic dividend—India’s median age is currently 28, similar to China’s in the early 2000s, providing a vast labour force and a growing consumer market. Additionally, India’s expanding middle class, one of the world’s largest, is driving consumption and shaping economic dynamics much like China’s did two decades ago. The Indian government’s strong push for infrastructure development—through investments in roads, railways, and ports—mirrors China’s aggressive infrastructure expansion, which played a crucial role in its manufacturing dominance. Moreover, India’s Make in India initiative and export promotion schemes reflect China’s earlier export-driven growth strategy. These factors position India as a compelling alternative for businesses looking to diversify operations away from China. However, differences in regulatory frameworks, land acquisition policies, and business ecosystems indicate that while India follows a similar path, its growth story will unfold uniquely.

France’s investments in India span multiple high-growth sectors, reinforcing a strong economic partnership between the two nations. French companies are expanding their presence from aerospace and defence to luxury retail, automobiles, and consumer goods, leveraging India’s booming economy and favourable investment policies. 

Aerospace giants like Dassault Aviation and Airbus have deepened their engagement through defence collaborations, technology transfers, and local manufacturing initiatives. In luxury retail, brands such as Ladurée and Chanel are tapping into India’s rising affluent class. Meanwhile, companies like Renault and L’Oréal are capitalising on the country’s growing demand for automobiles and premium consumer goods. The Indian government’s ‘Make in India’ and ‘Atmanirbhar Bharat’ initiatives, along with strategic policy reforms, have further encouraged French firms to invest in local production and innovation. With active support from organisations like Invest India and the Indo-French Chamber of Commerce and Industry (IFCCI), French businesses increasingly view India as a long-term growth destination, strengthening bilateral economic ties and fostering job creation across various industries.

India’s growing economic clout, favourable demographics, and policy-driven investment climate position it as an increasingly vital partner for France. While it may not entirely replace China in French investment strategies, India offers a compelling alternative with its expanding consumer market, strategic bilateral ties, and ongoing infrastructure modernisation. The Indian government’s commitment to business-friendly reforms, including the ‘Make in India’ initiative and Production-Linked Incentive (PLI) schemes, further enhances its appeal to foreign investors. However, to fully capitalise on this momentum, India must continue simplifying regulations, ensuring policy stability, and addressing infrastructure gaps to create a seamless investment ecosystem. As French companies seek to diversify and expand their global footprint, India stands out as a resilient and dynamic market, offering long-term opportunities across defence, technology, luxury, and infrastructure sectors. The deepening Indo-French economic partnership is a testament to India’s potential as a global investment hub, paving the way for sustained collaboration and mutual growth in the years to come.

Pranav Raja, Academic Associate, Economics Area, Great Lakes Institute of Management, Gurgaon



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