The Indian economy represents one of the world’s most complex and diverse economic structures, characterized by a unique blend of traditional and modern sectors coexisting within a mixed economy framework. As the world’s fifth-largest economy by nominal GDP and third-largest by purchasing power parity, India’s economic structure has undergone significant transformation since independence in 1947, evolving from a predominantly agrarian economy to a service-dominated structure with growing industrial and manufacturing capabilities.
The structural composition of the Indian economy reflects its demographic diversity, with over 1.4 billion people representing different socioeconomic backgrounds, skill levels, and geographic distributions. This vast human resource base, combined with abundant natural resources and a strategic geographic location, provides both tremendous opportunities and significant challenges for economic development and structural transformation.
India’s economy operates within a federal democratic framework where both central and state governments play crucial roles in economic governance, policy formulation, and resource allocation. The constitutional framework establishes a clear division of responsibilities between different levels of government while allowing for cooperative federalism in addressing economic challenges and promoting sustainable development.
The liberalization reforms initiated in 1991 marked a watershed moment in India’s economic history, transforming the economy from a license-permit raj system to a more market-oriented approach. These reforms have fundamentally altered the structural dynamics of the Indian economy, leading to increased private sector participation, foreign investment, and integration with global markets while maintaining the public sector’s strategic role in key areas.
Table of Contents
Agriculture Sector
The agriculture sector remains the backbone of the Indian economy, despite its declining share in GDP over the decades. Currently contributing approximately 17-18% to the national GDP, agriculture continues to employ nearly 42% of India’s workforce, making it the largest employer and a critical sector for livelihood security and rural development. This sector encompasses crop production, livestock, fisheries, forestry, and allied activities that support millions of farming families across the country.
Land distribution in India is characterized by fragmented holdings, with the average farm size being approximately 1.08 hectares, significantly smaller than in many developed countries. This fragmentation presents both challenges and opportunities, as small farms can be labor-intensive and environmentally sustainable but may face constraints in achieving economies of scale and mechanization. The land ownership patterns vary significantly across states, with some regions having more equitable distribution than others.
Crop diversity is a distinguishing feature of Indian agriculture, with the country producing a wide range of food grains, cash crops, horticulture products, and plantation crops. Rice and wheat are the primary staple crops, while cotton, sugarcane, tea, coffee, and various spices contribute significantly to export earnings. The country is the world’s largest producer of milk, pulses, and spices, and the second-largest producer of rice, wheat, and cotton.
Monsoon dependency remains a critical characteristic of Indian agriculture, with nearly 60% of cultivated land depending on rainfall. This dependency makes agriculture vulnerable to climate variability and extreme weather events, highlighting the importance of irrigation infrastructure, water management, and climate-resilient farming practices. The government has invested significantly in irrigation projects, watershed development, and drought management programs to reduce this vulnerability.
Agricultural productivity varies significantly across regions and crops, with states like Punjab, Haryana, and Tamil Nadu achieving higher yields through intensive farming practices, better irrigation facilities, and effective extension services. However, many regions, particularly in eastern and central India, continue to face productivity challenges due to inadequate infrastructure, poor soil health, and limited access to modern farming technologies.
Technological adoption in agriculture has been gradual but increasing, with initiatives like Digital India promoting the use of precision agriculture, drone technology, soil health cards, and weather forecasting services. The Green Revolution of the 1960s and 1970s demonstrated India’s capacity for agricultural transformation, and current efforts focus on a sustainable and inclusive second Green Revolution.
Industry Sector
The industrial sector forms the manufacturing backbone of the Indian economy, contributing approximately 25-30% to GDP and employing about 24% of the workforce. This sector encompasses manufacturing industries, mining, construction, and utilities, each playing distinct roles in economic development, employment generation, and technological advancement. The sector has evolved significantly since independence, transitioning from import substitution policies to export-oriented and globally competitive manufacturing.
Manufacturing constitutes the largest component of the industrial sector, spanning traditional industries like textiles, steel, and chemicals to emerging sectors like electronics, automobiles, and pharmaceuticals. India has established itself as a global hub for several manufacturing activities, particularly in generic pharmaceuticals, textiles and apparel, automotive components, and information technology hardware. The “Make in India” initiative launched in 2014 aims to transform the country into a global manufacturing destination.
Heavy industries play a crucial role in providing basic materials and capital goods for other sectors. The steel industry is among the world’s largest, with both public sector enterprises like SAIL and private companies like Tata Steel contributing to production. The chemical industry is diverse, ranging from petrochemicals to specialty chemicals, supporting various downstream industries and contributing significantly to export revenues.
Textiles and apparel represent one of India’s oldest and most important industries, contributing significantly to manufacturing GDP, employment, and exports. The sector benefits from abundant raw materials, skilled labor, and established supply chains, making India the world’s second-largest textile exporter. However, the industry faces challenges from technological upgradation, environmental compliance, and competition from other countries.
Automotive industry has emerged as a major industrial sector, with India becoming a significant manufacturing hub for both domestic and export markets. The presence of global automotive companies, strong component suppliers, and government support has contributed to the sector’s growth. The industry is now transitioning toward electric vehicles and sustainable mobility solutions in response to environmental concerns and government policies.
Mining industry provides essential raw materials for various industrial activities, with India being rich in coal, iron ore, bauxite, and other mineral resources. However, the sector faces challenges related to environmental sustainability, land acquisition, and community displacement, requiring balanced approaches that ensure responsible mining while supporting industrial development.
Service Sector
The service sector has emerged as the dominant component of the Indian economy, contributing approximately 55-60% to GDP and employing about 34% of the workforce. This sector encompasses a wide range of activities including information technology, financial services, telecommunications, healthcare, education, hospitality, retail, and government services. The sector’s growth has been a defining characteristic of India’s economic transformation over the past three decades.
Information Technology and Business Process Management (IT-BPM) represents India’s most globally recognized service sector success story. With revenues exceeding $200 billion, the sector has established India as a global leader in software services, business process outsourcing, and digital technologies. Companies like TCS, Infosys, Wipro, and HCL Technologies have become global brands, demonstrating Indian capabilities in technology innovation and service delivery.
Financial services play a crucial role in economic development by mobilizing savings, allocating capital, and facilitating transactions. The sector includes banking, insurance, capital markets, and non-banking financial companies. India’s banking system comprises public sector banks, private sector banks, and foreign banks, with digital banking and financial inclusion becoming key focus areas. The insurance sector has grown significantly following liberalization, while capital markets have developed into sophisticated platforms for resource mobilization.
Telecommunications has undergone revolutionary transformation, evolving from limited landline connectivity to widespread mobile penetration exceeding 1.1 billion subscribers. The sector has enabled digital inclusion, e-commerce growth, and digital payment systems while supporting economic activities across sectors. The ongoing 5G rollout and digital infrastructure development promise to further accelerate economic digitization.
Healthcare services represent a growing sector with significant employment potential and export opportunities. India has developed expertise in medical tourism, pharmaceutical manufacturing, and telemedicine services. The sector includes traditional medicine systems like Ayurveda alongside modern healthcare, creating unique competitive advantages in holistic healthcare delivery.
Education services encompass formal education, skill development, online learning, and educational technology. India’s large young population creates both opportunities and challenges for the education sector. The growth of edtech companies and online learning platforms has accelerated, particularly following the COVID-19 pandemic.
Public Sector
The public sector remains a significant component of the Indian economy, encompassing central government, state governments, public sector enterprises, and government-controlled institutions. Despite privatization and economic liberalization, the public sector continues to play strategic roles in policy implementation, infrastructure development, social welfare, and economic regulation. The sector’s contribution to GDP varies but remains substantial in areas like defense, railways, energy, and social services.
Public Sector Enterprises (PSEs) operate across various industries, from oil and gas to telecommunications and financial services. Companies like Indian Oil Corporation, ONGC, Coal India, SAIL, and BHEL are among the largest corporations in India. These enterprises contribute significantly to government revenues through dividends and taxes while providing employment to millions of people. However, many PSEs face challenges related to operational efficiency, technological upgradation, and market competition.
Government administration provides essential services including law and order, justice, defense, foreign affairs, and regulatory functions. The civil services system, inherited from the British colonial period and adapted to democratic governance, manages policy implementation and public service delivery. Digital governance initiatives have transformed many government services, improving efficiency and transparency.
Public infrastructure development represents a major area of government investment and economic activity. This includes transportation networks, power generation, water supply, sanitation, and telecommunications infrastructure. The National Infrastructure Pipeline and various flagship programs demonstrate the government’s commitment to infrastructure development as a growth driver.
Social sector spending by the government covers education, healthcare, social protection, and poverty alleviation programs. Schemes like MGNREGA, PM-KISAN, Ayushman Bharat, and Swachh Bharat Mission represent significant public investments in human development and social welfare. These programs aim to ensure inclusive growth and equitable development across different sections of society.
Private Sector
The private sector has emerged as the primary driver of economic growth, innovation, and employment creation in India, contributing the majority of GDP and investment. This sector encompasses multinational corporations, large Indian companies, medium enterprises, and small businesses operating across all sectors of the economy. The liberalization reforms since 1991 have significantly expanded the private sector’s role and contribution to economic development.
Corporate sector includes some of India’s largest and most successful companies, such as Reliance Industries, Tata Group, Adani Group, Bharti Airtel, and Mahindra Group. These companies operate diversified business portfolios spanning energy, telecommunications, automobiles, chemicals, steel, and technology. Many Indian companies have expanded globally, establishing manufacturing facilities, acquiring companies, and building brands in international markets.
Foreign Direct Investment (FDI) has played a crucial role in private sector growth, bringing capital, technology, management expertise, and market access. India has become one of the world’s largest FDI recipients, with investments flowing into sectors like services, computer software, telecommunications, trading, and automobiles. Multinational corporations have established significant operations in India, treating it as both a manufacturing base and a market destination.
Entrepreneurship and startup ecosystem have flourished, with India becoming the world’s third-largest startup ecosystem. Cities like Bangalore, Mumbai, Delhi, and Hyderabad have emerged as major startup hubs, fostering innovation in technology, fintech, e-commerce, healthtech, and edtech. Unicorn companies like Flipkart, Paytm, Ola, and Zomato demonstrate the entrepreneurial dynamism of the Indian private sector.
Capital markets have developed sophisticated mechanisms for private sector financing, including stock exchanges, debt markets, venture capital, and private equity. The Bombay Stock Exchange and National Stock Exchange are among the world’s largest, facilitating capital raising and investment opportunities for both domestic and international investors.
Small and Medium Enterprises (SMEs)
Small and Medium Enterprises constitute the backbone of the Indian economy, contributing approximately 30% to GDP, 40% to exports, and providing employment to over 110 million people. These enterprises operate across all sectors, from manufacturing and services to agriculture and retail, demonstrating remarkable resilience, adaptability, and entrepreneurial spirit. The SME sector includes micro, small, and medium enterprises as defined by the Micro, Small and Medium Enterprises Development Act.
Manufacturing SMEs produce a diverse range of products including textiles, leather goods, handicrafts, engineering components, food processing, and chemicals. These enterprises often serve as suppliers to large companies, participate in global value chains, and contribute significantly to export earnings. Cluster development approaches have helped many manufacturing SMEs achieve economies of scale and technological upgradation.
Service sector SMEs include retail outlets, restaurants, transportation services, professional services, information technology, and financial services. The growth of digital platforms and e-commerce has created new opportunities for service SMEs to reach wider markets and scale their operations. Fintech, healthtech, and edtech startups represent emerging areas of SME growth.
Government support for SMEs includes various schemes and programs such as Stand Up India, Startup India, Make in India, and Atmanirbhar Bharat. These initiatives provide financial assistance, technological support, market linkages, and skill development opportunities. Credit guarantee schemes help SMEs access bank financing despite limited collateral and credit history.
Challenges facing SMEs include access to finance, technological obsolescence, regulatory compliance, market competition, and skilled labor shortages. The COVID-19 pandemic particularly affected many SMEs, leading to government intervention through emergency credit schemes, moratoriums, and support packages. Digital transformation and e-commerce adoption have become crucial for SME survival and growth.
Informal Sector
The informal sector represents a significant portion of the Indian economy, estimated to contribute 45-50% of GDP and employing approximately 90% of the total workforce. This sector includes unregistered enterprises, self-employed individuals, casual workers, and small-scale activities that operate outside the formal regulatory framework. Despite its large size and importance, the informal sector faces numerous challenges related to productivity, social protection, and integration with the formal economy.
Characteristics of the informal sector include small scale operations, family ownership, labor-intensive production, limited capital, traditional technology, and unregistered status. These enterprises often operate in urban slums, rural areas, and semi-urban locations, providing goods and services to local communities. The sector includes street vendors, small manufacturers, construction workers, domestic workers, agricultural laborers, and transport operators.
Employment patterns in the informal sector are characterized by low wages, irregular income, lack of social security, and limited career advancement opportunities. However, the sector also provides livelihood opportunities for millions of people, particularly those with limited education and skills. Women’s participation in the informal sector is significant, though often undervalued and undercounted in official statistics.
Economic contribution of the informal sector extends beyond its GDP contribution to include poverty alleviation, income distribution, and social stability. The sector serves as a shock absorber during economic downturns and provides flexibility in labor markets. Inter-linkages between formal and informal sectors are extensive, with many formal enterprises relying on informal suppliers and distribution networks.
Challenges include low productivity, limited access to credit, lack of social protection, regulatory constraints, and market limitations. Formalization efforts aim to bring informal enterprises into the regulatory framework while preserving their employment generation capacity. Digital payment systems, simplified registration procedures, and social security schemes represent important steps toward formalization.
Organized Sector
The organized sector encompasses registered enterprises that comply with labor laws, tax regulations, and other statutory requirements. This sector contributes approximately 50-55% to GDP while employing only about 10% of the total workforce, indicating higher productivity and capital intensity compared to the informal sector. The organized sector includes large corporations, government enterprises, banks, insurance companies, and registered small enterprises.
Corporate governance in the organized sector follows established standards, regulatory compliance, and transparency requirements. Listed companies must adhere to stock exchange regulations, accounting standards, and disclosure norms. Professional management, board oversight, and stakeholder governance are key features that distinguish the organized sector from informal enterprises.
Employment conditions in the organized sector typically include regular wages, social security benefits, provident fund, medical insurance, and other statutory benefits. Labor productivity is generally higher due to better technology, training, working conditions, and organizational systems. However, employment growth in the organized sector has been limited relative to GDP growth, leading to concerns about jobless growth.
Technology adoption and innovation are more prevalent in the organized sector, with companies investing in research and development, process improvements, and digital transformation. Quality standards, environmental compliance, and international certifications are common features that enable global competitiveness and market access.
Financial systems in the organized sector are well-developed, with access to bank credit, capital markets, institutional investors, and financial services. Credit rating systems, financial reporting, and audit mechanisms provide transparency and accountability that facilitate investment and lending decisions.
Rural Economy
The rural economy supports approximately 65% of India’s population and represents a significant portion of economic activity, employment, and cultural heritage. While agriculture remains the dominant activity, the rural economy encompasses non-farm activities, agro-processing, rural manufacturing, services, and traditional crafts. Rural development has been a key priority for successive governments, with numerous programs and schemes aimed at improving rural livelihoods and quality of life.
Agricultural activities form the core of the rural economy, including crop production, livestock rearing, dairy farming, fisheries, and forestry. Land-based livelihoods support millions of farming families, though landholding sizes have been declining due to population growth and land fragmentation. Sharecropping and tenant farming are common in many regions, affecting productivity and investment incentives.
Non-farm activities have grown in importance, providing supplementary income and employment opportunities for rural households. These include rural manufacturing, construction, transportation, retail trade, repair services, and small enterprises. Skill development programs aim to enhance rural youth capabilities for both farm and non-farm employment.
Rural infrastructure development has been a major focus, with investments in roads, electricity, telecommunications, water supply, sanitation, and internet connectivity. Programs like Pradhan Mantri Gram Sadak Yojana, Saubhagya, and BharatNet have significantly improved rural connectivity and access to services. Digital India initiatives are transforming rural governance, service delivery, and economic opportunities.
Financial inclusion efforts have expanded banking services, insurance coverage, and digital payment systems in rural areas. Self-Help Groups, microfinance institutions, and cooperative societies play important roles in rural credit and social mobilization. Government schemes like PM-KISAN, crop insurance, and rural employment guarantee provide income support and risk mitigation.
Urban Economy
The urban economy has emerged as the primary driver of India’s economic growth, contributing approximately 65-70% of GDP while housing about 35% of the population. Urban areas serve as centers of industry, services, innovation, and economic dynamism, attracting investments, talent, and resources from across the country and globally. Urbanization trends indicate continued growth in urban population and economic concentration in cities.
Metropolitan cities like Mumbai, Delhi, Bangalore, Hyderabad, Chennai, and Pune have developed as major economic hubs specializing in different sectors. Mumbai serves as the financial capital, Bangalore as the IT capital, Delhi as the political and commercial center, while other cities have developed strengths in manufacturing, pharmaceuticals, automobiles, and services.
Industrial clusters and special economic zones have concentrated manufacturing and export activities in urban and peri-urban areas. These clusters benefit from infrastructure, skilled labor, supplier networks, and logistics connectivity that support efficient production and global competitiveness. Technology parks and IT corridors have created specialized ecosystems for knowledge-intensive industries.
Service sector dominance characterizes urban economies, with activities like information technology, financial services, healthcare, education, entertainment, and retail concentrated in cities. Urban consumption patterns and lifestyle changes have created demand for diverse goods and services, supporting entrepreneurship and business development.
Urban challenges include infrastructure deficits, traffic congestion, air pollution, water scarcity, waste management, and housing shortages. Urban governance systems face pressures to improve service delivery, planning, and sustainable development. Smart city initiatives aim to leverage technology and innovation to address these challenges while enhancing urban quality of life.
Regional Disparities
Regional disparities represent one of India’s most significant development challenges, with substantial differences in economic development, per capita income, infrastructure, human development, and quality of life across states and regions. These disparities reflect historical factors, geographic advantages, policy differences, institutional capacities, and resource endowments that have created uneven development patterns.
Interstate inequalities are evident in per capita income variations, with states like Goa, Sikkim, Haryana, and Delhi having significantly higher per capita incomes compared to states like Bihar, Uttar Pradesh, Madhya Pradesh, and Odisha. Economic growth rates also vary substantially, with some states achieving sustained high growth while others lag behind national averages.
Infrastructure development shows marked regional variations, with southern and western states generally having better physical and social infrastructure compared to northern and eastern states. Road density, electricity access, telecommunications connectivity, healthcare facilities, and educational institutions demonstrate these disparities clearly.
Industrial development has been geographically concentrated, with states like Maharashtra, Gujarat, Tamil Nadu, Karnataka, and Andhra Pradesh accounting for a large share of manufacturing output and industrial employment. Investment flows, both domestic and foreign, have also been concentrated in these industrially developed states.
Agricultural productivity varies significantly across regions due to differences in irrigation, soil quality, climate conditions, technology adoption, and support services. Punjab, Haryana, and western Uttar Pradesh achieved high agricultural productivity through the Green Revolution, while many eastern and central states continue to have lower productivity levels.
Government initiatives to address regional disparities include special category status for certain states, backward area development programs, industrial promotion policies, and resource transfers through Finance Commission recommendations. Regional development schemes and infrastructure investments aim to promote balanced development across different regions.
Human Development Index (HDI)
India’s Human Development Index reflects the country’s progress in health, education, and standard of living, though significant challenges remain in achieving inclusive human development. With an HDI value of approximately 0.645, India ranks in the medium human development category, demonstrating substantial progress since independence while highlighting areas requiring continued attention and investment.
Health indicators show mixed progress, with significant improvements in life expectancy, child mortality reduction, and disease control, alongside persistent challenges in malnutrition, healthcare access, and health system strengthening. Life expectancy has increased substantially, reaching approximately 69 years, though regional variations and gender disparities remain significant. Infant mortality and maternal mortality have declined but continue to be higher than desired national targets.
Education achievements include substantial expansion of school enrollment, literacy improvements, and higher education growth. Primary education has achieved near-universal enrollment, while secondary and higher education access continues to expand. However, quality concerns, learning outcomes, dropout rates, and skill mismatches represent ongoing challenges requiring systemic improvements.
Income and living standards have improved significantly, with poverty reduction, middle class expansion, and consumer spending growth. Per capita income has grown steadily, though inequality remains a concern. Access to basic amenities like electricity, clean water, sanitation, and housing has improved through various government programs and economic development.
Gender development shows progress in areas like female education, political participation, and workforce engagement, while challenges persist in gender-based violence, wage disparities, and social norms. Women’s empowerment programs and legal reforms aim to address these structural inequalities and promote inclusive development.
Interstate HDI variations reflect regional development disparities, with states like Kerala, Goa, Himachal Pradesh, and Sikkim achieving high HDI levels while states like Bihar, Uttar Pradesh, and Madhya Pradesh have lower HDI rankings. These variations underscore the importance of targeted interventions and regional development strategies.
Income Inequality
Income inequality in India has increased over the past few decades, despite overall economic growth and poverty reduction. Various measures, including the Gini coefficient and income share of different population quintiles, indicate growing disparities in income distribution. This trend raises concerns about the inclusiveness of growth and the need for policy interventions to ensure equitable development.
Wealth concentration has increased significantly, with the richest segments of society capturing a disproportionate share of economic gains. Studies indicate that the top 1% of the population holds a substantial portion of total wealth, while the bottom 50% has a very small share. This concentration affects social cohesion, political stability, and sustainable development prospects.
Rural-urban disparities contribute significantly to overall inequality, with urban per capita incomes being substantially higher than rural incomes. However, within-group inequality has also increased in both rural and urban areas, indicating that inequality is not just a rural-urban phenomenon but reflects broader structural changes in the economy.
Sectoral income differences are substantial, with high-productivity sectors like information technology, financial services, and organized manufacturing offering higher wages compared to agriculture, informal manufacturing, and traditional services. Educational qualifications, skill levels, and sector of employment significantly influence earning potential and career advancement opportunities.
Inter-generational mobility remains limited for many poor families, with children often unable to escape poverty due to limited access to quality education, healthcare, and economic opportunities. Social mobility is constrained by caste, gender, geographic location, and family background, perpetuating inequality across generations.
Policy responses to address income inequality include social protection programs, skill development initiatives, rural employment schemes, education expansion, and inclusive growth policies. However, the effectiveness of these interventions in reducing inequality while maintaining economic growth remains a key policy challenge.
Role of Government in the Indian Economy
The government plays a multifaceted and crucial role in the Indian economy, encompassing policy formulation, regulation, public investment, service delivery, and economic management. Despite liberalization and increased private sector participation, the government remains a significant economic actor through fiscal policy, monetary policy, industrial policy, and social programs. The federal structure creates multiple layers of government involvement at central, state, and local levels.
Economic planning has been a distinctive feature of Indian economic management, with Five-Year Plans providing strategic direction for development priorities and resource allocation. Although centralized planning has given way to indicative planning and market-oriented approaches, the government continues to set long-term goals, sectoral targets, and development strategies through various policy documents and national missions.
Fiscal policy represents a primary instrument of government intervention, involving taxation, public expenditure, and debt management to achieve macroeconomic stability and development objectives. The government uses fiscal measures to stimulate growth, control inflation, reduce inequality, and provide public goods. Budget allocations reflect government priorities and policy commitments across different sectors and programs.
Regulatory framework encompasses a wide range of government functions including competition policy, financial regulation, environmental protection, labor standards, and consumer protection. Independent regulators in sectors like telecommunications, electricity, securities markets, and insurance ensure fair competition and consumer welfare while promoting sectoral development.
Public investment in infrastructure, education, healthcare, and research provides the foundation for private sector development and long-term growth. Government spending on physical infrastructure, digital connectivity, skill development, and innovation creates positive externalities that benefit the broader economy.
Social welfare programs represent a significant area of government intervention, aimed at poverty reduction, social protection, and inclusive development. Programs like MGNREGA, Public Distribution System, Ayushman Bharat, and various pension schemes provide safety nets and basic services to vulnerable populations.
Economic Reforms and Structural Changes
India’s economic reforms journey began earnestly in 1991 following a severe balance of payments crisis, marking a paradigm shift from state-controlled to market-oriented economic policies. These reforms have fundamentally transformed the structure, performance, and global integration of the Indian economy, leading to sustained growth, increased competitiveness, and improved living standards. The reform process continues to evolve, addressing emerging challenges and opportunities in the changing global economy.
Liberalization measures dismantled the license-permit raj system, reduced government controls, and eliminated industrial licensing for most sectors. Trade liberalization reduced import tariffs, removed quantitative restrictions, and promoted exports. Financial sector reforms deregulated interest rates, introduced competition in banking, and developed capital markets. These measures unleashed entrepreneurial energy and improved economic efficiency.
Privatization policies have reduced government ownership in non-strategic sectors while retaining control in strategic areas like defense, atomic energy, and railways. Disinvestment programs have transferred ownership of many public sector enterprises to private investors, improving operational efficiency and raising resources for the government. However, the pace and scope of privatization remain subjects of ongoing debate.
Foreign Direct Investment (FDI) liberalization has attracted significant capital inflows, technology transfer, and management expertise from global investors. FDI policies have been progressively liberalized, with automatic approval for most sectors and increased foreign ownership limits in various industries. Sectoral caps and conditions continue to exist in sensitive sectors like defense, **