The slowdown in the economy has not diminished India's appeal in Davos

This report is taken from CNBC's 'Inside India' newsletter this week that brings you insightful and timely news and market commentary on the emerging powerhouse and the big companies behind their meteoric rise. Like what you see? You can subscribe here.

“The people and youth of India now Willing to contribute to creating the economy “$5 trillion by 2025,” he explained in his 2018 World Economic Forum speech.

“Not only this, when innovation and entrepreneurship… help (individuals) transform from job seekers to job givers, the number of avenues that will be opened for their country and for your business can only be imagined,” Modi added.

It is fair to say that achieving this goal has proven difficult.

The Indian economy is expected to be there $4.27 trillion, according to the International Monetary Fund This year, $0.73 trillion less than Modi's target.

that it Slowing economy It raised questions about the country's lofty growth goals. Market watchers believe that India is now going through a cyclical slowdown.

But what is interesting is that India's story – and its growth potential – continues to attract the attention of investors in India, Davos and beyond.

India is among Top five regions Global CEOs surveyed by PwC are looking forward to investing in it over the next 12 months. Other regions that made the top five among 4,700 executives surveyed in 109 countries were the US, the UK, Germany and mainland China.

Optimism about India has spilled over into the ongoing discussions in Davos.

Speaking to CNBC on the sidelines of this year's World Economic Forum, Managing Director and Group CEO Khaldoun Al Mubarak at Mubadala Investment Company He described India as “a very interesting country (and) a very interesting market.”

One measure that highlights India's potential in his view is the size of its population, but its youth. Mubarak said that about 480 million Indians are under the age of 18, which is a larger number than the population of the United States, the total population of Europe, the population of the Middle East, as well as the population of South America who are under the age of 18.

He said, “We have been investing in India… for years, and we continue to work on building our investment portfolio in India and actually entering into that wave that has already begun.”

He added that this cycle “will, in my view, continue moving forward.”

Mubadala's investments in India include Tata Power, a renewable energy company owned by the Tata Group Reliance IndustriesJio's technology-enabled giant platforms.

Prosus is another investment firm looking to tap into India's growth potential, especially the country's technology industry.

“You've seen the impact of technology in India… and they're saying: 'We're ready for the next step,'” the company's CEO said. Fabricio Plosi told CNBC On the sidelines of the summit.

“Prosus is ready to invest more and more in India. We have invested about $8 billion there over the past few years and we will invest more,” he added.

Indian startups that Prosus has invested in include food delivery company Swiggy, edtech company BYJU's, agritech player Dehaat, and e-commerce platform Meesho.

Moving forward with technology

The interest in India – particularly opportunities in technology and startups – is in line with the government's broader focus on developing the sector.

Among the key priorities for the Indian delegation to Davos this year was deepening its foothold in the semiconductor industry through government incentives and targets.

This includes exploring the development of its own graphics processing unit (GPU) in the next three to five years, said Ashwini Vaishnao, Minister of Railways, IT, Information and Broadcasting. He told CNBC-TV18 on the sidelines of the World Economic Forum meeting.

Other projects unveiled include India's plans to develop 25 indigenous chipsets Designed and manufactured in the country. It is looking forward to offering the first tranche by September and the first tranche by 2026.

Vaishnaw also explained the government's goal of providing core computing power with 1,000 GPUs, especially for startups that lack access.

He added that this is part of the government's focus this year on enhancing talent and leveraging data to create robust datasets to train artificial intelligence models.

Vaishnau had led what is said to be the largest Indian delegation to Davos this year, which included representatives from eight states: Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Maharashtra, West Bengal and Uttar Pradesh, with each of them attending. They compete for investments for their upcoming initiatives.

For example, Andhra Pradesh Chief Minister Chandrababu Naidu He reportedly showcased the state's business-friendly policies Hoping to attract multinational companies such as Unilever, PepsiCoAnd Google Cloud AstraZeneca.

Meanwhile, neighboring Telangana has showcased its expertise in electric vehicles, pharmaceuticals and semiconductors. Elsewhere, Maharashtra reportedly introduced itself as India's industrial power.

The large presence of Indian officials in Davos is likely an acknowledgment of the fact that companies, especially those that have been around for only a few years, need more capital than they can raise domestically.

Foreign investments in the country are “drying up” due to economic policy uncertainty and geopolitical risks, according to Dheeraj Nim, foreign exchange strategist and economist at ANZ Bank.

One way forward, he suggested, is for the Indian government to “promote greater trust by reducing political and regulatory costs, and improving the ease of doing business in India.”

“There is a lot that India can do even if global variables are out of control. India has plans to become a developed country by 2047, so we will need much stronger growth than the 6-7% we are used to. The growth will be It will be achieved by making more investments as well as enhancing workforce productivity and technological capabilities.

The question of how India plans to continue growing at a sustainable pace, while creating jobs and increasing productivity, is a top priority for the Indian government. In Davos, India's Minister of Railways, Electronics and Information Broadcasting, Ashwini Vaishnao, sat down to discuss with a group of global executives, investors and Indian entrepreneurs. The breakfast organized by Brunswick Group and CNBC on the sidelines of the World Economic Forum allowed executives and investors to pose questions to the Minister and discuss the investment environment in India.

India may lower its disinvestment target for FY2025. The country's government is looking forward to Reducing its goals related to divestment and asset monetization By 40% — or to less than 300 billion rupees ($3.47 billion) from 500 billion rupees — for fiscal year 2024 to 2025, the Economic Times reported, citing people familiar with the discussion. Regulatory hurdles and valuation difficulties have proven to be roadblocks, but Prime Minister Narendra Modi's administration is still selling larger stakes in state-run companies than previous governments did.

The Quartet met and reaffirmed their partnership. Foreign ministers of the group, which includes the United States, Australia, India and Japan, met on Tuesday and stressed the importance of keeping the Indo-Pacific region free, according to a joint statement issued after the talks in Washington. The meeting, hosted by US Secretary of State Marco Rubio on his first day in office, was meant to signal that Confronting China has been a top priority for the Trump administrationAnalysts said.

Oil prices may rise in India. The United States imposed New sanctions on Russian oil On January 10th. While India imports about 40% of its oil from Russia, according to business intelligence firm Kpler, New Delhi may face a sudden supply crunch. There may be an interruption in supplies to India Up to 500 thousand barrels per dayTo mitigate the potential oil shock, Indian importers are looking to import oil from suppliers in the Middle East, Victor Kurilov, senior analyst at Rystad Energy, told CNBC.

Indian stocks traded mixed this week. the Classy 50's The index fell by 0.03% this week and closed at 23,205.35 points.

The yield on 10-year Indian government bonds settled at 6.78%.

Kumar Rakesh, India analyst at BNP Paribas, said on CNBC this week Optimism about India's automobile industry. India's exports of passenger cars and motorcycles have been growing at a reasonably strong rate in recent years, especially in the markets of Africa, Latin America, the Middle East and Southeast Asia, Rakesh said. Moreover, Indian automakers have been able to enjoy greater profitability because their cost of production locally is one of the lowest in the world.

Meanwhile, Jose Rasco, CIO of Global Private Banking and Wealth Management Americas at HSBC, acknowledged that the Indian market is not cheap, but that is because investors “Pay for quality“Some of the features that attract investors to India are its young and diversified economy, good legal system and increasing productivity in recent years.