India’s Growth Story: Decoding India’s Economic Blueprint5 min read
India’s economic journey has been a captivating blend of ancient heritage and a forward-thinking vision for the future. As an emerging market, India has showcased remarkable growth. India currently boasts a GDP of approximately $3.75 trillion1. Projections indicate an ambitious milestone: becoming a $5 trillion economy by 20272.
India’s manufacturing sector has experienced a significant growth story, evolving from traditional practices to modern, technology-driven production, driving economic expansion and job creation. With the government’s ‘Make in India’ campaign and manufacturing fund incentives, India is poised for a thriving manufacturing future.
Government initiatives encouraging growth
The Indian government has played a pivotal role in creating an environment conducive to economic prosperity. The ‘Make in India’ scheme launched nearly a decade ago has attracted substantial Foreign Direct Investment (FDI), since its inception. An essential driver of this initiative is the Production Linked Incentive (PLI) scheme across 14 sectors. This scheme aims to fortify supply chains, enhance competitiveness, and boost export potential, offering significant gains in production and employment, especially for MSMEs. Complementing these initiatives, ‘Atmanirbhar Bharat’ fosters self-reliance, revitalizing the economy post-Covid-19. It prioritizes local production, reducing dependence on imports and creating job opportunities, particularly in pivotal sectors like power, coal, defence, aviation, and mining.
Key Industries poised to boost the economy
Various sectors have made impressive progress towards achieving self-reliant production and impactful exports. Some of them are:
- Software and Services: India has been one of the major exporters of IT and BPO services over the last two decades. India is also becoming a major vendor to the world when it comes to SaaS and other tech offerings. Additionally, the implementation of India Stack, which includes Aadhaar and the Unified Payments Interface (UPI), has played a pivotal role in unlocking India’s internet economy.
- Fintech & Financial services: With the advent of smart apps and the Internet, fintech services have gained great traction post-pandemic. The sector is expected to propel growth in upcoming years.
- Renewables: Meanwhile, the renewable energy sector is experiencing a surge, driven by robust policies and investments, particularly through initiatives like the National Hydrogen Mission and a focused approach to solar energy, attracting substantial Foreign Direct Investment (FDI) inflows.
- Infrastructure: Strategic initiatives like the Industrial Corridor Development Programme3 comprising 11 corridors are enhancing connectivity and logistics infrastructure in India. Major projects like Bharatmala Pariyojana and the Sagarmala Project are revolutionizing connectivity and logistics networks, bolstering the ease of doing business and facilitating seamless trade.
- Manufacturing: This combination is enabling India’s manufacturing sector to grow to the next level. The sector, encompassing key sub-sectors such as chemicals, automobiles, textiles, electronics, and pharmaceuticals, is indeed at the forefront of the country’s economic transformation.
The government’s goal is to elevate the contribution of manufacturing to 25% of GDP4, propelling India towards becoming a global factory. Noteworthy achievements include the surge in exports to $450 billion in FY235, a significant increase from the pre-Covid level of $330 billion in FY19.
Some sub-sectors that are powering this sector:
- Chemicals: In the realm of chemicals, India stands as the 6th largest global producer6 and 3rd in Asia, playing a pivotal role in providing foundational elements for various industries spanning across textiles, paints, pharmaceuticals, and agrochemicals.
- Automobiles: The auto industry is poised for significant growth with initiatives like the Automotive Mission Plan, targeting the creation of 3.2 million7 direct incremental jobs by 2026 and requiring an investment of $25-30 billion8.
- Healthcare & Pharma: Deemed as “Pharmacy of the World,” India has the 3rd largest pharma industry in the world in terms of volume9. Biotech products have increased from 10 products to more than 700 in 202210.
- Defence: Driven by ‘Aatmanirbhar Bharat’ initiative, there has been a big push on indigenous defence manufacturing infrastructure. India is now exporting defence equipment to over 75 countries11.
- Electronic Systems: India is committed to reaching USD 300 bn worth of electronics manufacturing and exports by 2025-2612.
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These industries collectively underscore India’s commitment to self-sufficiency and global competitiveness.
India’s transformative economic initiatives
In this favourable environment of a conducive policy environment, India’s rising geo-political prowess in a multi-polar world, strong public and private investments, domestic demand, digital initiatives, and surging exports, the time is ripe to invest in India.
India’s growth story is a testament to its unwavering spirit and visionary governance. With manufacturing leading the charge supported by robust sectoral growth, the space holds a huge promise for investors.
Source: IBEF, www.nicdc.in, ww.makeindia.com, IBEF Report – May 2023, Avendus Spark. Data as at 31 August 2023
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References:
1https://www.forbesindia.com/article/explainers/gdp-india/85337/1
3https://www.nicdc.in/index.php/projects/national-industrial-corridor-development-programme.html
5Avendus Spark. Data as at 31 August 2023.
6https://www.makeinindia.com/index.php/sector/chemicals
7https://www.makeinindia.com/index.php/sector/automobile-components
8https://www.makeinindia.com/index.php/sector/automobile-components
9https://www.makeinindia.com/index.php/sector/pharmaceuticals
10https://www.makeinindia.com/index.php/sector/biotechnology
11https://www.makeinindia.com/index.php/sector/defence-manufacturing
12https://www.makeinindia.com/index.php/sector/electronic-systems
