India is ambitiously targeting a $10 trillion economy by 2030, with a near-term goal of surpassing $5 trillion in GDP within the next three years. Prime Minister Narendra Modi government’s latest budget, presented last month, aims to sustain this growth with significant investments in infrastructure, health, and education.
However, India’s aspirations extend further. The ultimate goal is to transform into a developed economy by 2047, aiming for a $30 trillion GDP with a per capita income of $18,000 (Dh66,105) annually. This vision, detailed in the Viksit Bharat @2047 approach paper released last month, focuses on nine key priorities to create ample opportunities for all.
“By 2047, India is capable of becoming a $30 trillion economy with the quality of life of a developed nation,” the paper states.
To reach these milestones, India will need to implement crucial structural reforms, enhance its innovation ecosystem, and adopt effective economic policies to foster growth and attract global investment.
“Focusing on skill development for SMEs, improving the ease of doing business, and incentivising foreign investment are key economic reforms needed to achieve a $10 trillion economy by 2030,” says Dr Mohammed Aslam Khan, Chairman and Managing Director of Octaware Technologies Limited, a Bombay Stock Exchange-listed IT services firm specialising in digital transformation for healthcare, finance, and government sectors.
Economic growth and stability
The country’s real GDP grew by 8.2 per cent in the financial year 2024, marking over 7 per cent growth for the third consecutive year, driven by stable consumption and investment demand.
“India is expected to emerge as the fastest-growing global economy over the next five years. Key sectors that are expected to contribute to this growth include energy, electronics, automotive, agriculture, defense, services, and healthcare,” says S Sathish, Partner and National Sector Leader-Industrial Manufacturing, KPMG in India. He adds that global economic turmoil has favoured India as companies look to diversify supply chains.
“India’s recent trade agreements with countries like the UAE and speculated agreements with European, and African countries will positively impact economic growth. While global uncertainty may affect exports, India’s major production and consumption base may lessen the impact,” Sathish adds.
Budget highlights
In line with its long-term focus, India’s post-election budget emphasises growth, macroeconomic stability, and resilience to global challenges.
In her speech, Finance Minister Nirmala Sitharaman highlighted that inflation would remain low, stable, and move towards the 4 per cent target.
In its post-budget commentary, Fitch Ratings noted that the government’s modest GDP growth assumption of 10.5 per cent in FY25 is achievable and expects the deficit to drop below 4.5 per cent of GDP in FY26. In addition to MSME support, the budget includes measures to review customs duties and reduce foreign firms’ corporate tax rates to 35 per cent, from 40 per cent.
Sectoral focus
India is focusing on key sectors such as infrastructure, health, education, manufacturing, and technology to drive growth. Strategic investments and reforms in these areas aim to boost productivity, enhance economic resilience, and create ample opportunities for development.
Manufacturing growth
India’s manufacturing landscape has evolved over the past decade, with sectors like automobiles, wood products, furniture, and pharmaceuticals gaining output share.
The budget emphasises support for MSMEs and manufacturing, particularly in labour-intensive sectors. A self-financing guarantee fund will provide up to Rs1 billion in guarantee cover per applicant. Public sector banks will develop in-house capabilities to assess MSME creditworthiness, eliminating the need for external assessments.
“India’s manufacturing sector has the potential to reach $1 trillion by 2025 driven by increased demand for Indian goods and expected government support over the next few years,” says Sathish of KPMG. He adds that government schemes such as Production Linked Incentives (PLI) and measures promoting FDI have supported manufacturing in recent years, noting that “the measures should continue going forward.”
“Focused initiatives and incentives to increase the digitalisation of manufacturing and adoption of artificial intelligence are necessary to enhance competitiveness,” says Sathish, emphasising that skill-building programmes and financial support should be designed to strengthen the supplier ecosystem and SMEs.
Electronics industry
India’s electronics sector is on a growth trajectory, with domestic production reaching Rs8.22 trillion, and exports climbing to Rs1.9 trillion in FY23, according to Economic Survey 2023-24. The establishment of facilities for major global brands in India has strengthened the local industry. Government initiatives such as Make in India and various Production Linked Incentive (PLI )schemes have driven this expansion.
Semiconductor technology initiatives and measures to support local production reflect the government’s focus on technological advancement.
EV ecosystems
India’s electric vehicle (EV) market has seen robust growth, with sales surpassing 1.7 million units in fiscal year 2024, according to a report by JMK Research & Analytics.
The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) II scheme has been pivotal in this expansion, though its funding is being reduced. In the budget, the Finance Minister proposed reducing the FAME II allocation from Rs51.72 billion in FY24 to Rs26.71 billion for FY25.
Looking ahead to 2030, India’s EV market, valued at $2 billion, is expected to grow to $7.09 billion, with annual sales projected to reach 10 million.
Information technology
India has solidified its position as a major global player in IT and BPO services, showcasing its competitive edge on the world stage. As technology evolves and demands become more specialised, India is poised to meet these needs, bolstered by its history of technological success and a focus on upskilling and reskilling.
In the budget, Dr Aslam notes that funding for innovation, extended tax benefits for start-ups, the abolition of angel tax, digital public infrastructure in health, law, and services, and the implementation of a digital crops survey will positively impact the digital economy.
“These initiatives will help tech start-ups and IT service providers,” he says, adding that his company sees “an opportunity to work on the geographic information system (GIS), blockchain-based faceless solutions, and development of record management systems, and leverage IndiaAI Mission’s skill development for its export services.”
Agriculture and rural development
The agriculture sector supports 42.3 per cent of the population and contributes 18.2 per cent to GDP. The budget aims to boost productivity and resilience by releasing high-yielding and climate-resilient crop varieties. The Digital Agriculture Mission (2021-25) will digitise the sector, while the Agriculture Infrastructure Fund (AIF) supports infrastructure development. An additional Rs53 billion has been allocated for the Digital Agriculture Mission, aimed at promoting technology use in farming.
Infrastructure boost
The government is making substantial investments in infrastructure to boost the economy, with plans to sustain robust fiscal support over the next five years, balancing it with other priorities and fiscal consolidation.
This year, Rs11.11 trillion has been allocated for capital expenditure, representing 3.4 per cent of GDP.
To achieve the $1 trillion manufacturing target, KPMG’s Sathish stresses the need for a sharper focus on transportation infrastructure, including roads, shipping, railways, and aviation.
“New and innovative funding models involving public-private partnerships, such as novel non-fare revenues and price inflation buffers, will be beneficial,” he says.
Sathish also highlights the need for an integrated digital logistics marketplace that provides detailed transport data and rate visibility. Improved visibility and scheduling will promote greater adoption.
Global powerhouse
India’s goal of becoming a $10 trillion economy by 2030 is ambitious but achievable through steady economic growth, strategic investments, and technological advancements.
“India is already on track to balance growth with sustainability through various measures the government has taken in the past, including net zero by 2070, sovereign green bonds, and renewable energy targets,” says Sathish.
He emphasises the need for the government to attract foreign and private investments in renewable energy, energy storage, and green hydrogen technologies to ensure sustainable growth.
The government’s focus on infrastructure, MSMEs, education, and healthcare will be vital. By tackling global challenges and capitalising on its demographic dividend, India is poised to become a global economic powerhouse.
