A Harvard University report predicts
that India’s economy will continue to be one of the fastest growing economies
in the world for the next decade, beating China and the U.S. India’s economy is
predicted to grow by 7.3% and the report estimates this growth will continue at
an incredibly fast pace. Researchers at Centre for International Development at
Harvard University (CID) said:
“India tops the list as the fastest growing country for the coming decade, at 7.9 per cent annually… India has made inroads in diversifying its export base to include more complex sectors, such as chemicals, vehicles, and certain electronics.”
The report also points to India’s
ability to redeploy its existing skill base to new products and thus diversify
its economy and exports.
A HSBC “Navigator” survey confirms
that Indian companies are upbeat on local and global opportunities with 94 per
cent showing optimism for the growth of their businesses compared to a global
average optimism rate of 77%.
HSBC notes three key drivers of
growth for Indian firms, the use of technology, product demand, and the growth
of ecommerce.
HSBC India said:
“We believe that India will continue to hold its position as one of the fastest growing economies globally, and hence, present long-term growth opportunities.”
A report by the India Brand Equity
Foundation reveals some of the drivers of India’s success, its high rates of
growth, and the country’s potential:
“India’s stupendous rise on the global stage is being driven by a slew of factors – strong institutional infrastructure, favorable demographic profile, skilled workforce, an emerging middle class, a dynamic entrepreneurial culture, rising productivity, a resilient private sector, rapid technological advancement.”
Major Sectors Creating Opportunities
for Investors and Entrepreneurs in India
High-Tech Startups
Indian Prime Minster
Narendra Modi committed a multi-billion dollar support in funding and tax breaks to propel
high-tech startups in a country of well-educated millennials. The move was
expected to double India’s new startups over the following five
years. This growing number of high-tech startups means opportunity for
technology investors and venture capitalists, both within India and from
abroad.
Use of Mobile Applications
In 2017 India overtook the U.S for
the greatest number of mobile application downloads, reaching 12.1 billion and
taking the 2nd spot globally for this metric. One platform forecast that by
2022 India will reach 37.3 billion application downloads annually, a rate of
growth of 207% and one that makes India the fastest growth market for apps in
the world.
The growth has been driven by the
availability of cheaper smartphones from China and a subsidization of 4G data
in the country. These statistics mean that India has to be one of biggest
markets to consider for app developers, marketers, and indeed investors.
Ecommerce and the Internet in India
Increasing smartphone and internet
availability in India has propelled its ecommerce market. This digital
transformation has led to an ecommerce market worth over $50 billion in recent times and
one that is expected to grow to $400 billion by 2026.
India’s key ecommerce players are currently Flipkart, Amazon India, and Paytm Mall. Electronics form the largest segment of ecommerce sales at 48% of the market, followed by fashion at 29%.
Google’s launch of a dedicated
Indian storefront for its hardware products is imminent and set to compete with
a similar Apple storefront and Flipkart’s current domination of the Google
product retail market in India.
Infrastructure Development
Infrastructure sector is a key
driver for the Indian economy. The sector is highly responsible for propelling
India’s overall development and enjoys intense focus from Government for
initiating policies that would ensure time-bound creation of world class
infrastructure in the country. Infrastructure sector includes power, bridges,
dams, roads, and urban infrastructure development. India was ranked 44 out of
167 countries in World Bank's Logistics Performance Index (LPI) 2018. India
ranked second in the 2019 Agility Emerging Markets Logistics Index.
According to the Department for Promotion of Industry and Internal Trade (DPIIT), FDIs in the construction development sector (townships, housing, built up infrastructure and construction development projects) and construction (infrastructure) activities stood at US$ 25.78 billion and US$ 17.22 billion, respectively, between April 2000 and September 2020. The logistics sector in India is growing at a CAGR of 10.5% annually and is expected to reach US$ 215 billion in 2021.
The infrastructure sector has become
the biggest focus area for the Government of India. India plans to spend US$
1.4 trillion on infrastructure during 2019-23 to have a sustainable development
of the country. The Government has planned investment of Rs. 5,000,000 crore
(US$ 750 billion) for railways infrastructure from 2018-30.
Media and Entertainment
Hollywood’s Indian equivalent
“Bollywood” is now actually more productive than its U.S-based counterpart.
Bollywood now makes twice as many movies as Hollywood and contributes billions
to India’s GDP. With movie ticket prices much lower in India, Hollywood’s
revenue still far outstrips Bollywood, but movies in Bollywood cost a fraction
of the price to create.
India’s Bollywood mega-stars don’t
just stop at acting, many of them are investing in India’s thriving technology
and ecommerce startups too.
Manufacturing
Manufacturing is still a foundation
of India’s economy and it’s a growing sector. An active program by the India
government “Make in India” combined with India’s wider economic success and led to make India the third-largest global economy.
By 2025, India’s manufacturing
sector should reach $1 trillion in output and form 25% of India’s GDP compared
to 16% of GDP in 2016. Manufacturing is one of the biggest destinations for
inbound investment into India in a number of sectors including automotive and
electronics production.
India’s Vice President Venkaiah
Naidu, speaking in Paris on November 9, 2018, predicts India is close to
becoming a $5 trillion economy by 2025.
Agriculture and Food Processing
Over 50% of India’s total workforce
is employed in its agricultural sector which contributes around 18% of the
countries GDP. India is second in the world for agricultural output, but its
current share of global agricultural exports is just 2%. That said, India is
one of the largest exporters of sugar, beef, rice, and shrimp.
To increase exports, the government
of India has set a target to increase food processing in the currently from 10%
to 20% to increase India’s share of the global food processing market from 1.5%
to 3% by 2020. The country currently has eight “mega food parks” and the
Ministry of Food Processing Industries (MOFPI) is planning to increase this
number to 42 by the end of 2018.
Chemicals and Minerals
In India, chemicals are expected to
become a $250 billion-dollar industry by 2020, as well as petrochemicals, the
country produces a significant portion of the world’s pharmaceuticals.
Mineral mining and exploration were
2.6% of the country’s GDP in 2017. Though an area of concern due to some of the
low-safety and illegal processes employed, India produced 567 million tons of
coal, 210 million tons of iron ore, and 1.59 tons of gold in the 2017-2018
period.
Global budgets for mineral
exploration have increased recently and the price of gold is rising. Two
factors that may further influence this sector in the coming years.
Healthcare and Medical
Driven by rising incomes, greater
health awareness, and better access to insurance services, India’s healthcare industry
is expected to grow to $373 billion by 2022. India’s government launched its
largest funded healthcare scheme, the National Health Protection Scheme, in
September 2018 and the sector is expected to generate 40 million jobs by 2030.
Private sector medical expenditure accounts for 74% of the total value of the
sector. Medical tourism is also a growth sector for India, which has seen over
22% growth in an area which is expected to double in size to $6 billion by the
end of 2018.
IT and Business Services
No overview of economic opportunity
in India is complete without a glance at the IT and business services sector in
India. The country’s high proportion of well-educated English speakers has led
to the sector increasing from a standing start in the country to 55% of its GDP
in 2018. IT companies alone contributed 8% of India’s GDP in 2016 and the
country is now home to Intel, Texas Instruments, Yahoo, Facebook, Google and
Microsoft.
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