A recent report from IDBI Capital highlights that India is on a rapid economic growth trajectory, expected to add $1 trillion to its GDP every 18 months over the next six years. This ambitious pace positions the country to become a $10 trillion economy by 2032, making it the third-largest economy globally by 2030.
Key Drivers of Growth
- Manufacturing Sector: The manufacturing industry is projected to contribute significantly to this growth, accounting for 32% of the increase in Gross Value Added (GVA). Government initiatives like “Make in India” are crucial in enhancing manufacturing capabilities, aiming to transform India into a global manufacturing hub.
- Historical Economic Acceleration: India’s economic journey has seen a remarkable acceleration. It took 63 years to reach a $1 trillion GDP in 2010, followed by a leap to $2 trillion by 2017 and $3 trillion by 2020. The impact of the COVID-19 pandemic did push the timeline for a $4 trillion GDP to late 2024, but growth prospects remain strong.
- Future Projections: From 2024 to 2032, India is expected to achieve a GDP of $10 trillion, driven by high demand in manufacturing, strong export capabilities, and government support through schemes like Production Linked Incentives (PLI).
Manufacturing Leadership
India is anticipated to surpass major global economies in manufacturing output, including the US, China, Germany, South Korea, and Japan, in the Industrial Production Index (IIP). The report emphasizes India’s potential for growth through favorable policy reforms and a conducive business environment.
Export Growth
India’s export potential is also set to expand, with forecasts suggesting that exports could comprise 25% of the GDP by 2030, reaching $2 trillion—an increase from just $61 billion in 2000. By 2024, exports are expected to hit $776.7 billion.
Factors Supporting Economic Expansion
Several factors are fueling this growth:
- Rising Domestic Demand: Increased disposable incomes are driving consumer spending.
- Global Supply Chain Realignment: Businesses are seeking alternative manufacturing bases, with India emerging as a viable option.
- Supportive Financial Environment: Enhanced public and private capital expenditures are bolstering economic prospects.
With these elements in place, coupled with a favorable demographic dividend, India is well-positioned to emerge as a global economic powerhouse.
