During the India Ideas Challenge summit hosted by the US-India Business Council, the Indian prime minister (PM) addressed the country’s position as a safe and reliable trading partner post-COVID-19. With all eyes on India’s ability to rise to the challenge, the PM highlighted India as a land of emerging opportunities.
We present some of the key sectors highlighted in the PM’s speech that we expect to ride the wave of growing optimism in India’s growth story.
A Large Population Providing a Huge Scope for IT Penetration
India is one of the top contributors to the global information technology (IT) sector, with nearly 500 million users actively using the Internet, as per the Internet and Mobile Association of India’s Digital in India report. The potential for cross-selling products to a connected ecosystem of 1.35 billion people in this digital marketplace is enticing. Fintech and eCommerce are likely to gain prominence as India transitions towards a cashless economy and more Indians enter the workforce. Given the security challenges, a strong technology policy is the need of the hour.
An Abundance of Opportunities in Agriculture
The pandemic has once again highlighted the importance of the agrarian economy. Several opportunities exist along the value chain in farm management, logistics, agricultural machinery, fisheries, and food processing. Despite a large food production base, India’s level of food processing is low. There is a need for the country to move up the value chain as India’s agriculture exports consist of mainly raw materials. According to Invest India, increasing investments in infrastructure facilities, the use of modern technology, and promoting food security will position India as a preferred investment destination for the food processing sector, which is expected to be worth half a trillion dollars by 2025.
Will Healthcare of the 2020s be the IT sector of the 2000s for India?
The pandemic has exposed the limitations of healthcare systems worldwide. With the increasing number of COVID-19 cases, hospitals’ capacity has been severely put to the test. The pandemic could be the critical breakpoint needed for India to revamp its healthcare delivery system. Despite the constraints, India’s medical equipment manufacturing industry has risen to the challenge and is one of the pandemic’s success stories. Increasing the investment in equipment and medical facilities in public hospitals and further impetus on domestic manufacturing could be key growth drivers. The Indian pharmaceutical industry has been actively ensuring drugs reach different parts of the world in record time. here is also an opportunity for India to reduce its reliance on Chinese application programming interfaces in the IT sector.
Clean Energy New India
India has been making steady progress in its transition towards a natural gas-based economy. Moreover, recent investments in solar and wind projects are steps in the right direction towards India’s adoption of clean energy sources. With an ambitious target of achieving 450 gigawatts of renewable energy by 2030, the sector is expected to see rapid scaling up of capacity. Worsening air quality and concerns over global warming will tip the balance in favor of clean fuels.
One Giant Leap for Indian Aviation
According to Frost & Sullivan’s analysis, rising standards of living will lead to Indian passenger traffic nearly doubling in 10 years. Given the huge demand and growth potential, India is well-positioned to become a critical part of the aircraft manufacturing supply chain, provided it takes appropriate measures to ensure the “Made in India” moniker is attractive. Recent decisions to favor the setup aircraft maintenance, repair, and overhaul (MRO) facilities in India are a step in the right direction. In the short term, the government needs to ensure airlines remain sustainable.
Strong Defense and Space Capabilities
The government’s recent decision to increase the Foreign Direct Investment (FDI) limit in defense from 49% to 74% is a shot in the arm for India’s defense sector. The focus on local investment alongside a restriction of imports will go a long way toward India’s path to self-reliance in the defense sector. The space sector will also experience considerable traction with the private sector allowed to participate in a range of activities going forward.
The Big Infra Push
India’s recently-launched National Infrastructure Pipeline initiative aims to enhance the country’s infrastructure and help India become a 5 trillion dollar economy by 2025. Improved road connectivity to remote areas, expressways, and industrial road corridors are a few of the planned upgrades to existing infrastructure. Moreover, the government intends to increase the share of rail freight to 50% in 2030 by introducing dedicated rail freight corridors and a multi-modal transport network. The development of inland waterways and up-gradation of ports will also boost the maritime infrastructure. Housing for all and piped water connections to households are key focus areas in India’s infrastructure push.
Digital Technology to Drive Financial Inclusion
The government’s push towards financial inclusion with an emphasis on digitization will immensely benefit the rural population. The ease of making digital payments and local-language based mobile applications will accelerate the adoption of fintech in rural areas. Microfinance institutions are also expected to leverage digital banking to mobilize savings and deposits. There is a huge opportunity for lenders to monitor repayments and the effective utilization of loans while providing customer-specific and digital-enabled microfinance products.
COVID-19 has reshaped the global order, placing India as one of the top alternatives to China-based global supply chains. India’s efforts to reform its sectors are already started to bear fruit. Stable decision making, transparent processes, and the adoption of flexible policy positions support business activity and remain vital in converting growth opportunities.
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