As the country celebrates its 75th year of Independence, there is much cause for cheer for India has not only displayed resilience in the face of an ongoing pandemic but also demonstrated great leadership in charting the path ahead for economic expansion with a firm focus on sustainability. India took centre-stage by not just helming the world’s largest vaccination drive but also being a facilitator for several other nations, further growing its influence on the world stage.
In 2020, India witnessed a challenged economy due to factors outside of her control, registering a significant contraction of 7.5% in its GDP. Though almost all countries observed a similar trend of contraction in their respective GDPs, India stood out in terms of its resilience and the ability to bounce back. The economy rebounded within a year and showed a prompt recovery with a forecast of 10% GDP growth in the current year. The growth was primarily driven by conducive government policies resulting in ease of doing business and hence solidifying investor confidence in the country. The forecasts for near future also look promising where most of the leading institutions pointing to a GDP growth of ~8% per year.
In order the maintain the momentum of growth, it will be imperative to focus on significantly increasing the scale of the manufacturing sector from its current share of 17% to the overall GDP. The Government of India has also set an aspirational target of achieving a 25% share from the manufacturing sector. In order to achieve this, the sector in India need to change from a build-to-print destination to a technologically advanced and automated manufacturing destination. There is significant opportunity for India to use the technology advantages that global players bring to ‘Create in India,’ with India co-owning the Intellectual Property (IP) in areas of strategic national importance. Creating in India in collaboration with global players will catapult India’s vision to create a strong ecosystem and commercialize production locally, and to use this base to boost global supply chain and export capabilities. This will surely catapult the Prime Ministers vision to push India into $5 Trillion economy by 2025.
The defence sector, for example, can be the one of many sectors where such a model can be followed. The co-development for the defence sector will not be just technology transfers or just manufacturing but enabling an ecosystem that will include co-design, co-development and co-manufacturing, supply chain and support resulting in multiplier effects for the economy. The domestic demand itself is worth USD 130 billion for the next five years and this also can increase significantly if we consider the export opportunities. Defence was one of the few sectors that was not significantly affected by the pandemic. The Govt continued its efforts to reform the sector and all the reforms are expected to yield some fruitful results starting 2022.
The aviation sector has a high synergy with the defence sector in terms of capabilities and competencies required for manufacturing. While this sector was among the hardest hit during the pandemic, it is expected to bounce back strongly in 2022, for India remains the fastest growing aviation market across the globe. Reports suggest that India has become the third largest domestic aviation market in the world and is expected to overtake UK to become the third largest air passenger market by 2024. With increased impetus on investments across creating infrastructure and encouraging new entrants into the market, the sector is well-poised for growth and development despite its rocky last couple of years. The launch of new and rechristened airlines in India points towards an optimistic and productive year for the aviation sector. The Airports Authority of India (AAI) is expected to further drive this growth by investing INR 25,000 crores (USD 3.3 billion) over the next five years for expansion and modification of existing terminals, new terminals, expansion or strengthening of existing runways, aprons, Airport Navigation Services (ANS), control towers, technical blocks etc. This mix of fresh investments, infrastructure development and market potential signal a renewed sector that will grow fast and open up significant opportunities for India’s rich talent pool.
India’s vision for economic growth highlights the need for innovation across critical sectors. The time is ripe to bolster our industrial ecosystem and technological prowess to play a greater role in the global market. A future-ready industry will play a significant role as India gears up to realise its true potential and highlight its advances and readiness to the world.