Today, India is firmly established as one of the world's five largest economies and continues to grow rapidly. Over the past decade, its GDP has doubled, driven by strong domestic consumption, infrastructure investment, and key structural reforms.
After registering a remarkable growth of 7,6% in 2025, the Asian Development Bank projects an increase of 6,9% for 2026 and 7,3% for 2027. According to the IMF, in 2027, India will rank fourth in the world in nominal GDP, surpassing the Japanese economy; in the 2,5-3 year outlook, it is expected to rank third, overtaking Germany.
Traditionally, India's economy has been heavily dominated by services, especially IT and software exports. The major challenge for the Indian government now is to enable manufacturing to catch up with services as a driver of growth.
Main sectors
Manufacturing's contribution to GDP today is around 16-17%. The government's objective, however, is to raise this share to 25% through its National Manufacturing Policy. The growing demand for goods and services fosters new business opportunities, which, in turn, generates a cycle of economic growth in various sectors.
Electronics and semiconductorsOver the next five years, the sector is set to grow even faster. The Indian government aims to generate $300 billion in production by 2026 and is transforming the country from a mere assembler into a chip manufacturing ecosystem.
Infrastructure and logisticsTo boost industrial development, the government is working on integrating physical and digital infrastructure within the framework of the national master plan “Gati Shakti.” This initiative strategically connects industrial hubs with ports, airports, and freight transport routes. The central objective is to reduce high logistics costs and create industrial parks ready for manufacturing ecosystems to operate and scale seamlessly.
The automotive industryManufacturing priorities in the industry have shifted from domestic fuels to green energy and electronics. In India, the number of electric cars is growing, and it is estimated that by 2030 one in five light vehicles could be electric.
The materials sectorIt contributes around 12% to manufacturing GDP and supports the infrastructure and construction sector.
The pharmaceutical and medical sector: India is the world leader in generic medicines and vaccines, with a strong global presence. It is now driving the manufacture of medical devices, a market expected to reach $50 billion by 2030.
Green manufacturing and decarbonizationIndia aims to achieve net-zero emissions by 2070, and its economy is currently undergoing a reconfiguration, with massive investments in renewable energy equipment, energy storage systems, and low-carbon materials. Currently, its solar module production capacity has already exceeded 100 gigawatts.
“Make in India”
Launched in September 2014, this initiative emerged as a rapid response to the 2013 crisis (when India was considered one of the “Fragile Five” by Morgan Stanley) to turn the country into a global manufacturing hub and reduce dependence on imports.
Key achievements include increased manufacturing and exports in various industries such as electronics, steel, renewable energy, electric vehicles, and defense. Furthermore, the initiative has opened strategic sectors (railways, defense, and medical equipment) to foreign investment.
Advantages for manufacturing development
Demographic advantageIndia maintains a relatively young demographic (median age of 29,2 years in 2026), having an invaluable window of opportunity to consolidate sustained economic growth and become the main industrial base and a major market in the region.
UrbanizationIn 2024, 35% of the population lived in cities. Each year, more people are leaving the agricultural sector and seeking employment in urban industry and services.
Geopolitical alternativeAmid geopolitical uncertainties caused by the conflict in the Middle East and rising manufacturing costs in China, multinationals are migrating their supply chains to India to take advantage of its huge labor market.
Advanced IT SectorAlthough IT is a service sector where India is already a world leader, the country has begun to use this large workforce of software engineers to drive smart factories, automation and the design of advanced electronic components that the new manufacturing needs.
ConnectionsIn recent years, India has signed multiple free trade agreements, including agreements with the United Arab Emirates, the United Kingdom, Australia, New Zealand and the European Free Trade Association (EFTA).
Obstacles
Infrastructure deficienciesThere are still huge gaps in infrastructure, especially in rural areas, which increase transport costs compared to other Asian giants.
Dependence on key importsDespite the progress, dependence on foreign critical components remains high (around 60% in advanced electronics).
Skilled talent gapThe lack of universal quality education, especially in automation and AI, poses a serious obstacle to technological progress.
Geopolitical tensionsIn 2025, Donald Trump imposed high tariffs of 25% on products imported from India because of its continued purchases of Russian oil.
Conclusions and forecasts
India will remain among the most advanced economies in the region and the world in the coming years. However, with appropriate reforms, its growth could be considerably faster.
Between 2030 and 2035, the economic model is expected to mature substantially. Long-term projections indicate that India will firmly establish itself as the world's third-largest economy during this period. However, to make the definitive leap from being the world's back office to a global manufacturing powerhouse, the country will need to create a favorable environment by integrating policy and infrastructure, and focusing on innovation and sustainability.
