From a Land of Rice and Cattle to One of the World's Greatest Economic Powers – Executive Summary

India's economic growth in 2024 is on the global stage, with a projected 7% increase in GDP, putting the country at the forefront of growth in Asia.

This growth, coupled with the peculiarities of the Indian economy, suggests that the country may be skipping a traditional stage of economic development, moving directly from an agricultural economy to a services economy, leaving the industrial sector in the background, according to The Economist.

Historically, economic development has been characterised by a gradual transition from an agricultural to an industrial economy, before reaching a service-centric base. The services sector, which already accounts for over 55% of India’s GDP and is growing at 10% per annum, is the country’s main driver of employment and growth.

However, this rapid shift raises concerns. Although India is on track to become the world’s third-largest economy, overtaking Germany and Japan, this leap into services could come at a cost, especially in terms of the country’s ability to employ its huge population.

In recent years, Indian industry has faced significant challenges, such as the exit of international manufacturers, including Ford and General Motors, which cited increasing competition and operational difficulties as reasons for closing their operations in the country. Moreover, high taxes, outdated labor laws and regulatory uncertainty are hampering industrial development in India.

This contrasts with the strong growth of the services sector, especially in information technology, where cities such as Bangalore are emerging as global technology hubs.

As the working-age population continues to grow, India faces the challenge of creating 115 million new jobs by 2030, which will require a joint effort between industry and services.