How India can become a high-income country

For India to transform into a high-income country with a projected gross domestic product (GDP) of $23-35 trillion, will need a sustained annual growth of 8 per cent to 10 per cent.

This will be powered by India’s demographic dividend, technological innovation, and sectoral transformation, according to the “India@2047: Transforming India Into A Tech-Driven Economy” report by Bain & Company and Nasscom.

By 2047, the services sector is expected to contribute 60 per cent of India’s GDP, while manufacturing will account for 32 per cent, both playing a pivotal role in economic expansion.

With nearly 200 million individuals expected to enter the workforce in the coming decades, India has a unique opportunity to drive high-value job creation and unlock significant economic potential, highlighted the report.

Five key sectors — electronics, energy, chemicals, automotive, and services — would act as strategic growth levers due to alignment with global trends and scalability, with the potential to address India’s unique challenges and advantages.

Rising income, a growing pool of skilled workers, and continuous improvements in infrastructure are some of the key factors that can fuel this growth.

However, realising this vision requires overcoming key structural challenges through a tech-enabled, multi-pronged approach.

The report underlines a projected workforce gap of about 50 million people by 2030, necessitating expanded STEM (science, technology, engineering, and mathematics) education and targeted skilling initiatives across sectors.

Further, a greater emphasis on backward integration and local manufacturing could reduce India’s reliance on imports for critical components.

As the world becomes more protectionist with increasing geopolitical tensions, there is a possibility of a slowdown in capability transfer to emerging economies — harmful interventions have tripled since 2019, trending toward localised supply chains and “friendshoring”.

Friendshoring is a supply chain strategy that involves manufacturing and sourcing from countries that are allies.

Technological fragmentation/ decoupling (driving the shift towards developing own tech versus relying on foreign tech) is estimated to cost up to 5 per cent of GDP for middle-income economies.

Lokesh Payik, partner at Bain & Company, said: “India stands at a critical juncture in its journey towards becoming a high-income nation, with a projected GDP of $23-35 trillion by 2047.

"This transformation hinges on sectoral transformation, technological advancements, and workforce development, shifting India from a net importer to a globally competitive, export-driven economy.”

He further added that electronics is one of the key sectors instrumental in this journey and India is poised to emerge as a global manufacturing hub expected to be of $3.5 trillion by 2047, contributing more than 20 per cent to global production.

There are some areas where India can focus on to sustain growth.

When it comes to labour, India must increase women labour participation from about 29 per cent to about 50 per cent by 2047.

“Upskilling and increasing the number of graduates can lead to a rise in productivity and contribution by labour across sectors,” said the report.

The report also added that proliferation of artificial intelligence/machine learning (AI/ML), generative AI, rising cloudification, and increased data generation and service usage can potentially drive up demand and capacity for data centres by 15-20 per cent year-on-year (Y-o-Y).

Transformative technologies are rapidly reshaping multiple industries, with established themes like cloud computing and big data, evolving into emerging trends such as AI/ML, and blockchain.

Looking ahead, future innovation drivers like quantum technology and next-gen transport will further redefine possibilities.

Effectively leveraging these advancements will be crucial to leapfrog growth and drive the next wave of innovation.

Sangeeta Gupta, senior vice president at Nasscom, said: “India's economic growth depends on strengthening infrastructure, bridging skill gaps, and fostering innovation through technology and global partnerships.

"By investing in digital and transport infrastructure, enhancing domestic manufacturing, and driving collaborative R&D (research and development), we can position India as a leader in future technologies and global trade.

"A multi-pronged, tech-driven approach will be key to unlocking inclusive and sustainable growth.”