India to outpace Japan as second-largest economy in Asia by 2030: S&P Global Market Intelligence

India is expected to continue to be one of the world’s fastest growing economies over the next decade, which will make it one of the most important long-term growth markets for multinationals in a wide range of industries, including manufacturing industries such as autos, electronics and chemicals to services industries such as banking, insurance, asset management, health care and information technology, it said.

The article said that after two years of rapid economic growth in 2021 and 2022, the Indian economy has continued to show sustained strong growth during the 2023 calendar year. The country’s GDP growth rate rose to a pace of 7.8 per cent year-on-year in April-June of 2023, compared with growth of 6.1 per cent in the January-March quarter of 2023. The strong growth rate was despite high base year effects after GDP growth of 13.1% y/y in the April-June quarter of 2022.

“The near-term economic outlook is for continued rapid expansion during the remainder of 2023 and for 2024, underpinned by strong growth in domestic demand,” the article said.

The acceleration of foreign direct investment (FDI) inflows into India over the past decade reflects the favourable long-term growth outlook for the Indian economy, helped by a youthful demographic profile and rapidly rising urban household incomes, it said.

The long-term outlook for the Indian economy is supported by a number of key growth drivers, with its large and fast-growing middle class being an important factor which is helping to drive consumer spending, the article said.

It said that the rapidly growing Indian domestic consumer market as well as its large industrial sector have made the country an increasingly important investment destination for a wide range of multinationals in many sectors, including manufacturing, infrastructure and services.

The digital transformation of India that is currently underway is expected to accelerate the growth of e-commerce, changing the retail consumer market landscape over the next decade. This is attracting leading global multinationals in technology and e-commerce to the domestic market.

By 2030, 1.1 billion Indians will have internet access, more than doubling from the estimated 500 million internet users in 2020. The rapid growth of e-commerce and the shift to 4G and 5G smartphone technology will boost home-grown unicorns like online e-commerce platform Mensa Brands, logistics startup Delhivery and the fast-growing online grocer BigBasket, whose e-sales have surged during the pandemic, it said.

The large increase in FDI inflows to India that has been evident over the past five years is also continuing with strong momentum evident even during the pandemic years of 2020-2022.

India’s strong FDI inflows have been boosted by large inflows of investments from global technology MNCs such as Google and Facebook that are attracted to India’s large, fast-growing domestic consumer market, as well as a strong upturn in foreign direct investment inflows from manufacturing firms, it said.