India’s Outlook for 2024-25: Key Growth Areas and Investment Prospects

We discuss India's economic outlook for 2024-25 and promising sectors for foreign investment as the country enters a general election year. Despite geopolitical factors and varying FDI trends, India remains a bright spot for global investors, thanks to its robust macroeconomic fundamentals. With a large and growing market, a youthful workforce, and a steadfast policy emphasis on education reforms, upskilling, manufacturing, tech-enabled governance, infrastructure development, and enhanced regional connectivity, the country offers significant opportunities for both greenfield investors and businesses engaging in market expansion, mergers and acquisition, and supply chain diversification.

India's economy is on track to reach 6.5 percent growth in the fiscal year 2024-25 and will hit 7 percent in 2026, according to latest estimates from S&P Global. Data from the quarter ending September showed the Indian economy expanded 7.6 percent year-on-year.

This positions the country as a compelling foreign investment hub, which is also set to overtake China's growth forecast of less than 5 percent in 2024. Even by the IMF's conservative estimates, India will emerge as the world's third-largest economy by 2027, surpassing Japan and Germany, with GDP exceeding US$5 trillion.

The country’s robust economic trajectory is underpinned by resilient growth and favorable demographics. After all, India is the most populous country in the world and where the median age is 28.2 years. Recovery in domestic demand, particularly in private consumption and household spending, after a prolonged pandemic, should facilitate business expansion plans. Feeding into this is India’s large consumer base, rising urban incomes, and the aspirations of the world's largest young population.

India is a well-developed market, characterized by a compelling growth narrative supported by strong macroeconomic fundamentals. The entry of a substantial workforce into the formal economy, a population equipped with digital capabilities, and the evolution of a thriving innovation ecosystem collectively contribute to the formation of an extensive talent pool. - Rohit Kapur, Managing Director, Dezan Shira & Associates India

Key sectors for foreign investors in India

Webinar - India’s Manufacturing Landscape in 2024: Key Sectors, Challenges, Competitiveness, and Schemes 

India Session: March 13, 2024 

10:00 AM Brussels / 2:30 PM India Time / 4:00 PM Vietnam Time / 5:00 PM China Time 

North America Session: March 14, 2024  

9 AM Los Angeles / 12 PM New York / 6 PM Brussels 

Join us as Koushan Das, Manager – Business Intelligence, shares insights on India’s manufacturing landscape in 2024 and highlights the importance of emerging sectors, competitiveness in Asia, the importance of MSMEs, and key industrial hubs in the country.  

This webinar is FREE of charge. 

Register now for India’s Session 

Register now for North America's Session 

In the realm of investments, India's appeal endures, offering global companies substantial scale, skilled talent, and cutting-edge technology. Micro, small, or medium enterprises (MSMEs) will remain pivotal in fostering jobs, income, capabilities, and ecosystems for sustained growth in consumption, manufacturing, and infrastructure investments.

Key industries beckoning foreign investors in India in 2024 include healthcare and insurance, fintech, renewable energy and climate tech, electric vehicles and automobiles, IT and services, real estate and infrastructure, fast-moving consumer goods (FMCG), and R&D, tech innovation, and artificial intelligence (AI). These have all been on a hot streak in 2023, as foreign direct investment (FDI) policies have relaxed in recent years, and production-linked incentive (PLI) schemes have promoted industry-wise capacity building.

India's digital economy will continue to attract investors as technology-based solutions are sought to transform people's lives, governance, and enterprise operations. The rapid growth in demand for online products and services is also a reflection of the increasing spending power of India's non-metropolitan (tier-2 and tier-3) cities. The digital economy accounted for 4-4.5 percent of the total GDP in 2014 and is currently at 11 percent. The government projects the digital economy to make up more than 20 percent of Indian GDP by 2026.

This pace of digitalisation means we are now looking at every citizen, every consumer consuming digital products or services, whether it is Instagram reels or Digital Public Infrastructure that connect them to the government and governance, or using the cloud and all of the upstream and downstream impacts that are created by this space and trend of digitalisation. - Union Minister of State for Electronics and Information Technology Rajeev Chandrasekhar, G20 Digital Innovation Alliance Summit at Bengaluru

The Indian IT industry continues to pull ahead, as its expertise applies to all sectors, and is predicted to generate US$350 billion in revenues by 2030; it currently contributes 8 percent to the GDP. Increasingly, it has begun to compete with captive facilities for talents. GCCs/GICs or global capability centers cater to multiple sectors, covering technology, human resources, finance, risk, data analytics, supply chains, and building digital and AI competencies. India’s captive centers act as a ‘sandbox’ for global multinational companies (MNCs) seeking large-scale transformation, including but not limited to AI, machine learning, generative AI, IoT, quantum computing, and blockchain. Examples include Citi’s India Citi Solution Centres (CSC), SAP Labs India, 3M, Airbnb, Cargill, Pratt & Whitney.

At a previous stage, GCCs were predominantly acquired by leading players in the IT sector like TCS, Wipro, Cognizant, and Capegemini; however, they have now entered what is being called a ‘Wave 4.0,’ where the focus is building niche competencies, monetizing new services, and supporting frontier tech. As per the most recent Nasscom-Zinnov report, India presently accommodates approximately 1,580 GCCs, providing employment to 1.66 million individuals. By 2025, India is set to surpass 1,900 GCCs, providing employment to over 2 million people. 

Emerging industries poised for investment-led growth in 2024 are battery energy storage solutions, green hydrogen, biotechnology, AVGC (animation, visual effects, gaming, comics), and semiconductor chip manufacturing, assembly, and design. Foreign companies looking at the Indian market are at an advantage as state governments are flexible and offer competitive sops to attract cutting-edge technology and generate large scale employment.

Increasing India’s participation in global value chains is a top target for both government and domestic market stakeholders. It’s what has contributed to various policymaking efforts to improve the business environment and streamline compliance on one hand, as well as cultivate local competencies in niche sectors on the other. So far, export performance of the mobile industry is a first step in the direction of deeper supply chain engagement.

Furthermore, India has intensified its decarbonization initiatives amid shifts towards renewable energy, and aims to achieve 500 GW renewables capacity by 2030.

In the corporate sector, sustainability and ESG is on the radar of top organizations and manufacturing enterprises as green tech skills will influence hiring decisions to key roles in 2024. According to an industry report by TeamLease Digital, India's green industry is expected to add 3.7 million jobs by FY 2024-25 to the current 18.5 million. The top sought skills are in renewable energy, environmental health safety, solar energy, corporate social responsibility, and sustainability.

Sustainability entails a commitment to diminish the carbon footprint across enterprise operations, including buildings, production and service processes, transportation, waste treatment, etc. India will be seeking greater global collaboration in the realm of technology, resource management, and green skilling to grow its domestic expertise in these critical areas. Bridging knowledge gaps, however, will not be limited to manufacturing and corporate sectors as farming and agriculture—which serve as India’s economic backbone—also require long-term investment in sustainability skills, green tech, and data application.

Given the trajectory of India's growth, the changing nature of jobs, and its large young demographic cohort, education reforms and skilling are big focus areas for policymakers. While edtech startups have a role to play, the Indian education market itself boasts close to 1.5 million schools and about 265 million students. Nearly one in four individuals in India are between the ages of 15 and 29, per Invest India, fueling the demand for higher education and upskilling. Private sector involvement is welcome and the National Education Policy (NEP 2020) is seeking curricular changes and to position India as a top choice for higher education by fostering international collaborations and exchange programs between Indian and foreign institutions. Estimated to be worth US$113 billion, Invest India predicts India's education sector will reach US$313 billion by FY 2029-30.

Moving to the outlook for the real estate sector in India, 2024 is anticipated to be positive across the residential, office, and warehousing segments. According to industry analyst Knight Frank’s New Horizon Outlook 2024 report, Mumbai is poised for a 5.5 percent increase in prime residential prices during the year, attributed to robust demand and a thriving economic environment. The warehousing market is expected to benefit from the decentralization of supply chains and the government's emphasis on manufacturing. In the office space, India, alongside China, is projected to lead Grade-A office supply in the Asia-Pacific (APAC) region in 2024. Collectively, these two countries are set to constitute nearly two-thirds of the anticipated 10 million sqm (108 million sqft) of office supply.

Finally, sector opportunities across the infrastructure domain will be attractive as the federal and state governments implement long-term blueprints to bolster regional air/road/railway connectivity, improve energy supplies, achieve renewable targets, and upgrade transportation networks. Per the latest available data covering the first seven months of FY24 (April-October 2023), infrastructure output in India rose 8.6 percent year-on-year.

Infrastructure output accounts for 40 percent of industrial production. India’s October data showed that electricity generation grew 20.3 percent, coal production grew 18.4 percent, steel sector output grew 11 percent, cement production grew 17.1 percent, and crude oil production increased by 1.3 percent.

Dynamics of an election year: Prominent states present stable policy framework in 2024

The looming general elections, expected to be scheduled between April-May 2024, alongside various state elections leading up to it, will influence the economic objectives of the central government, led by Prime Minister Narendra Modi’s BJP Party. These elections will influence federal spending plans and announcements pertaining to job creation and infrastructure development.

However, several Indian states will not be electing new chief ministers as their tenures have just begun or are mid-way. Major industrial states not going into local election mode (elections to the state legislative assembly) in 2024 include Karnataka, Tamil Nadu, Uttar Pradesh, Gujarat, and Maharashtra. States that will have completed their election cycle and have new local governments in place by the end of 2023 include Chhattisgarh, Madhya Pradesh, Rajasthan, and Telangana.

For foreign companies, it is advisable to seek guidance from local experts and investment support agencies to optimize available incentives while gaining clarity on sector preferences. Most states boast competitive Industrial Policies, updated every 3-5 years, outlining sectors earmarked for promotion and growth. These targeted and emerging sectors will present companies, ranging from large-scale enterprises to MSMEs, with a diverse array of incentives linked to job creation, technology and intellectual property, location of establishment, and tax benefits.


Heading into 2024, India’s economy looks steady and on an upward trend. Projections indicate that India will be the world’s third largest economy by 2027, surpassing US$5 trillion in GDP. Positive trends are expected across services and manufacturing, especially education, healthcare, IT, and PLI-industries, all of which cumulatively bode well for the real estate sector.

Foreign companies are urged to factor in federal incentives and compare state-wise benefits before choosing their location and setting up. Key incentive programs may encourage foreign firms to invest in domestic players to access subsidies and tap into supplier networks.

The general elections could present an X-factor, but global investors can expect Indian policymakers to maintain a steady focus on business stability, job creation, industrialization, and an expanding digital economy.


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