India is on track to become a major player in the global economy, according to a recent report by S&P Global. The report predicts that India will be the fastest-growing major economy over the next three years and the third-largest globally by 2030.
This growth is expected to be driven by emerging economies in the Asia-Pacific region, including China, Vietnam, and the Philippines. Emerging markets are set to play a crucial role in shaping the global economy over the next decade. The report forecasts an average GDP growth of 4.06 per cent through 2035 for these markets, compared with 1.59 per cent for advanced economies. By 2035, emerging markets are expected to contribute about 65 per cent of global economic growth.
India's entry into JP Morgan's Government Emerging Market Bond Index is expected to provide additional government funding and unlock significant resources in domestic capital markets. This is seen as a first step, as investors will continue looking for improved market access and settlement procedures. India, Indonesia, and Brazil have made improvements relative to their peers and have the momentum to ascend over the next decade. India, in particular, boasts high momentum in policy favourability, while Brazil and Indonesia have made gains in resource availability, including labour and financial capital.
India, Mexico, and Vietnam are among the emerging markets that could benefit from supply chain relocation given their relatively mature manufacturing sectors and strategic trade ties with the US and other developed markets. To compete with developed economies' government support for local manufacturing and the use of rules of origin to secure their economic interests, emerging markets such as India, Malaysia, and Indonesia have successfully attracted investment and boosted exports by leveraging their unique value propositions.
India's expansion in electronics has followed an assembly-to-component strategy, using tariffs and production-linked incentives to draw investment in the manufacturing of smartphones and other network-connected devices. The sheer scale of sales opportunity in the Indian market has also provided "in-market, for-market" justifications for investments in manufacturing in the country. India's consumer spending on goods is worth $1.29 trillion in 2024, according to S&P 'Global Market Intelligence' forecasts. The acceleration in growth is particularly marked in export industries such as apparel, household equipment including appliances and electronics, and transport equipment.
Aside from manufacturing for local sales, the contracted electronics manufacturers also export products, particularly smartphones, driving 44 per cent annual growth in telecom equipment exports from 2015 to 2024. The report suggests that the key to success is for governments to establish policies to upskill workforces both generationally and in the short term, and to reduce the 'brain-drain' effects of high-skill worker emigration. India's economic growth and development are set to be driven by a combination of factors, including policy favourability, resource availability, strategic trade ties, and a focus on upskilling the workforce. The country's entry into JP Morgan's Government Emerging Market Bond Index, its measures to improve fiscal flexibility, and its strategies to attract investment in manufacturing are all expected to contribute to its position as a leading emerging market and major global economy by 2035. This growth trajectory underscores the importance of strategic planning and policy implementation in shaping the future of emerging economies.
