India’s Long-Term Growth Story: Why the Next Two Decades Could Be Transformational

India is poised to become a major global growth engine, driven by IT leadership, digital infrastructure, entrepreneurship, and strong demographics, an EY report says. High-value services, expanding credit, manufacturing competitiveness, and infrastructure upgrades could fuel growth, boost consumption, and integrate India deeper into global value chains, provided policy reforms sustain long-term momentum.

India is increasingly being viewed as a leading contender to power global economic growth in the decades ahead, supported by its dominance in information technology services, swift digital adoption, vibrant entrepreneurial activity, and favourable population dynamics, according to a recent report by EY assessing the country’s long-term economic outlook.

The report underscores India’s evolution into a global hub for IT and services, suggesting the country is well-placed to become the “office of the world” for multinational corporations. What initially began as a model centred on cost advantages has steadily shifted toward higher-value offerings. Today, Indian firms are delivering sophisticated digital engineering, advisory services, product design, and innovation-focused solutions to clients across the globe.

Central to this growth narrative is India’s digital public infrastructure. The widespread use of digital platforms has lowered operational costs for businesses, enhanced transparency, and improved efficiency across the economy. This digital backbone has also accelerated the shift toward formal economic activity, making it easier for enterprises and individuals to participate in the financial system.

The report adds that these digital systems have expanded financial inclusion and opened new avenues for business creation across multiple industries, giving India a notable edge among large global economies.

Another key factor highlighted is the need to bridge India’s credit gap to sustain elevated growth rates. Faster expansion of credit, coupled with the development of a more robust corporate bond market, could stimulate consumption by widening access to personal loans while also providing long-term funding for manufacturing and infrastructure projects. Such measures would help strengthen demand and expand the economy’s productive capacity.

India’s dynamic startup and entrepreneurship landscape is also expected to be a major contributor to future growth. Strong inflows of private capital, alongside rapid digitalization, have driven the emergence of new-age companies in technology and beyond. The report notes that this surge in entrepreneurial activity will be critical in delivering differentiated growth and fostering innovation-led expansion in the years ahead.

Demographic trends remain one of India’s most significant structural strengths. EY projects that by 2047, per capita income could rise six-fold for a population exceeding 1.7 billion. This shift is expected to trigger a massive expansion in consumer spending, with a young and growing workforce and rising incomes positioning India as one of the world’s fastest-growing consumer markets.

On the production side, enhancing the global competitiveness of domestic manufacturing is identified as a strategic imperative. Achieving scale and capability in complex, high-value, and emerging industries would allow India to serve both local and international markets, reinforcing its role within global value chains.

Infrastructure investment is another pillar of the long-term vision. The report sets an ambitious goal of cutting logistics costs from the current 14–18 per cent of GDP to around 8 per cent by 2030, in line with global best practices. Reaching this benchmark would significantly boost productivity and international competitiveness.

At the same time, the report cautions that while these drivers provide a strong foundation for India’s economic ascent, sustained policy focus will be essential. Addressing remaining structural challenges and maintaining reform momentum will be key to accelerating growth and ensuring it can be sustained over the long term.