Taking stock of Growth Story of Indian Republic

“The sword of revolution is sharpened on the whetting stone of ideas.”

As we celebrate the 73rd year Republic Day, these words by the charismatic Indian revolutionary, Bhagat Singh, strongly beholds the versatile mindset of Indians and the magnificent growth as a nation we have achieved over the years. In the 21st Century, India has emerged as the harbinger of the IT, Agritech, Space Tech, Healthcare, and Manufacturing revolution with a sustainable edge over the others.

Even though the last two years have been a conundrum for businesses across nations, what came out crystal clear was the high confidence in countries like India with robust capabilities and great minds to steer the economic growth curve. This is evident from the fact that besides the fragile global economy, investments in the Indian private equity in 2021 were at a record $63 billion, a 57 percent growth from the previous year. Interestingly, 15 Indian start-ups became unicorns in the first half of 2021, while 29 more reached unicorn status in the second half. That is, more new unicorns were created in India than the eight that emerged in 2020. It brings the country’s total to 57, closing the gap with China, which boasts about 160 unicorns, which in turn is second only to the US with roughly 400.

The Sunrise Sectors

Just as covid-19 has caused major dislocation in the Indian economy, it has also acted as a tailwind for digital and technology-enabled businesses, thus making it a big criterion for private equity firms that are looking to bet on the next set of high growth companies in India. It became clear that sectors like Ed-tech, Fintech, SaaS, and Health-tech would become more prominent amongst investors as they demonstrated resilience, while other sectors bled during the pandemic. Besides this, in India, the future holds to be promising for deep-tech start-ups in space and drone technology after the government liberalized these industries; AI-VI technology catering to the metaverse and biotechnology.

Despite being one of the largest consumer markets, India’s share of global electronic manufacturing has been a mere 3.6 percent, even though domestic manufacturing itself has grown at a CAGR of 23 percent over the last five years. This has been a consequence of snubbed opportunities in the last decade. When the trade wars began and companies were exiting China, many turned to ASEAN countries, including Vietnam, Taiwan, and Indonesia. However, India failed to attract them, again. The policies that were incorporated by these South-Asian countries in the last decade are finally being introduced in India with an indigenous flavor.

Today, India has another opportunity and it is paramount to not miss it. Small calibrated steps would go a longer way than grand gestures. Digitization in India at a mass level, with the lowest broadband rates in the world, could captivate MNCs and open millions of manufacturing and services jobs. The production linked incentives (PLI) scheme launched by the government is one such step in this direction.

The PLI scheme for the electronics and telecom market is designed to trigger an impulse for both Indian companies and those from outside that wish to manufacture in India at very competitive costs. They are designed to have a domino effect creating pools of ancillary firms and services, and a wealth of jobs.

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