Market & Business Opportunities in India (2023-28)

Last Updated: May 29, 2023

Sector Indicator

India and other emerging Asian economies are driving Asia’s growth. With its expanding 1.4 billion population, India is predicted to reach a $20 trillion GDP in the next 20 years.


What's the Outlook of India?

Between 1980 and 2010, Japan predominantly held sway over the Asian economy. However, a shift began to unfold over the last three decades, largely due to China’s deepened reforms and openness. From 2010 onwards, China took the reins as the leading Asian country, and now, over a decade later, it accounts for nearly 50% of the Asia-Pacific’s total GDP. In contrast, India’s economic output during this period fell short compared to ASEAN, despite having more than double its population.

This dynamic is slowly changing as India’s growth surges and China’s expansion decelerates. India, a country that gained independence from the United Kingdom in 1947, is the world’s seventh-largest nation, comprised of 28 states and 8 federal territories. Covering an area of 2.98 million square kilometers, India is home to over 1.4 billion people. While its economy might currently seem modest, projections suggest that it could hit a GDP of $5 trillion within the next five years – a figure comparable to Japan – and continue to expand to $10 trillion by 2036, and $20 trillion by 2045.

Although India’s average growth rate may not mirror China’s impressive over 10% from 1980 to 2010, India has still maintained a solid growth rate of over 6% in the past decade. This rate is double the global average for the same period, and 1.5 times that of the Asia-Pacific region. As India pivots its developmental focus from service to manufacturing, efforts will be concentrated on bolstering logistics infrastructure, manufacturing capacities, and harnessing market opportunities presented by the energy sector. Illustrative of this, the 2022/23 federal budget has boosted the country’s capital expenditure in these areas to 7.5 trillion rupees. High-profile policy initiatives such as “Self-reliant India” and “Make in India” signify important policy trends.

Further, India’s easing of investment restrictions, improved business-friendly environment, and labor and talent development strategies, enhanced by supportive policies from governments at all levels, are anticipated to entice companies looking to diversify supply chain risks to invest in India. This suggests that India and ASEAN could find themselves vying for investment in Asian manufacturing plants. In a recent discussion, Foxconn India’s strategic director highlighted that India’s current manufacturing scale, though still one-seventh of China’s, has never been higher and holds the potential to stimulate production across the entire electronics ecosystem as the supply chain matures.

In addition to manufacturing, India also presents immense opportunities in consumption. With the gradual increase in India’s per capita GDP, coupled with the ongoing issue of income inequality, we foresee an expansion of the high-end consumer group. The acceleration of manufacturing policies should also bolster the middle class and increase non-essential spending in the medium to long-term future (5-10 years).

Finally, the advancement of IT in India significantly fosters a myriad of new digital innovations. Thus, in terms of the digital economy, we are optimistic about India’s potential growth, which we believe could maintain an annual growth rate of 14%, reaching 5 trillion rupees ($61 billion) in 2024.


Table of Contents
GDP (% of Asia)|Source: IMF
GDP Growth Rate (%)|Source: IMF

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Macroeconomic Perspective

India’s macroeconomic development is multi-faceted. Investment in infrastructure has seen significant increases, driven by the Indian government’s advocacy for infrastructure development. For instance, the Gati Shakti scheme passed at the end of 2021 aimed to coordinate various infrastructure projects across 16 federal departments. The National Logistics Policy, approved in mid-2022, further complements this scheme, promoting the development of transport infrastructure including freight, rail, and water transport. The federal government hopes this policy can reduce logistics costs from the current 13-14% to a level comparable with other developed countries.

This surge in infrastructure development aligns with India’s ambition to become a geo-manufacturing hub. Federal government initiatives, including labor law reforms, are enhancing India’s attractiveness as a manufacturing center. Foxconn, Pegatron, and Wistron, who have established plants in India and continue to increase investment, also support these reforms in collaboration with the Indian Telecommunications Association. The manufacturing policy initiative of recent years, known as “Make in India,” has seen significant success, largely due to increasing labor and business costs in China, the China-US trade war, and companies’ trend to diversify supply chain risks.

Such growth has massively boosted foreign investment, with foreign direct investments ranging from $30-60 billion nearly every year for the past five years, primarily focusing on the mid to low-end manufacturing chain. However, the stagnation of land law reform may somewhat deter investors. Yet, with Prime Minister Modi’s continued high approval rating among the public and in the parliament, if he secures a third term in 2024, land law reform will have a high likelihood of progressing.

As manufacturing influx continues and supply chain ecosystems are completed, the Indian government, while deepening relations with various countries, will also create significant export opportunities. Besides the India-Australia FTA that came into effect last year, India has also initiated trade talks with the UK. Given the UK’s proactive trade negotiations post-Brexit, it’s very likely that both countries will officially sign an agreement this year. Negotiations with the EU, Israel, and Gulf Arab nations will also continue to be pursued.

On the consumption front, India’s economy has always been driven by private consumption, accounting for approximately 58% of the GDP. Despite a dip in 2020 due to the pandemic, the growth rapidly rebounded, propelling overall economic development. As industrialization and urbanization intensify domestically, along with the rapidly growing middle class, private consumption will become a growth engine for the economy in the medium to long term. This will stimulate the development of consumer goods, tourism, and even the luxury sector.

Demographic Trends

India has already surpassed China to become the world’s most populous country this year, with a notably young population. While the median age in China is 38, it is projected that India will only reach this level by 2050.

However, India’s complex culture, regional differences, lagging education, and uneven industrial distribution make it challenging to effectively reap the benefits of its population dividend. We believe that as manufacturing policies are gradually implemented and industrial development becomes widespread, the skill levels of its vast population will significantly improve over the next 10-20 years.

Yet, whether India can reverse the trend of declining female employment, implement comprehensive labor law reforms beneficial for business at the federal level, effectively control the balance of rural and urban population and work patterns between federal and local governments, and maintain international competitiveness of its talents in the era of booming automation and AI, will be key factors determining India’s medium to long-term growth potential.

From a consumption perspective, the rapidly growing population, continuously expanding middle class, and development among different provinces and cities will present significant opportunities.

Although India’s population growth has begun to slow, it remains substantial in the less developed northern regions. For example, Uttar Pradesh, with a population of 230 million, is not only the most populous state in India but also the world’s most populous sub-division, equivalent to twice the size of Guangdong in China.


However, on an economic level, the dominant development still comes from rapidly industrializing states. Interestingly, Maharashtra, the largest economy in India and home to Mumbai, the financial hub, has maintained strong growth over the past 17 years but lags behind several states with faster industrial development.

For example, Tamil Nadu, where Foxconn set up its base, has seen a growth rate as high as 9.8 times during this period, compared to the national rate of 8.1 times. Furthermore, between 2017 and 2020, as many manufacturing businesses moved in, growth during these three years reached an impressive 45%. Karnataka, host to Siemens, Samsung, Unilever, and ABB, has seen a growth rate as high as 11.9 times (15.8% CAGR). Gujarat in the northwest has seen a similar level of growth, with the rate accelerating in recent years. Foxconn chose Gujarat for its expansion, with a factory investment of 1.5 trillion rupees, expected to start operation in 2025.


Driven by manufacturing incentive policies like the PLI, Make in India, infrastructure policy, the 100 Smart Cities policy (starting in 2015), the SEZ Scheme (Special Economic Zones for FDI), and affordable housing policies, India’s urbanization level is expected to increase further to around 40% by 2030. The degree of urbanization in Tamil Nadu, Telangana, Kerala, Maharashtra, and Gujarat is projected to break through 50%. Conversely, Bihar, Himachal Pradesh, and Assam will still maintain a large proportion of non-urban residents, approximately 75%.

Simultaneously, the number of so-called megacities will also rise. Hyderabad and Ahmedabad are set to become the next two cities with a population exceeding ten million, bringing the total number of megacities in India to seven, equivalent to China. Cities with over a million inhabitants will see significant growth, estimated to increase by as much as 60%, from 42 cities to 68.

Consumer Expenditure & Retail

From a consumer perspective, India’s retail market is still in a very nascent stage. The top ten largest retailers, including e-commerce businesses, only control 6.7% of the market. This is a stark contrast to China, where Alibaba, JD.com, and Pinduoduo control 25.5% of the market, or South Korea where Shinsegae, Coupang, and Lotte dominate the retail scene. While this does present certain distribution challenges, it also signifies a lower barrier to entry, offering potential opportunities for new entrants.

In the development of the entire consumer market and retail, we believe that the following two key development opportunities will become more prominent in the next five years.

Opportunity #1: The potential market for durable consumer goods is strong

Based on the significant increase in disposable income in the coming years, this will greatly increase the willingness of Indian citizens to purchase appliances such as TVs, refrigerators, air conditioners, etc. The development of fintech platforms and the central bank’s commitment to long-term lowering/maintaining low interest rates will further stimulate consumption. In addition, the government’s policy to increase domestic production will make many electronics purchases easier, driving domestic consumption. Under such premises, we believe that enterprises can actively deploy and consider the following angles to enter market development:

  1. Expand markets beyond first-tier cities and actively cooperate with local partners to implement the last mile deployment to increase market share in these blocks ahead of others.
  2. Effectively use the federal government’s manufacturing policies, especially PLI, to land local production to meet the country’s continuously expanding demand and to hedge against geopolitical risks.
  3. Products that improve living efficiency will grow significantly. This trend is almost the same in every fast-growing industrialized economy, whether it is Eastern Europe, China, or Vietnam. Examples include microwaves, floor cleaning robots, affordable dishwashers, and dryers.
  4. Air conditioning will be the most significant growth item, not only because of the process of urbanization, but also because the impact of rising temperatures in India is particularly serious.

Opportunity #2: The demand for luxury goods will greatly increase

With the prevalence of domestic industrialization and manufacturing, coupled with India’s strong IT strength and huge domestic consumer market, the population of young and high-income people will continue to expand, and the proportion of the wealthy will also greatly increase. This series of developments will significantly improve the market prospects for luxury goods in India. Based on this background, we believe that companies can consider:

  1. Increase solutions to target high-income individuals with different needs, or establish brands for this consumer group to keep interactions in a highly relevant way on marketing and sales channels.
  2. Focus on culture: Whether in North India, South India, the West, or traditional India, being highly relevant culturally will be especially important for high-consuming groups. The Indian market and potential are both enormous, so it is bold to segment the market for development in this field.
  3. The second-hand market and platform opportunities will be very obvious: This trend is the same as in China over the past two decades. The cultivation of the second-hand and even rental market will continue to be solid market potential.

Perspective of The Digital Economy

Market Outlook

In terms of growth, the digital economy market in India is expected to be the strongest among all industry categories. This is primarily due to the thriving domestic demand, a massive consumer market, and India’s advantages in talent and ecosystem. Significant growth is anticipated in the fields of SaaS, servers, and fintech. Moreover, recent improvements in India’s business policies have led to a substantial increase in foreign direct investment in the IT and electronics sectors. Over the next decade, a series of policies aimed at promoting domestic manufacturing, knowledge and information inflow, and a mature domestic IT ecosystem will contribute to lower costs and increased innovation in the digital economy sector.

Recent Focus Areas

  • Latest trade data shows that in 2022, India’s import proportion of electronic products increased by 56.3% compared to the previous year, with a total value of $8.2 billion. This growth is driven by strong demand for laptops, components, and the rapid growth of the domestic PC assembly market.
  • German software giant SAP announced in June 2022 its plan to double its investment in India over the next few years, including the recruitment of 3,600 new employees. SAP is also constructing a campus with an area of 170,000 square meters and over 15,000 seats, expected to be completed by 2025.
  • According to the Invest India report, by the end of 2022, 32 companies in the large-scale electronic manufacturing sector have successfully obtained incentives under the Production-Linked Incentive (PLI) scheme. The government aims to manufacture over $15 billion worth of IT hardware through this program by 2026. Additionally, several billion dollars have been allocated in the 2021/2022 and 2022/2023 budgets to support the domestic ICT manufacturing industry.
  • There is an increasing interest among cloud computing providers to establish data centers in India. Oracle opened its first data center in Mumbai in 2019 and a second one in Hyderabad in June 2020. Similarly, Google Cloud launched its second center in Hyderabad in July 2021, and Amazon also initiated its second center in India.
  • In March 2022, Microsoft announced its plan to invest ₹150 billion in the next 15 years to develop India’s largest data center in Hyderabad. This investment aims to revitalize the local IT market and support partners.
  • The latest data from IBEF shows that India has received a cumulative foreign direct investment of up to 871 billion US dollars in the IT sector (from April 2000 to June 2022). In the fiscal year 2020-21, the annual investment reached a new high of 81 billion US dollars.

Current Market Overview:

From the perspective of the entire IT market, India’s core growth drivers include the lower adoption of IT services (demand-side), rapid wealth accumulation among citizens (demand-side), the active establishment of the electronics manufacturing industry (cost-side), and government policy support (cost-side). Against this backdrop, significant value addition is expected across computer hardware, software, and IT services sectors in India.

Computers & Office Hardwares

In the market for computers and related office hardware, although sales rose in 2020 due to the end of support for Win7, the severe impact of the pandemic affected revenue, causing a slight decrease in sales. However, it’s interesting to note that during the 2020-2021 period, sales of higher-priced computers and laptops saw an increase, mainly due to the rise in remote work needs among higher-income groups. This trend is similar to that in advanced Western countries, but with India’s relatively smaller base, it wasn’t enough to offset the overall decline in market sales.

Geographically speaking, in the past two years, we’ve observed a significant increase in sales in more remote areas (third and fourth-tier cities). This is largely due to the expansion efforts of electronics retailers, including Reliance Digital, Samsung Plaza, Croma, and Spice Hotspot in these remote cities. Coupled with improvements in logistics and an increase in internet penetration among residents, this has stimulated the growth of e-commerce in electronics. According to Fitch’s assessment, in 2022, approximately 45% of PC sales occurred outside of India’s 75 largest cities. As infrastructure in India continues to improve, this proportion is expected to rise, and the overall growth in sales will likely surpass that in more mature cities.

The growing demand for computers and related office hardware in educational institutions and the government is also noteworthy. As far as schools are concerned, out of over 1.3 million schools in India, only 14% have computer-related equipment on their premises.

IT Service

In the field of IT services, although India’s booming demand for digital technologies has created a vast market opportunity, this trend during the pandemic, combined with the high turnover rate of IT service providers (SPs), has led to inflated labor costs. Recruitment, training, and employee retention have become major areas of focus. A rising turnover rate is projected to negatively impact service providers’ short-term profit margins.

Between 2020 and 2023, digitalization and digital transformation dominated India’s corporate IT spending, with project-oriented IT services becoming the main expenditure during this period. Whether it was the adoption of ERP, AI, or cloud migration, each represented a significant IT investment. In some industries, upgrading existing software architecture and systems was also a major expense. Correspondingly, these substantial investments will require ongoing expenditure for managed services, with cloud and related application management expected to surpass project-oriented expenditures by 2024 (as predicted by IDC). In the support services market, the main driver is the renewal of annual maintenance contracts for software and hardware support, especially in the financial services industry.

Cloud, AI/ML, and security continue to be major investment areas for Indian businesses. To meet the increasing adoption of cloud, cloud service providers continue to expand their market coverage in India, launching new data centers. Colocation service providers have also expanded their coverage of local businesses by opening new data centers. As the entire IT market continues to accelerate, we see several major opportunities:

Opportunity #1: Accelerated Adoption of AI in India

Just as China was able to adopt technologies like mobile wallets and mobile payments in a digital-native way during its rapid rise without legacy systems, India is in a similar position. However, rather than being digital-native, this will be AI-native technology adoption spanning various states.

For example, India’s latest pension system, Bhavishya, is fully implementing AI for process automation and user interaction. Last year, MeitY (the government’s electronic information department) also expressed plans to establish AI centers nationwide to promote AI development. This March, they proposed a clear AI plan (originally planned for the end of April but has been delayed) to integrate various resources and promote AI development nationwide, including advocating for startups, training personnel, and popularizing the industry.

Companies like IBM, TSC, and Wipro also launched AI-related projects in India in 2022. We believe that with the government’s proactive policy incentives and India’s rapidly growing economy and potential, Indian private and public enterprises will actively seek external partners to implement and integrate technology in the field of AI. In the medium to long term, India is likely to become a center of IT technology innovation, continuing to export corresponding developments globally.

Opportunity #2: Surge in Demand for Cybersecurity

With the frequency of cybersecurity incidents in the past two to three years, severe cyber attacks have occurred in industries such as aviation, payment, banking, and even raw materials. This series of events has led to the government adjusting related regulations and requiring organizations to implement best practices for cybersecurity.

Although compliance, legal compliance, and SECaaS (Security as a Service) will bring market opportunities, we believe that the most significant market demand will be in the field of “Secure-by-Design.” This means implementing corresponding cybersecurity awareness from the initial design of products, services, and systems, rather than making patches later.

Opportunity #3: Cloud Adoption and Cloud-Native

The accelerated internet penetration rate and increased mobility have led to an unprecedented surge in data volume. At the same time, the growing demand for public cloud services and the ongoing transition from traditional cloud deployment to hybrid and multi-cloud models are driving investment in data centers in the country. Significant developments, such as NTT’s launch of a new data center in Navi Mumbai in May 2022 and the Indian government granting infrastructure status to data centers during the 2022-2023 budget meeting, signal mature market opportunities. These conditions create an environment conducive to the growth and expansion of managed infrastructure services.

The financial services industry is particularly increasing its cloud adoption rate. In April 2022, Infosys launched its vertical-specific product Cobalt, aimed at building agility, accelerating innovation, and providing personalized customer experiences through a cloud-native business platform. Similarly, TCS launched TCS BaNCS in May 2022, a Google Cloud SaaS suite specifically for the financial services industry. These forward-thinking moves highlight the continually expanding opportunity to drive cloud services in the financial field.

Birlasoft’s partnership with Google Cloud is another significant contributor to cloud expansion. Through a strategic partnership, Birlasoft is ready to assist its customers in cloud-based digital transformations, equipping its Google Center of Excellence with over 200 Google Cloud platform experts. Coupled with other developments such as Microsoft and Oracle Cloud Infrastructure’s plans to expand their business, these conditions create a robust market opportunity for increased cloud adoption and the subsequent demand for managed application city management and managed infrastructure services.


  • Data:OOSGA.org
  • Analysis:Project Team
Author: Project Team

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