Sustaining India’s growth momentum for the next two decades calls for a fresh approach grounded in bold reforms, stronger domestic capacities, renewed institutional partnerships and adaptive strategies suited for the evolving global landscape, finance minister Nirmala Sitharaman said at an event in San Francisco.
Speaking at the Hoover Institution at Stanford University, the minister said the last two budgets have laid the groundwork for this transformation, with a clear multi-sectoral policy agenda.
Scaling up manufacturing is essential to absorb a youthful workforce, reduce import dependencies and build competitive global supply chains, she said.
Even though the recent global developments appear “formidable”, they are full of possibilities, she said, adding that India and the US can collaborate in several sectors, including semiconductors, power generation, quantum computing and pharmaceuticals.
The International Monetary Fund (IMF) has cut India’s growth projection by 30 bps to 6.2% for FY26 due to higher trade tensions and global uncertainty.
“As we lay the foundation for a developed India, we must stay committed to long-term goals, without losing sight of present realities. The global order is changing. That poses challenges but also opportunities. We must be prepared to tackle the former while seizing the latter,” she said.
India has set a goal to become a developed nation by 2047, the 100th year of Independence.
She said a significant thrust on infrastructure development by a more than four-fold increase in the union government’s capital expenditure between 2017-18 and the 2025-26 Budget has created a strong foundation for manufacturing-led growth by bolstering investor confidence.
“Our next focus is reducing regulatory frictions, digitising approvals, and integrating MSMEs into global value chains. Special support to women-led and rural enterprises will help enhance economic opportunities and ensure more inclusive growth,” she said.
In the last decade, the government has undertaken structural reforms, rationalising over 20,000 compliances, decriminalising business laws and digitising public services to reduce friction.
“The US and India have enjoyed a long-standing economic collaboration, which can be strengthened to enable industry participation and partnership and investments in several key sectors,” she said.
Underlining that manufacturing is a key engine for transformation, Sitharaman said the sector is a force multiplier for the services sector growth and not so much the other way round.
Manufacturing binds societies and leads and lends cohesion to communities by providing employment opportunities and financial strength to communities, she said.
“For India, scaling up manufacturing is essential to absorb a youthful workforce, reduce import dependencies and build competitive global supply chains,” she said.
The government hopes to increase the contribution of manufacturing in India’s GDP to 22-23% from 12%, she said.
“In India’s GDP, the service sector’s contribution is about 64% and if that is one side, at the lower end, the gig economy’s growth is rapid. In fact, if 7.1 million people are in the gig economy today, as of 2021-22 data, we expect that to go to 230 million by 2030. That’s not manufacturing,” she said.
Even though the service sector disproportionately contributes both to the GDP and to employment, India can’t ignore manufacturing, she added.