History rarely waits. It offers opportunities—brief, decisive windows—when nations can pivot toward greatness or stumble into stagnation. For India, that moment is now.
Amid global economic uncertainty, geopolitical realignments, and the global reordering of supply chains, India finds itself in an enviable position. It is the fastest-growing major economy, with a burgeoning middle class, a demographic dividend in waiting, and an increasingly assertive global profile. Yet the question looms: will India seize this opportunity to transform itself, or will it let another moment slip away?
The Economic Foundations Are Set
Prime Minister Narendra Modi’s government has laid considerable groundwork over the past decade—implementing the GST to unify markets, cutting corporate taxes to attract investment, and aggressively spending on infrastructure. Balance sheets are cleaner, inflation is relatively under control, and financing conditions have improved.
Still, a critical engine of transformation remains sluggish: private sector capital expenditure. Despite corporate profitability being high, gross fixed capital formation has hovered around 25% of GDP, virtually unchanged since Modi first took office in 2014. Business investment remains tepid. Factory capacity utilisation continues to languish at 70–75%, and private capex is projected to fall sharply next year.
This investment malaise reflects deeper anxieties—about consumer demand, tariff unpredictability, and a policy regime that feels pro-business but not necessarily pro-market.
Global Crosswinds: A Strategic Advantage
India’s opportunity doesn’t lie merely in domestic reforms. It lies in the cracks of the global system. As trade uncertainty mounts—with the return of President Donald Trump in the U.S., rising protectionism, and ongoing realignments in supply chains—India can present itself as a stable, open, and competitive alternative.
Some progress is visible. Tariff reductions were introduced in the latest budget. A long-pending trade deal with the UK has been finalised. Conversations with the EU and the U.S. are accelerating. These are encouraging signs, but to unlock real capital inflows and manufacturing traction, India must go further—liberalise its markets, reduce regulatory friction, and build trust with global investors.
But India Inc Is Still Investing Elsewhere
Curiously, even as India’s star rises globally, its top conglomerates are increasingly placing their bets outside its borders. Outbound deals in late 2024 hit a 10-year high, and greenfield investments by Indian companies abroad have surged dramatically. The UAE, US, and Europe remain top destinations. What’s striking is that while global investors hesitate over India’s domestic climate, Indian firms are themselves accelerating capital outflows.
This dissonance matters. It signals a lack of conviction, not about India’s future, but about the immediate environment needed to make bold domestic investments. Even icons of Indian industry seem to be in a wait-and-watch mode—constrained perhaps not by capital, but confidence.
The Confidence Deficit
To revive domestic investment, India must stimulate demand, offer policy stability, and reframe its economic priorities to be pro-market, not merely pro-incumbent. Consumers need more purchasing power, not just subsidies. Startups and mid-sized firms need regulatory clarity and ease—not just tax cuts for large firms. And investors—domestic or foreign—need consistency in legal and policy treatment.
Recent legal cases involving Volkswagen and Samsung have underscored how regulatory unpredictability can spook capital. The memory of Vodafone and Cairn still lingers. These aren’t merely anecdotal; they’re symptomatic of a system that lacks clarity, consistency, and accountability.
A Demographic Dividend in Peril
The most dangerous cost of missing this moment is not economic—it’s generational. India’s young population is both its greatest strength and its biggest risk. Without meaningful job creation and skill-intensive growth, the demographic dividend could easily become a demographic burden.
Today, the share of workers in manufacturing remains stuck at 12%, the same as two decades ago. Half the jobs created since the pandemic have been in agriculture, not industry or services. If India wants to be the factory to the world, it must invest in human capital, simplify labour laws, and reimagine skilling and education in line with global demand.
Bold Bets, Not Incremental Moves
This is not the time for hesitation. The scale of opportunity demands ambition.
Think of the early 2000s, when Indian conglomerates like the Tatas and Birlas ventured into global acquisitions—buying Tetley, Corus, Novelis, and Jaguar Land Rover. Those were audacious, era-defining moves. Today’s global conditions call for a similar appetite—but this time, directed inward.
We don’t need just another policy tweak or modest reform. We need structural change—clarity in taxation, deep infrastructure modernization, genuine competition policy, and the political will to back reforms even when they hurt entrenched interests.
Why This Moment Must Not Be Wasted
The global economic landscape will not remain fluid forever. The window that opens today might close tomorrow. Countries like Vietnam, Indonesia, and Mexico are moving fast to fill the manufacturing void left by a China recalibrating itself. India has the market, scale, and stability to outcompete them—but only if it acts with purpose.
Geopolitically too, India’s credibility is rising. It is a member of the Quad, an active player at G20, and a voice that many in the Global South resonate with. This credibility must now translate into a domestic environment that’s just as confident, competent, and credible.
Will We Leap or Linger?
India stands at a crossroads, but unlike the crises of the past, this is a moment of strategic advantage. The fundamentals are in place. The world is watching. And yet, the final leg of the journey must be powered not by government push alone, but by private conviction, corporate courage, and policy ambition.
This is India’s moment to shine. But it won’t be handed over—it must be taken, decisively and deliberately.
