India | G20 Tracker

Member Profile: India

India: strong growth, low inflation but big structural challenges

India is set to remain one of the strongest-growing G20 economies in 2025 and 2026 (low profile Indonesia just beats it). Inflation is in target. Interest rates are coming down. But big structural challenges (notably pollution and corruption) remain.

Jul 9

Our SWOT Analysis of the Indian economy

1. Large domestic market. India has a large domestic market: India's vast population creates a significant domestic market for goods and services. This domestic market helped India continue growing during the period of recurrent crises from 2008 to 2022 (see table).

2. IT. India is a global hub for IT services, software development and technology outsourcing.

3. Skilled Workforce. India has a young and educated workforce, contributing to its competitiveness in various industries.

4. Pharmaceuticals. India is a major player in the global pharmaceutical market, producing generic drugs and vaccines.

Source: TIER Co; Oxford Economics; Refinitiv Datastream.

1. Income Inequality. India has significant income and wealth disparities. and lacks comprehensive social welfare systems.

2. Regulatory Complexity. Complex regulations and bureaucracy can hinder business growth and investment. India is a largely ‘unfree’ economy according to the Heritage Foundation.

3. Poverty and Informal Economy. A significant portion of economic activity occurs in the informal sector, impacting productivity and tax revenue. Only 1.5% of the population pay income tax.

4. Environmental Concerns. Pollution, deforestation, and environmental degradation pose challenges for sustainable development. Delhi is the most polluted city in the world. India is not on track to reach net zero CO2emisssionsby 2050.India’s is not on track to meet net zero CO2e emissions by 2050. Indeed, on recent trends, emissions per head are set to continue rising.

5. Corruption. India is perceived as corrupt country, scoring below 50% on Transparency International’s Corruption Perception Index.

Source: Heritage Foundation; 1 October 2023.

Source: Answer in Lok sabha by the Union Finance Minister

Source: Energy Institute Statistical Review of World Energy; Refinitiv and Tier Co calculations.

Source: Transparency International via Refinitiv; 1 October 2023.

1. Digitalisation. Embracing digital technologies can enhance efficiency, access to services, and business opportunities.

2. Infrastructure Development and Renewable Energy. Investing in infrastructure projects can stimulate economic growth and improve connectivity. Much progress has been made but further work is needed.Transitioning to renewable energy sources can address energy needs and contribute to sustainability goals. India has been a rapid adopter of solar energy in recent years.

3. Increased female participation. Participation of women in employment is low. An increase in this could significantly help economic growth. India is expected to be the fastest growing G20 economy over the next 15 years. Developing the manufacturing sector can create jobs, boost exports, and contribute to economic growth. India has taken some manufacturing jobs from China.

4. Innovation and Startups. Fostering innovation ecosystems can drive entrepreneurship, tech startups, and economic diversification.

1. Economic Inequality. Disparities in income and wealth can lead to social tensions and impact economic stability.

2. Political Instability. Political factors, including policy changes and social unrest, can create uncertainties for businesses and investors.

3. Global Economic Uncertainty. India's economy is linked to global fluctuations, making it susceptible to economic shifts.

4. Population Growth. Rapid population growth can strain resources and create challenges for employment and social services.

5. Geopolitical Factors. Geopolitical tensions and conflicts can impact trade relationships and overall stability.

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