India's Trade and Globalization Outlook

While India is unlikely to become the next manufacturing powerhouse, it will likely continue to play a key role in the ongoing globalization of services.

Trusted Insights for What's Ahead^®

• Expansion of domestic activity is driving forecasted GDP growth of around 6 percent for the (calendar) year 2023 and about 5 percent for 2024, well above other large economies. While growth will likely slow over the next decade, it will continue to outperform the global average.
• The global share of India’s manufacturing supplier base has been on an upward trend over the last decades but remains relatively limited compared to other key industrial hubs such as the US, China, and Europe. Still, several industries have a supplier base that should be able to support a greater global production footprint, including food products; wood; paper products and printing; fabricated metal products; and computer, electronic, and optical equipment.
• Production activities for the US (and global) market are shifting out of China. While India is benefiting from these trends, the country is unlikely to replace China. Rather, production activities are spreading to economies in the region, including India, Vietnam, India, Thailand, and Malaysia, among others.
• India’s export strength resides primarily in services. Trade and investment flows in commercial services ballooned over the last few years. And while trade in goods has peaked in many places, trade in services is likely to continue to expand over the next decade, boding well for India’s overall economic outlook.