Indian economy
Will India be able to overcome the ongoing global crisis better than others?
As the world navigates through a complete reshuffle of the global economic order, the Indian economy may benefit from the remarkable transformation it already went through and it is still implementing. With a blend of demographic dividends, technological advancements, and policy reforms, India may be poised to emerge as a new economic powerhouse.
Key assets supporting India's economic transformation
Human Capital:
Above all, India’s greatest asset lies in its human capital, a youthful population with a median age of around 28 years, driving consumerism while also forming part of the resource pool. The challenge, though, will be in ensuring capabilities and upgrading of skills.
Technological Advancements:
The rapid proliferation of digital technologies, coupled with the government’s continued push for initiatives like Digital India and Make in India, is driving innovation across sectors.
Policy Reforms:
Ongoing efforts to streamline regulations, improve infrastructure, and foster entrepreneurship to attract foreign investments and spur economic development.
Sectoral growth and future prospects
Traditional sectors like agriculture and manufacturing of goods and services continue to remain in high focus, while the services sector, particularly information technology, finance, and healthcare, are supporting the nation’s resilience and growth. Initiatives such as the Smart Cities Mission and Clean India Campaign will act as catalysts in urban development and sustainable infrastructure.
Even though uncertainty has become the norm, the India economy seems to have built the right mix of drivers to overcome the on-going crisis, maybe better than some of its neighbours and competitors.
Historically, India has demonstrated a virtuous economic business cycle, averaging around 6-7% growth annually over the past few decades. Looking ahead, several factors suggest that India’s growth domestic rate could continue to be strong over the next 10-20 years.
One sector that will contribute significantly towards the competitive edge of India is its IT industry. The prospects for its already strong base are being driven by global technological advancements, evolving consumer preferences, and changing business landscapes. Emerging technologies such as artificial intelligence (AI), machine learning (ML), blockchain, and quantum computing, as well as cloud computing, remote work using collaborative tools, are currently in focus for the sector. The talent pool in these domains is increasing steadily.
“Historically, India has demonstrated a virtuous economic business cycle, averaging around 6-7% growth annually over the past few decades.”
Global captive centers and challenges
An interesting fact here is that the IT base in India is not merely made of Indian companies. There are close to 1600 global captive centers, or captive offshore centers, which are subsidiaries of multinational corporations in India to perform specific business functions, such as IT services, research and development (R&D), finance and accounting, customer support, and back-office operations. Attracted mainly by the expanding breadth of IT services being offered, access to a skilled talent pool, cost efficiencies, and proximity to the Indian market, this captive unit base is rapidly expanding.
“One sector that will contribute significantly towards the competitive edge of India is its IT industry.”
Global MNCs have very well adaped to the Indian business context and culture. They understood the keys to successfull operations in India:
- Talent Acquisition and Retention: Despite India’s large pool of skilled professionals, there is fierce competition for top talent in the IT and technology sectors. Recruiting and retaining skilled employees due to high demand, attrition, and competition from other companies—including domestic and multinational firms, startups, and IT service providers—is the biggest challenge.
- Regulatory and Compliance Issues: Operating a captive center in India requires compliance with various regulatory requirements, including labor laws, tax regulations, data protection laws, and intellectual property regulations.
- Infrastructure and Connectivity: Ensuring reliable infrastructure and connectivity is essential for maintaining uninterrupted business operations and meeting the demands of global clients. Captive centers may need to invest in infrastructure upgrades and backup systems to mitigate associated risks.
- Cost Management: Cost efficiency rather than cheaper costs should be the accepted factor for such units to locate in India. While India offers cost advantages compared to developed countries, operating a captive center still entails significant costs related to infrastructure, real estate, salaries, and operational expenses.
- Cultural and Organizational Challenges: Establishing a captive center in India requires bridging cultural differences and integrating Indian operations with the global organization’s culture and practices. Captive centers may face challenges related to communication, collaboration, and alignment of goals and objectives between headquarters and offshore teams.
- Security and Intellectual Property Protection: Captive centers must implement robust security measures, data encryption, access controls, and compliance frameworks to protect sensitive information and intellectual property from cybersecurity threats, data breaches, and insider risks.
Could these trouble times be a tremendous opportunity for India to shine on the Global stage?
At the cusp of a transformative era, India seems equipped with the tools, talent, and tenacity to overcome the future drastic economic challenges. Its youthful population, coupled with strategic technological advancements and robust policy reforms, offers a unique blend of resources to navigate the challenges of our troubled world. The country’s diversified sectoral growth, led by traditional industries and propelled further by a thriving IT and services sector, reflects a resilient and dynamic economy.
Should India continue to attract global captive centers and foreign investments, its position as a global hub for innovation and enterprise becomes ever more pronounced. The challenges of infrastructure, regulatory compliance, and talent retention are real but not insurmountable. Through sustained collaboration between government, industries, and civil society, these hurdles can be converted into opportunities, paving the way for inclusive and sustainable development.
In a world looking for new beacons, India is not just a promising contender—it could rapidly become one of the rare reliable economic global powers.
Sukanya Badri Partner – Blonk India
Sukanya Badri is a senior international Partner with a passion for transforming businesses through a unique blend of finance, marketing, and leadership expertise. Over the years, Sukanya has collaborated with global corporates, SMEs, and start-ups, successfully navigating complex assignments while managing local and international clients. As a Senior Partner at Blonk Group, Sukanya provides tailored Talent Acquisition strategies from conception to implementation for both Indian and global clients. Her focus spans the automotive, industrial, and technology sectors, fostering growth through impactful people strategies and business methodologies. Her role as a Visiting Faculty at BIM has allowed her to share insights on the international business landscape with aspiring professionals, further enriching her journey. Sukanya is fully committed to empowering businesses and leaders to realize their full potential.
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