India’s Trade Opportunities in a Changing Global Context, highlights that while India continues to grow at a rapid pace, hitting its ambitious $1 trillion merchandise export target by 2030 will require diversifying its export basket and fully leveraging global value chains.
India’s growth reached an impressive 8.2% in FY23/24, cementing its position as the fastest-growing major economy. Public infrastructure investment and increased household spending in real estate fueled this growth. Meanwhile, a booming manufacturing sector, which saw a 9.9% rise, and a resilient service industry helped balance out underperformance in agriculture.
A positive trend in urban unemployment also emerged, especially among women. Female urban unemployment dropped to 8.5% in early FY24/25, though youth unemployment remained a concern at 17%. With a narrowing current account deficit and strong foreign investment, India’s foreign exchange reserves hit a record $670.1 billion in August, enough to cover over 11 months of imports.
The World Bank remains optimistic about India’s medium-term outlook, forecasting growth to reach 7% in FY24/25. India’s debt-to-GDP ratio is also expected to decline, while the current account deficit will stabilize at 1-1.6% of GDP through FY26/27.
However, for India to hit its export target, the IDU stresses the need to reduce trade costs, lower barriers, and deepen trade integration. With rising global protectionism and reconfigured global value chains post-pandemic, India’s opportunity to expand its trade potential is evident.
Auguste Tano Kouame, the World Bank’s Country Director in India, highlighted India’s growth prospects, along with declining inflation, which will help reduce extreme poverty. To boost growth further, India can harness its global trade potential by diversifying its export basket, particularly in textiles, electronics, and green technology.
The report emphasizes that despite India’s IT, business services, and pharma strengths, sectors like apparel and electronics must be scaled up.
