Regional Analysis 2020

India Market Review 2020

GDP growth hit its lowest rate in more than six years in Q3 2019, attributed to slow employment growth, but growth is expected to recover somewhat in 2020 and 2021.

5.6%
GDP growth 2019
6.6%
Expected GDP growth 2020

Economic overview

In 2014, India’s economy was valued at US$1.7 trillion and by 2024, it is projected to be worth US$5 trillion. It is the fastest-growing trillion-dollar economy in the world, although GDP growth has been slowing and hit its lowest rate in more than six years in Q3 2019, coming in at 4.5%. The estimated figure for the year is 5.6%, with forecasts putting 2020 and 2021 growth at 6.6% and 6.7% respectively. This is being attributed to slow employment growth, which is weighing on consumption, but growth is expected is expected to recover somewhat in 2020 and 2021.

The logistics sector in India is growing at a CAGR of 10.5 per cent annually and is expected to reach US$ 215 billion in 2020. Revenue from digital segment is expected to comprise 38 per cent of the forecasted US$ 350 billion industry revenue by 2025. The Indian e-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion as of 2017. India is the world’s second largest telecommunications market, with total subscriber base of 1,183.51 million at the end of March 2019. India is set to launch 5G by 2020. India's biotechnology industry comprising bio-pharmaceuticals, bio-services, bio-agriculture, bio-industry and bioinformatics is expected grow at an average growth rate of around 30 per cent a year and reach US$ 100 billion by 2025. Total installed capacity of power stations in India stood at 356.82 Gigawatt (GW) as of May 2019. FDI equity inflows of US$44.36 billion during 2018-19, more than 70 per cent have come mainly from Singapore, Mauritius, Netherlands, Japan and United Kingdom. 

Construction

India is expected to become the third largest construction market in the world by 2025, contributing 13% of the country’s GDP, with 7.1% output growth expected to then. The real estate market is expected to reach a market size of US$1 trillion by 2030 from US$120 billion in 2017.

By 2024 India's economy is projected to be worth US$5 Trillion, making it the fastest-growing trillion-dollar economy in the world

The Mutual Fund (MF) market in India has seen rapid growth in Assets Under Management (AUM). Total AUM of the industry stood at Rs 23.80 trillion (US$340.48 billion) between April 2018 and February 2019. with US$1.4 trillion in next five years on infrastructure.

India’s push for data localisation, which requires certain kinds of data to be stored within the country, has generated significant demand already, as it is estimated that over 75% of this data now currently resides outside the country. Last year, the Reserve Bank of India mandated that all financial transaction data should be located on servers in India. It also clarified that data which is taken outside of India for processing should be brought back. This forced global companies such as Mastercard and Visa to begin the process of storing data in India.

There are currently 151 co-location data centres in Inda and the industry capacity is projected to increase by an additional 431 - MW in by 2024 from the current levels of 350 - MW (design IT power load) in 2018-19, according to the report titled 'India's Data Centre Industry’ report . This expansion is expected to provide a greenfield investment opportunity of US$4.1 billion in setting up data centres from the current US$2 billion opportunity that exists. Mumbai and Chennai will account for a 76% percent share of these, with new capacity additions; other key metros such as Delhi-NCR, Pune and Hyderabad to follow also in the mix.  

Last year, the Reserve Bank of India mandated that all data of financial transactions should be located on servers in India. It also clarified that the data which is taken outside of India for processing should be brought back. This forced global companies such as Mastercard and Visa to begin the process of storing data in India.

Contributor: Darshan Joshi

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