India is projected to achieve an annual growth rate of 6.5% over the next decade, with potential for even higher growth if the industrial and export sectors expand more rapidly, according to a report by US investment banking firm Morgan Stanley released on Tuesday. The firm noted significant growth potential in India’s export sector, which could be enhanced through a comprehensive reform package. Previous analyses indicated that India’s economy is expected to grow at a quicker pace of 6.5% in FY2026 GDP, an increase from the earlier forecast of 6%, attributed to GST reforms.
Morgan Stanley agreed with this assessment, stating, ‘In our base case, India’s GDP will grow at this rate over the coming decade, one of the fastest-growing economies globally.’ The report highlighted that studies show each job created in manufacturing exports leads to two additional jobs in related sectors such as transportation and logistics. In this light, India has a notable opportunity to boost its export market share, currently at 1.8%, which is significantly lower than its representation in the working-age population and GDP. Morgan Stanley recommended a comprehensive reform strategy, including an accelerated development of public infrastructure, particularly for last-mile connectivity.
It emphasized the necessity for ‘a systematic approach that incentivizes state governments to enhance the business environment and ensure that the workforce is sufficiently skilled.’ The report recognized that policymakers are making strides, but the scale of the employment challenge necessitates a quicker response. An estimated 84 million individuals are expected to enter the workforce in the upcoming decade, assuming participation rates remain stable. ‘In the medium term, a pressing concern is that AI may diminish job growth prospects, especially within the IT services sector, a key employment source, as well as in the domestic services sector,’ it suggested.
