For investors looking at India, the focus should turn to medium-term growth prospects. There are five themes that we think will drive India’s growth potential in the years ahead:

1) Technology – India’s digital economy

2) Income – Rising income of the middle class

These five themes, TIGER, should serve as tailwinds for the India’s growth dynamics over the medium term. They can also feed off each other to create a cycle that should generate more economic activity, and enable an upgrading of better infrastructure.

The growth of a digital economy will permeate across the economy and boost productivity. The “Make in India” initiative encourages both foreign and domestic investment in the manufacturing sector; “Smart Cities” aims to eradicate urban squalor and “Digital India” targets an overhaul of government services with electronic identity, digital payments, and bank accounts. Additionally, the government has launched its Open Network for Digital Commerce (ONDC) in an attempt to deepen e-commerce penetration and foster innovation by start-ups with a special focus on small merchants and rural consumers. (Chart 2: Number of Internet users in India)

In the next decade, Indian consumers are going to have more disposable income.

India’s income distribution could flip over the next decade, and consequently overall consumption in the country could more than double to $4.9 trillion in the next decade.

Clearly, India has a rising middle class which will spend more of its transactions in the digital economy. India can become a $1 trillion digital economy in 5 years, unlocking its strength in digital innovation and cyber security. This young, digitally savvy, productive and growing work force provides a long runway for growth as the country propels forward.

India wants to reach net zero emissions by 2070 and to meet fifty percent of its electricity requirements from renewable energy sources by 2030. A transition to clean energy is a huge economic opportunity.

Globally, electric vehicles are expected to grow by 36% annually, reaching 245 million vehicles in 2030 – more than 30 times above today’s level. Coming from a low base, India is expected to see bigger exponential expansion. India has launched several initiatives to promote electric mobility, including the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, which provides subsidies to buyers of electric vehicles, and the National Electric Mobility Mission Plan (NEMMP), which aims to put millions of electric and hybrid vehicles on the roads. In India, electric two and three-wheelers will represent the lion’s share of the total electric vehicle fleet, as this category is most suited to rapid transition to electrification.

Renewable electricity is growing at a faster rate in India than most countries, with new capacity additions on track to double in the next few years. A transition to clean energy is a huge economic opportunity. India is particularly well positioned to become a global leader in renewable batteries and green hydrogen. These and other low-carbon technologies could create a market worth up to $80 billion in India by 2030.

Globally, electric vehicles are expected to grow by 36% annually, reaching 245 million vehicles in 2030 – more than 30 times above today’s level.

Coming from a low base, India is expected to see bigger exponential expansion. India has launched several initiatives to promote electric mobility, including the Faster Adoption and Manufacturing of Electric Vehicles (FAME) scheme, which provides subsidies to buyers of electric vehicles, and the National Electric Mobility Mission Plan (NEMMP), which aims to put millions of electric and hybrid vehicles on the roads.

Electric two and three-wheelers will represent the lion’s share of the total electric vehicle fleet in India, as this category is most suited to rapid transition to electrification.

With the “Make in India” strategy, India’s manufacturing sector is at an inflection point. India should continue to benefit from global capital inflows, as trade tensions and the diversification of global supply chains are trends that are to persist in the medium term. Multi-national Corporations (MNCs) have committed large investments in areas like electronics manufacturing, and the Indian government has turned its policy agenda toward incentivising the localisation of manufacturing.

India’s push for infrastructure like roads and ports will mean that there is significant scope for India to move up the value chain of manufacturing.

India can build on the comparative advantage it has in its IT sector to drive greater productivity.