Navigating the Path to $1 Trillion: Dynamics of India’s Emerging Sectors

January 17, 2024

Navigating the Path to $1 Trillion: Dynamics of India’s Emerging Sectors

In the quest to achieve a robust target of $1 trillion in merchandise exports by 2030, the Indian economy is strategically pivoting towards new and dynamic sectors. The Director General of Foreign Trade underscores the pivotal role of emerging domains such as electronics, renewable energy, IT Hardware sector and electric vehicles in propelling India towards this ambitious milestone. Let’s delve into the performance of these sectors over the past few years and explore the intriguing revenue projections that delineate the trajectory for India’s economic ascent.


IT Hardware Sector-

  • Despite global economic challenges, the Indian IT industry is poised to reach $350 billion in revenues by 2030, with the potential to double employment opportunities in the next decade, according to industry leaders.
  • In the financial year 2022, the domestic market value of IT hardware was about 626 billion Indian rupees across India. This market value was estimated to increase to over 977 billion rupees by the financial year 2026.

Domestic market value of IT hardware in India from financial year 2019 to 2022, with estimates until 2026 (in billion Indian rupees)

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  • The Indian IT Hardware market recorded total revenues of $15.5 billion in 2022, indicating a compound annual growth rate (CAGR) of 5.6% from 2017 to 2022.
  • The client computing hardware segment emerged as the dominant contributor in 2022, securing total revenues of $7.1 billion, constituting 45.8% of the market’s overall value.
  • A significant driver for India’s IT hardware industry is the escalating demand for computer hardware and peripherals, primarily propelled by the surge in e-commerce and the expanding base of internet users.
  • The government’s Digital India campaign, aimed at ensuring internet connectivity for every citizen and fostering a digitally empowered society, has acted as a catalyst, further intensifying the demand for hardware products.
  • This heightened demand presents a substantial opportunity for the hardware industry to cater to the evolving needs of consumers, leveraging the favorable market dynamics.


Indian Renewable Energy Sector

Energy Consumption Ranking:

  • India is the 3rd largest energy-consuming country globally.

Renewable Energy Global Standings:

  • India ranks 4th globally in Renewable Energy Installed Capacity (including Large Hydro).
  • It holds the 4th position in both Wind Power capacity and Solar Power capacity, according to the REN21 Renewables 2022 Global Status Report.
  • India’s installed non-fossil fuel capacity has surged by 396% in the last 8.5 years.
  • In 2022, India experienced the highest year-on-year growth in renewable energy additions, reaching 9.83%.
  • India permits up to 100% Foreign Direct Investment (FDI) under the automatic route for renewable energy generation and distribution projects.
  • FDI in India’s renewable energy sector stood at $251 million in the third quarter (Q3) of the financial year (FY) 2023, with the top investing countries being Singapore, Mauritius, the Netherlands, and Japan.
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  • The International Energy Agency’s World Energy Outlook projects a growth of renewable energy supply to 4,550 GW in 2040 on a global basis.
  • Installed renewable power generation capacity has increased at a fast pace over the past few years, posting a CAGR of 14.58% between FY16 and FY23. India has 172.54 GW of renewable energy capacity in FY23.
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  • The country ranks fourth worldwide in terms of the total installed wind power capacity.
  • Due to its favorable location in the solar belt (400 S to 400 N), India is one of the best recipients of solar energy with abundant availability.
  • Delhi’s Indira Gandhi International Airport (IGIA) has become the first Indian airport to run entirely on hydro and solar power.
  • India has overtaken Japan, becoming the nation with the fifth-largest hydropower production capacity in the world with a total installed base of over 51.77 GW, and is only behind Canada, US, Brazil and China according to the International Hydropower Association (IHA).

What are the factors which have contributed to the growth of this sector?

Government Initiatives:

  • The government has proactively promoted renewable energy through flagship programs like the National Solar Mission, launched in 2010.
  • The mission initially aimed for 100 GW of solar power by 2022, later increased to an ambitious target of 450 GW by 2030.
  • A parallel wind energy program was also initiated, with a goal to achieve a capacity of 60 GW by 2022.

Cost Dynamics:

  • The decreasing cost of solar and wind power has been a significant driver for India’s renewable energy growth.
  • A report by the Institute for Energy Economics and Financial Analysis (IEEFA) highlights an 84% reduction in the cost of solar power since 2010.
  • This cost decline has positioned solar power as cheaper than coal-based power in most regions of the country.
  • Similarly, the cost of wind power has witnessed a 49% reduction in the past decade, establishing it as one of the most cost-effective energy sources in India.

Technological Advancements:

  • India’s success in renewable energy is fueled by rapid technological advancements.
  • The country stands as a pioneer in floating solar technology, hosting the world’s largest floating solar power plant in Kerala, boasting a capacity of 500 kilowatts.
  • This innovative plant is expected to generate 7.5 lakh units of electricity annually.


Electric Vehicles Sector

  • Economic Survey 2023 forecasts a substantial 49% Compound Annual Growth Rate (CAGR) for India’s domestic electric vehicle market from 2022 to 2030.
  • The projection aims for achieving 10 million annual electric vehicle sales by 2030.
  • The electric vehicle industry is expected to be a significant job creator, with a projection of around 50 million direct and indirect jobs by 2030.
  • The Indian government has a targeted goal of achieving 30% electrification of the country’s vehicle fleet by the year 2030.
  • Several incentives and policies have been introduced to actively support the growth of the electric vehicle industry.
  • The FY24 Union Budget has provided substantial support to the electric vehicle sector.
  • Key areas of focus include incentivizing the production of electric vehicles, promoting the adoption of hydrogen fuel, and embracing evolving technologies within the industry.
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India’s Surging Electric Vehicle Landscape and Bold Targets

Bain & Co. Predictions (2030):

  • Electric two-wheelers could constitute 40-45% of all EVs sold in India.
  • Electric passenger vehicles might account for 15-20% of total EV sales.

Niti Aayog Targets (2030):

  • Government aims for 40% EV adoption in buses.
  • Targets 30% adoption for private cars, 70% for commercial vehicles, and 80% for two-wheelers.

Economic Survey 2023 Highlights:

  • Forecasts an impressive 49% CAGR for India’s domestic EV market (2022-2030).
  • Anticipates around 10 million annual EV sales by 2030.
  • Estimates the creation of 50 million direct and indirect jobs in the EV industry by 2030.

Factors driving domestic EV industry sales growth in 2022:

  • Increased product availability in the market.
  • High costs of petrol, diesel, and compressed natural gas.
  • State subsidies and incentives under the FAME II scheme.
  • FAME II (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles):
  1. A Government scheme to boost Electric Vehicle development.
  2. Rs 10,000 crore allocated by the Central Government for Phase II.
  3. Aligned with the goals of the National Electric Mobility Mission Plan (NEMMP).
  • PLI Scheme for Automotive Sector:
  1. Approved on September 15, 2021, with a budgetary outlay of Rs. 25,938 crore.
  2. Supports domestic manufacturing of vehicles, including electric vehicles.
  • Increase in Lithium Imports and Domestic Reserves:
  1. With the rising popularity of electric vehicles in India, lithium and lithium-ion imports increased by 56% YoY in 2022–23 (up to January).
  2. India has 5.8% of the world’s lithium reserves.
  3. Recent discovery of 5.9 million tons of lithium reserves in Jammu and Kashmir.
  4. India set to become the world’s seventh-largest producer, reducing reliance on imports.


Electronics Sector

Factors Driving India’s Emergence as a Manufacturing Hub for electronics-

●      Competitive wages, along with highly skilled human resources, make India an attractive manufacturing destination.

●      Geopolitical factors are influencing companies to consider India as the next hub for manufacturing operations.

●      The country’s emphasis on digitalization and evolving lifestyle preferences are driving increased demand for discretionary goods, particularly smartphones and electronics.

Key Indicators which are driving the growth of this sector in India-

  • India’s per capita income has doubled in the last 7 years.
  • Ranking second globally, India is a major player in the smartphone market.
  • With over 91 billion digital transactions, India leads the world in digital payments.
  • Among the top three global economies for digital consumption, India’s impact is substantial.
  • The IoT market in India is expected to reach 9200 million by 2025, indicating a 100% growth.
  • India’s digitally skilled workforce stands at 1.4 million.
  • Hosting more than 50% of Global Capability Centres (GCCs), India is a preferred location.
  • As the sixth-largest OTT market, India has a significant presence in digital content.
  • Over 35% of the technology workforce in MNCs is based in India.
  • India aims to capture more than 65% of data revenue from 5G services by 2026.
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Production profile of the Indian electronics industry – FY2022

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Make in India: Transforming Mobile Manufacturing

  • Mobile phone production surged from 60 million in 2015 to 310 million in 2022, with a CAGR of 26%.
  • Make in India initiative has designated mobile phone manufacturing as a flagship initiative, boosting growth.
  • Over 200 manufacturing units were established in the last few years which employ around 700,000 people.
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    Current trends indicate India may have 1 billion smartphone users by 2026 (PWC)

                                    No. of smartphone users (in millions)

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Import of finished smartphones has been on a steady decline in India

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Production Linked Incentive Scheme was announced in Union Budget 2021-22 to boost domestic manufacturing, investments, and exports.

As of September 2022, PLI scheme for Large Scale Electronics Manufacturing has attracted over Rs 4,700 crores in investment. PLI along with the Make in India scheme has further led to the following-

India has become a preferred destination for global manufacturing giants:

  1. Samsung opens the world’s largest phone manufacturing unit in India.
  2. Apple has shifted major units to India.
  3. Other companies like Oppo, Vivo, Xiaomi, and Lava establish bases in India.

Mobile manufacturing leads to new job opportunities:

Approved companies, including Samsung, Foxconn Hon Hai, Rising Star, Wistron, and Pegatron, to generate over 2 lakhs direct employment and 6 lakhs indirect employment in the next 5 years.


In the realm of policymaking, initiatives like “Make in India” have played a crucial role in steering the country toward its ambitious export target. The emphasis on self-reliance and domestic manufacturing has not only bolstered economic growth but has also created a conducive environment for global investors. Policymakers are continuously fine-tuning strategies to encourage investments in key sectors, fostering innovation, and enhancing the ease of doing business.

The success of the “Make in India” initiative is evident in the growth of manufacturing units, such as those in electronics and mobile phones, contributing significantly to the country’s export capabilities. As India looks ahead to 2030, policymakers will likely continue refining and introducing policies that align with the evolving needs of these emerging sectors, promoting sustainability, competitiveness, and global relevance.

Additionally, collaborative efforts with industry stakeholders, international partnerships, and a keen focus on regulatory frameworks will be instrumental in ensuring that the policy landscape remains dynamic and supportive of India’s evolving economic aspirations. The journey toward a $1 trillion merchandise export target is not only an economic pursuit but also a testament to the efficacy of strategic policy making in shaping the nation’s economic destiny.