India is strongly positioned to become a major global economic force within the next two decades, potentially becoming the "office of the world" due to its strengths in information technology and services, rapid digitalization, thriving entrepreneurship, and favorable demographics. A recent Ernst & Young (EY) report highlights India's long-term economic prospects, projecting it to become a $26 trillion economy by 2047-48 while maintaining an average growth rate of approximately 6% per year. The report suggests that by this time, the per capita income could exceed $15,000, which is about six times the current level.
India's information technology (IT) sector has transformed from a cost-arbitrage model to a high-value proposition, providing advanced digital engineering, consulting, product development, and innovation-led services to multinational corporations. India currently hosts approximately 1,500 Global Capability Centers (GCCs), which comprise about 45% of all GCCs worldwide. These centers employ over 5 million people, demonstrating India's skilled talent pool, expertise in emerging technologies, and commitment to efficient business processes. The expansion of Indian and global IT companies into areas such as consulting, experience design, and Industry 4.0 product development further solidifies this position.
The EY report emphasizes the crucial role of India's digital public infrastructure in accelerating economic growth. Widespread adoption of digital platforms has significantly reduced business costs, increased efficiency and transparency, and accelerated the formalization of the economy. This infrastructure has also promoted financial inclusion and created new business opportunities across various sectors, giving India a competitive advantage compared to other large economies. Consistent government support for building India's Digital Public Infrastructure over the past decade has yielded substantial economic benefits, fostering innovation and entrepreneurship. The growth of the digital economy in India was approximately 15.6% annually between 2014 and 2019, which is 2.4 times faster than the overall Indian economy.
India's services sector, particularly IT services and Business Process Outsourcing (BPO), has been a key driver of economic expansion. Over the past two decades, India's service exports have grown by 14% annually, reaching $254.5 billion in 2021–22, with IT services and BPO contributing $157 billion. This growth is attributed to both Indian and global IT firms. Moreover, as developed economies face shortages of skilled labor, India has a significant opportunity to expand its non-IT services, particularly in sectors like education and healthcare, which are increasingly delivered through digital channels.
To sustain high growth, addressing the country's credit gap is crucial. The EY report suggests that accelerated credit growth and the development of a deeper corporate bond market could boost consumption by expanding access to personal credit and providing long-term capital for investments in manufacturing and infrastructure. This, in turn, would fuel demand and expand productive capacity across the economy. India's thriving entrepreneurship ecosystem, supported by strong private capital flows, is also a significant contributor to its economic potential.
India is projected to overtake Germany and Japan to become the world's third-largest economy by 2030, following the United States and China. This rise is attributed to decades of economic liberalization, which increased market orientation, expanded the role of private capital, and enhanced global competitiveness. Consistent policy support, private sector innovation, and demographic strengths are expected to keep India on a firm path to becoming a leading economic power.
