India is widely expected to become the world's third-largest economy, and the focus is shifting to how this growth translates into higher incomes and long-term resilience. Policymakers are emphasizing execution, reform, simplification, and center-state coordination as priorities for the next phase of growth. Alongside reforms, leaders are pointing to healthcare, livability, and trade resilience as areas where further investment will shape long-term growth.

PwC India Chairman Sanjeev Krishan, speaking at BT Davos 2026, highlighted key areas where India needs to focus to sustain its growth momentum. These include enhancing productivity across services and industrial segments, investing in skilling to maintain India's competitive advantage in services, and achieving scale to gain a competitive edge. He also emphasized the importance of infrastructure spending, particularly in urban areas, to boost GDP and enable greater participation of women in the workforce.

Infrastructure and Urban Development

Krishan stressed the critical need for continued focus on infrastructure, especially urban infrastructure, citing significant migration to cities. Improved logistics, urban capacity, and increased female workforce participation are essential to boosting India's GDP. He noted that while logistics costs have decreased, there is still room for improvement.

Skilling and Education Reform

Another key area highlighted by Krishan is the urgent need for skilling and education reform. He pointed out that a significant percentage of Indian graduates are not job-ready, necessitating a revamp of the education system to stay at the cutting edge, especially with disruptions from AI and other technologies. Rejigging the education curriculum at senior levels is crucial to ensure graduates are well-equipped to drive innovation consistently.

Artificial Intelligence

Krishan believes that India should focus on embedding AI into existing enterprise, manufacturing, service, and agriculture systems to drive efficiency, innovation, and scalable growth, rather than building its own Large Language Models (LLMs). PwC India launched an AI framework at Davos, suggesting that AI could add $550 billion to India's economy by 2035. The framework emphasizes the importance of governance, skills, and infrastructure to make AI people-centric and drive inclusive growth in sectors like agriculture, education, energy, healthcare, and manufacturing.

PwC's "AI Edge for Viksit Bharat" report introduces the 3A2I framework to scale AI responsibly across national systems, treating AI as a connected "central nervous system" for development. The framework focuses on Access (data, infrastructure, talent), Acceptance (trust, governance, ethics), Assimilation (integration into workflows), Implementation (large-scale deployment), and Institutionalization (long-term sustainability). The report also introduces the AI Edge outcomes framework, which establishes five national-scale outcomes for AI deployment: operational excellence, sustainability, good governance, resilience, and financial discipline.

Trade and Economic Engagement

India needs to address inverted duty structures arising from Free Trade Agreements (FTAs) and improve its low FTA utilization rate to fully capitalize on global trade opportunities. Despite global headwinds, India has focused on domestic demand, policy reforms, and trade recalibrations to maintain growth. In 2025, India concluded key agreements with the UK, New Zealand, and Oman, and initiated negotiations with Israel, while the EFTA deal went operational, aiming to diversify its global economic engagement.

Risks and Challenges

As India enters 2026, it faces both global and domestic risks. Global risks include US tariff policies, China's slow recovery and dominance in critical minerals, and geopolitical tensions in Central Asia. Domestic risks include poor transmission of policy rate cuts to credit growth, a resurgence of inflation, and potential implications of lower tax revenues for fiscal consolidation.

Union Budget 2026

With the Union Budget 2026 approaching, industry leaders are looking for clarity on taxation, reforms, and priorities to drive the next phase of economic growth. Key focus areas are likely to include AI-led innovation, manufacturing expansion, job creation, and energy transition, as the government balances stability with long-term ambition. The budget is seen as a critical milestone in advancing the Viksit Bharat 2047 vision.