Why the world is betting on India

My recent trip to Delhi offered me a firsthand look at India’s rapidly evolving economy and the subtle yet significant shifts in the everyday lives of its people. As one of the world’s fastest-growing large economies, India continues to command global attention, not just for its robust Gross Domestic Product (GDP) growth and general macroeconomic resilience, but also for the visible changes in how Indians live, work, and spend their leisure time.

As New Zealand (NZ) continues to view India as a trade partner and emerging powerhouse, it’s important to understand what’s happening on the ground. Not just in terms of GDP numbers, but in real experiences, innovation, and resilience.

India isn’t catching up – it’s pulling ahead

India’s economy grew by a faster-than-expected 7.4% in the final quarter of the fiscal year ending March 2025, accelerating from 6.2% the previous quarter and surpassing the expectations of 6.7% by most analysts. For the full financial year 2024/25, GDP growth was recorded at 6.5%, marking a slowdown from the previous year but still outpacing most major economies.

World organisations such as IMF, World Bank, and United Nations all maintain a positive outlook and expect India to maintain its lead as the fastest-growing major economy, with projected growth rates of around 6.2% to 6.7% for 2025 and 2026. The IMF projects India’s economy to reach $4.187 trillion in 2025, modestly overtaking Japan to become the world’s fourth-largest economy.

This growth is underpinned by strong domestic demand, increased infrastructure spending, government-led production incentives, a robust services sector, and resilient exports (particularly in software and pharmaceuticals).

Despite strong growth, inflation has remained under control. The consumer price index (CPI) inflation rate stood at 2.8% year-on-year in May 2025, allowing the Reserve Bank of India (RBI) to begin easing its monetary policy.

Where the growth is happening

India’s services sector, contributes around 50% of India’s GDP, led by IT, financial services, and telecoms. Indian IT giants like TCS, Infosys, and Wipro remain competitive globally, whilst startups in fintech and edtech bring fresh energy.

The government’s ‘Make in India’ and Production-Linked Incentive (PLI) schemes are encouraging domestic manufacturing, particularly in electronics, semiconductors, and automotive sectors. Heavy investment in highways, ports, and renewable energy infrastructure is creating jobs and improving logistics.

Agriculture faces pressure from climate change, but agri-tech platforms and digital marketplaces are creating new opportunities for farmers. The real estate sector is seeing revival, with affordable housing and commercial development picking up, especially in non-metro areas.

A promising market for New Zealand?

Foreign Direct Investment (FDI) inflows into India continue to be strong, with key sectors attracting global capital: electronics and semiconductor manufacturing, renewable energy, financial services and fintech, retail and e-commerce, and electric vehicles.

India’s strong trade ties with countries like the United States (US), United Arab Emirates (UAE), Australia, and the United Kingdom (UK) are expanding. For New Zealand, India remains a promising market, particularly in education, food and dairy exports, and tech services. The Comprehensive Economic Cooperation Agreement (CECA), currently under discussion, could further boost bilateral trade.

Some challenges on the horizon

Despite strong fundamentals, India faces several challenges: youth unemployment (especially among graduates), widening income inequality, climate risks like heatwaves and water shortages, and potential regulatory changes in data privacy and tech sectors.

Given the high impact these challenges may have on growth momentum, the Indian Government, and the private and civil sectors, are working toward solutions to address these.

Why India still offers a compelling investment story

India’s age demographic is one of its greatest assets, with over 65% of the population under 35. This young, aspirational, and increasingly skilled population is driving consumption, innovation, and demand for better services.

This drives the country’s commitment to green energy, digital public infrastructure, and fiscal reforms. India is no longer just a developing economy; it’s a dynamic, opportunity-rich market with local solutions that can scale globally.

How India is enabling the next wave of startups

India now has the third-largest startup ecosystem globally, with over 100 unicorns and thousands of emerging ventures. From fintech and healthtech to logistics and gaming, Indian entrepreneurs are solving local and globally relevant problems.

What’s more encouraging is the participation from smaller towns and young professionals with big ideas. The government’s Startup India Initiative, easy incorporation procedures, and access to venture capital have made it easier to build and scale businesses. Even traditional family-owned enterprises are embracing innovation. A unique driver of public interest is Shark Tank India, educating India about business concepts, valuations, innovation and risk taking.

Visible changes: technology at the forefront

One of the most striking changes I witnessed was the tech-led transformation of everyday life. Smartphones are now deeply embedded in people’s routines. Whether it’s a street vendor accepting digital payments or a busy household ordering groceries through apps, the speed and ease of living has dramatically improved.

Affordable internet and increased digital literacy have allowed millions of Indians – urban and rural – to be online. Quick commerce services promise delivery in 10 minutes or less. Auto-rickshaw drivers use Google Maps and mobile wallets. Even small shopkeepers in traditional markets accept QR code payments.

A country embracing change

India in 2025 is a nation in motion – economically ambitious, socially dynamic, and culturally adaptive. From the moment I landed in Delhi, I could see that India is no longer waiting to catch up with the rest of the world. It is carving its own path – fast, bold, and digitally driven.

India is evolving with its people, policies, and platforms all moving forward in sync. And that makes it one of the most exciting economies to watch and work with in the years to come.