‘India to contribute 15% of global growth’

The ongoing key reforms such as sops for manufacturing, easier labour laws, wooing FDI inflows and privatisation will help improve productivity and support long-term growth at 7.5-8% levels, which if played out well, can help India contribute 15% of global GDP growth by FY2026, says a report.

According to a report pencilled by the India economist at UBS Securities, Tanvee Gupta Jain, the country has the lowest manufacturing costs among peers, even though China retains significant ecosystem advantages and despite that India and Vietnam appear most likely to benefit from a shift out of China.

"The incentives for manufacturing, easier labour laws, encouraging FDI inflows and privatisation will help improve productivity and support long-term growth closer to the upside scenario of 7.5-8%. If this played out well, we estimate that India could contribute 15% to global GDP growth in the next five years ending FY26," GuptaJain said without quantifying the present share.

The report expects the large local market potential, low labour costs, macroeconomic stability and the hope of strengthening ongoing reform momentum will help achieve these objectives.

She says the five-year production-linked incentive (PLI) scheme is a significant turn in the manufacturing policy as it incentivizes select companies to scale up production and boost domestic value-addition. "From almost zero now, India's capacity should reach 20-30% of the total global supply chain in the next two years," says Gupta-Jain.