India’s economy looks set to grow at a steady 6.5% each year over the next decade, according to a fresh report from U.S. investment bank Morgan Stanley. But there’s even more potential if the country ramps up its industrial and export sectors, the firm predicts.
The report points out that India’s export sector has tons of room to expand. Right now, the country holds just 1.8% of the global export market—way below what you’d expect given its massive working-age population and GDP size. Morgan Stanley urges a big push on reforms to change that, including faster development of public infrastructure like better last-mile connectivity to ports and factories.
Experts at the bank agree with recent analyst views that India’s GDP could hit 6.5% growth in fiscal year 2026, up from earlier forecasts of 6%. “In our base case, India’s GDP will grow at this rate over the coming decade, making it one of the fastest-growing economies worldwide,” the report states.
One key benefit of boosting manufacturing exports? It creates jobs beyond just factories. Studies show that every job in export manufacturing spawns two more in areas like transportation and logistics, helping tackle India’s huge employment challenges.
With at least 84 million people expected to enter the workforce in the next 10 years—assuming steady participation rates—the pressure is on. Morgan Stanley notes that policymakers are working on this, but they need to speed things up. The firm calls for a smart plan to encourage state governments to improve the business climate and train workers with better skills.
Looking ahead, the report warns of a growing hurdle: artificial intelligence (AI). AI could slow job growth, especially in India’s key IT services sector and even domestic services, which have driven a lot of employment lately.
To keep unemployment steady, India would need average GDP growth of 7.4% over the medium term if workforce participation stays flat, the analysis suggests. If participation climbs gradually to 63%, the economy might need to hit 9.3% growth to maintain balance. These insights highlight why focusing on exports and reforms could be game-changers for India’s job market and economic boom.
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