Emergence of new sectors for youth in India: A look at India’s growth and vision (2024)

The general elections 2024 are going to be a pivotal moment in Indian history. At a time when India maintains the title of the fastest growing economy in the world, PM Modi made some bold promises at the India Today Conclave 2024. During his speech at the Conclave, PM Modi announced that in the next five years the country will witness the emergence of new sectors for the youth of the country. The bold prediction can be traced back to the growth of certain sectors, especially in the field of technology.

The two of the most impactful, up-and-coming sectors in this regard are AI and semiconductorindustries which are starting to take shape in the country. However, India has witnessed exponential growth in various other new sectors in the past 10 years. The country has become the second-largest smartphone market but has also turned into the second-largest manufacturer of smartphones. The production in the field of electronics has also witnessed significant growth. E-commerce is another sector that has expanded beyond metro cities and even the electric vehicle-boom has helped make EVs a real alternative to conventional ICE vehicles.

According to The India Cellular and Electronics Association (ICEA), a decade ago, the industry set ambitious targets and it has not only met but exceeded those expectations. The association has claimed that the industry has produced a whopping 2.45 billion units of mobile phones in the last decade. The value of these devices is estimated at Rs 4.1 lakh crore in FY24, a significant leap from Rs 18,900 crore a decade ago.

The industry had set a target of Rs 20 lakh crore over the 10-year period and it has nearly reached that goal with Rs 19.45 lakh crore in cumulative production.

Furthermore, India’s mobile phones have found a global market. Over the past decade, the cumulative exports of mobile phones have reached an estimated Rs 3.22 lakh crore. This makes mobile phones the fifth largest exported commodity from India. In the current fiscal year, it is expected that 30 per cent of the production will be exported. This is a testament to the quality and competitiveness of Indian-made mobile phones.

The imports of finished smartphones in India has also witnessed a sharp decline after 2015 with the lowest imports in 2020-21.

Challenges

Despite its rising labour costs, China remains cost effective relative to most of its major global competitors. Despite the exponential growth, India faces several challenges in becoming a top manufacturing hub, especially in comparison to its Chinese neighbour. The Chinese govt claims to have accounted for around 30 per cent of the total global manufacturing output in the year 2021. India can push for growth by upskilling its labour force and enhancing infrastructure. The govt plans to increase the production from 17 per cent of GDP in 2023 to 25 per cent of the GDP by as early as 2025.

Added competition from other markets can also slow the pace of growth in the manufacturing sector. According to a BCG report, over 90 per cent of North American manufacturers they surveyed relocated some production from China in the past five years—and a similar percentage plan to make such moves in the next five years. Apart from India, other preferred destinations are Mexico, Southeast Asia, Turkey, and Morocco.

EV manufacturing

The EV sector was in its nascent stage a decade ago but it has witnessed exponential growth in the second half of the past decade. Policies like FAME I were pivotal to the growth of the segment. Indian EV manufacturers played an important role in this regard. For some context, number of EVs sold in CY2014 were 2,390. On average, more than double the units were sold per day in the month of February this year. According to EV Ready India dashboard, 1,46,423 units were sold in the month of February. In 2023, India witnessed sales of over 1.5 million units of EVs which is around 50 per cent higher than sales in 2022.

Maxson Lewis, Founder and CEO, Magenta Mobility claims that "India's journey towards embracing electric vehicles reflects a remarkable evolution, shifting from 'What is an EV?' to 'Why not an EV?' Regulatory milestones, like the de-licensing of charging stations, FAME 1 subsidy, and mandatory switch for public transport buses to be electric, have driven this transformation.

He further added that, “Growth is evident across segments, with L3 Rickshaws showing 100% growth since 2014 and significant peaks in the 2W and 3W segments by 2022-2023. The L5 cargo boasts a 60% electric share, signaling a momentum towards sustainability. While the EV space initially saw negligible growth, recent data from the Vahan dashboard reveals a promising 154% Y-o-Y growth in FY 2022-23. This trajectory signifies a bright future for electric mobility in India."

While India is expected to continue to witness growth in the EV segment, challenges like over dependence on govt subsidies, higher prices in comparison of ICE vehicles and insufficient charging infrastructure could slow down the momentum.

The spread of e-commerce

The online shopping industry in India is growing fast. In the financial year 2022-23, the Government’s online marketplace (GeM) had its highest ever sales of $2011 billion. According to Invest India, since it started, GeM has sold more than 4.5 lakh crore worth of goods and helped save over Rs 40,000 crore.

As of March 2023, there are over 880 million internet users and over 1172 million phone users in India. The growth in online shopping is due to more people using smartphones, people having more money to spend, and cheap internet. With over 800 million users, India has the second-largest number of internet users in the world. In 2022, there were 125.94 lakh crore transactions made using UPI which is expected to grow further.

Invest India also claims that e-commerce is no longer restricted to big cities. Almost all areas in India have started shopping online. More than half of the online orders come from smaller cities and towns. These smaller places are quickly catching up to the bigger cities in terms of online shopping. The amount people spend on average in smaller towns is only slightly less than in bigger cities.

India is mostly shopping online for electronics and clothes, which make up nearly 70 per cent of the market. Other growing areas include online learning, local delivery services, and food delivery.

India expects to have 1 billion internet users by 2025 and the e-commerce market is projected to grow by 18 per cent annually through 2025. The govt also expects the country to have the 2nd largest online-shopper’s base globally by 2030 with around 200-300 million shoppers.