Economy of India

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The economy of India is characterised as a middle income developing market economy.[46] It is the world’s sixth-largest economy by nominal GDP and the third-largest by purchasing power parity (PPP).[47] According to the International Monetary Fund (IMF), on a per capita income basis, India ranked 145th by GDP (nominal) and 122th by GDP (PPP) in 2020.[48] From independence in 1947 until 1991, successive governments promoted protectionist economic policies with extensive state intervention and economic regulation, which is characterised as dirigism, in the form of the License Raj.[49][50] The end of the Cold War and an acute balance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India.[51][52] Since the start of the 21st century, annual average GDP growth has been 6% to 7%,[46] and from 2010 to 2016, India was the world’s fastest growing major economy, surpassing China.[53][54] Historically, India was the largest economy in the world for most of the two millennia from the 1st until the 19th century.[55][56][57]

The long-term growth perspective of the Indian economy remains positive due to its young population and corresponding low dependency ratio, healthy savings, and investment rates, increasing globalisation in India and integration into the global economy.[12] The economy slowed in 2017, due to shocks of “demonetisation” in 2016 and the introduction of the Goods and Services Tax in 2017.[12] Nearly 60% of India’s GDP is driven by domestic private consumption[58] and continues to remain the world’s sixth-largest consumer market.[59] Apart from private consumption, India’s GDP is also fueled by government spending, investment, and exports.[60] In 2019, India was the world’s ninth-largest importer and the twelfth-largest exporter.[61] India has been a member of the World Trade Organization since 1 January 1995.[62] It ranks 63rd on the Ease of doing business index and 68th on the Global Competitiveness Report.[63] With 500 million workers, the Indian labour force is the world’s second-largest as of 2019. India has one of the world’s highest number of billionaires and extreme income inequality.[64][65] Since India has a vast informal economy, barely 2% of Indians pay income taxes.[66] During the 2008 global financial crisis the economy faced a mild slowdown, India undertook stimulus measures (both fiscal and monetary) to boost growth and generate demand; in subsequent years economic growth revived.[67] According to the 2017 PricewaterhouseCoopers (PwC) report, India’s GDP at purchasing power parity could overtake that of the United States by 2050.[68] According to World Bank, to achieve sustainable economic development India must focus on public sector reform, infrastructureagricultural and rural development, removal of land and labour regulationsfinancial inclusion, spur private investment and exports, education, and public health.[69]

In 2020, India’s ten largest trading partners were the United States, China, UAE, Saudi Arabia, Switzerland, Germany, Hong Kong, Indonesia, South Korea, and Malaysia.[70] In 2019–20, the foreign direct investment (FDI) in India was $74.4 billion with the service sector, computer, and telecom industry remains leading sectors for FDI inflows.[71] India has free trade agreements with several nations, including ASEANSAFTAMercosur, South Korea, Japan, and several others which are in effect or under negotiating stage.[72][73] The service sector makes up 50% of GDP and remains the fastest growing sector, while the industrial sector and the agricultural sector employs a majority of the labor force.[74] The Bombay Stock Exchange and National Stock Exchange are some of the world’s largest stock exchanges by market capitalization.[75] India is the world’s sixth-largest manufacturer, representing 3% of global manufacturing output, and employs over 57 million people.[76][77] Nearly 66% of India’s population is rural,[78] and contributes about 50% of India’s GDP.[79] It has the world’s fourth-largest foreign-exchange reserves worth $585 billion.[45] India has a high public debt with 89% of GDP, while its fiscal deficit stood at 9.5% of GDP.[36][38] India’s government-owned banks faced mounting bad debt, resulting in low credit growth,[12] simultaneously the NBFC sector has been engulfed in a liquidity crisis.[80] India faces moderate unemployment, rising income inequality, and a drop in aggregate demand.[81][82] India’s gross domestic savings rate stood at 30.1% of GDP in FY 2019.[83] In recent years, independent economists and financial institutions have accused the government of fudging various economic data, especially GDP growth.[84][85]

India is the world’s largest manufacturer of generic drugs, and its pharmaceutical sector fulfills over 50% of the global demand for vaccines.[86] The Indian IT industry is a major exporter of IT services with $191 billion in revenue and employs over four million people.[87] India’s chemical industry is extremely diversified and estimated at $178 billion.[88] The tourism industry contributes about 9.2% of India’s GDP and employs over 42 million.[89] India ranks second globally in food and agricultural production, while agricultural exports were $35.09 billion.[79][90] The construction and real estate sector ranks third among the 14 major sectors in terms of direct, indirect, and induced effects in all sectors of the economy.[91] The Indian textiles industry is estimated at $100 billion and contributes 13% of industrial output and 2.3% of India’s GDP while employs over 45 million people directly.[92] India’s telecommunication industry is the world’s second largest by the number of mobile phone, smartphone, and internet users. It is the world’s 25th-largest oil producer and the third-largest oil consumer.[93] The Indian automobile industry is the world’s fifth-largest by production.[94][95] It has $1.17 trillion worth of retail market which contributes over 10% of India’s GDP and has one of the world’s fastest growing e-commerce markets.[96] India has the world’s fourth-largest natural resources, with the mining sector contributing 11% of the country’s industrial GDP and 2.5% of total GDP.[97] It is also the world’s second-largest coal producer, the second-largest cement producer, the second-largest steel producer, and the third-largest electricity producer.[98][99]


Historically, India has classified and tracked its economy and GDP in three sectors: agriculture, industry, and services. Agriculture includes crops, horticulture, milk and animal husbandry, aquaculture, fishing, sericulture, aviculture, forestry, and related activities. Industry includes various manufacturing sub-sectors. India’s definition of services sector includes its construction, retail, software, IT, communications, hospitality, infrastructure operations, education, healthcare, banking and insurance, and many other economic activities.[192][193]


Rice fields near Puri, Odisha on India’s east coast.

Agriculture and allied sectors like forestry, logging and fishing accounted for 17% of the GDP, the sector employed 49% of its total workforce in 2014.[195] Agriculture accounted for 23% of GDP, and employed 59% of the country’s total workforce in 2016.[196] As the Indian economy has diversified and grown, agriculture’s contribution to GDP has steadily declined from 1951 to 2011, yet it is still the country’s largest employment source and a significant piece of its overall socio-economic development.[197] Crop-yield-per-unit-area of all crops has grown since 1950, due to the special emphasis placed on agriculture in the five-year plans and steady improvements in irrigation, technology, application of modern agricultural practices and provision of agricultural credit and subsidies since the Green Revolution in India. However, international comparisons reveal the average yield in India is generally 30% to 50% of the highest average yield in the world.[198] The states of Uttar PradeshPunjab, Haryana, Madhya Pradesh, Andhra Pradesh, Telangana, Bihar, West Bengal, Gujarat and Maharashtra are key contributors to Indian agriculture.

The state of Punjab led India’s Green Revolution and earned the distinction of being the country’s bread basket.[199]
Amul Dairy Plant at Anand, Gujarat, was a highly successful co-operative started during Operation Flood in the 1970s.

India receives an average annual rainfall of 1,208 millimetres (47.6 in) and a total annual precipitation of 4000 billion cubic metres, with the total utilisable water resources, including surface and groundwater, amounting to 1123 billion cubic metres.[200] 546,820 square kilometres (211,130 sq mi) of the land area, or about 39% of the total cultivated area, is irrigated.[201] India’s inland water resources and marine resources provide employment to nearly six million people in the fisheries sector. In 2010, India had the world’s sixth-largest fishing industry.[202]

India exports more than 100,000 tonnes of processed cashew kernels every year. There are more than 600 cashew processing units in Kollam alone.[203]

India is the largest producer of milk, jute and pulses, and has the world’s second-largest cattle population with 170 million animals in 2011.[204] It is the second-largest producer of rice, wheat, sugarcane, cotton and groundnuts, as well as the second-largest fruit and vegetable producer, accounting for 10.9% and 8.6% of the world fruit and vegetable production, respectively. India is also the second-largest producer and the largest consumer of silk, producing 77,000 tons in 2005.[205] India is the largest exporter of cashew kernels and cashew nut shell liquid (CNSL). Foreign exchange earned by the country through the export of cashew kernels during 2011–12 reached ₹43.9 billion (equivalent to ₹67 billion or US$930 million in 2019) based on statistics from the Cashew Export Promotion Council of India (CEPCI). 131,000 tonnes of kernels were exported during 2011–12.[206] There are about 600 cashew processing units in Kollam, Kerala.[203] India’s foodgrain production remained stagnant at approximately 252 million tonnes (MT) during both the 2015–16 and 2014–15 crop years (July–June).[207] India exports several agriculture products, such as Basmati rice, wheat, cereals, spices, fresh fruits, dry fruits, buffalo beef meat, cotton, tea, coffee and other cash crops particularly to the Middle East, Southeast and East Asian countries. About 10 percent of its export earnings come from this trade.[208]

Indian agriculture is diverse, ranging from impoverished farm villages to developed farms using modern agricultural technologies. This image shows a farming community in a more prosperous part of India.

At around 1,530,000 square kilometres (590,000 sq mi), India has the second-largest amount of arable land, after the US, with 52% of total land under cultivation. Although the total land area of the country is only slightly more than one-third of China or the US, India’s arable land is marginally smaller than that of the US, and marginally larger than that of China. However, agricultural output lags far behind its potential.[209] The low productivity in India is a result of several factors. According to the World Bank, India’s large agricultural subsidies are distorting what farmers grow and hampering productivity-enhancing investment. Over-regulation of agriculture has increased costs, price risks and uncertainty, and governmental intervention in labour, land, and credit are hurting the market. Infrastructure such as rural roads, electricity, ports, food storage, retail markets and services remain inadequate.[210] The average size of land holdings is very small, with 70% of holdings being less than one hectare (2.5 acres) in size.[211] Irrigation facilities are inadequate, as revealed by the fact that only 46% of the total cultivable land was irrigated as of 2016,[201] resulting in farmers still being dependent on rainfall, specifically the monsoon season, which is often inconsistent and unevenly distributed across the country.[212] In an effort to bring an additional 20,000,000 hectares (49,000,000 acres) of land under irrigation, various schemes have been attempted, including the Accelerated Irrigation Benefit Programme (AIBP) which was provided ₹800 billion (equivalent to ₹930 billion or US$13 billion in 2019) in the union budget.[213] Farming incomes are also hampered by lack of food storage and distribution infrastructure; a third of India’s agricultural production is lost from spoilage.[214]

Manufacturing and industry

Industry accounts for 26% of GDP and employs 22% of the total workforce.[215] According to the World Bank, India’s industrial manufacturing GDP output in 2015 was 6th largest in the world on current US dollar basis ($559 billion),[216] and 9th largest on inflation-adjusted constant 2005 US dollar basis ($197.1 billion).[217] The industrial sector underwent significant changes due to the 1991 economic reforms, which removed import restrictions, brought in foreign competition, led to the privatisation of certain government-owned public-sector industries, liberalised the foreign direct investment (FDI) regime,[218] improved infrastructure and led to an expansion in the production of fast-moving consumer goods.[219] Post-liberalisation, the Indian private sector was faced with increasing domestic and foreign competition, including the threat of cheaper Chinese imports. It has since handled the change by squeezing costs, revamping management, and relying on cheap labour and new technology. However, this has also reduced employment generation, even among smaller manufacturers who previously relied on labour-intensive processes.[220]


Nuclear capable Agni-II ballistic missile. Since May 1998, India declared itself to be a full-fledged nuclear state.

With strength of over 1.3 million active personnel, India has the third-largest military force and the largest volunteer army. The total budget sanctioned for the Indian military for the financial year 2019–20 was ₹3.01 trillion (US$42 billion).[221] Defence spending is expected to rise to US$62 billion by 2022.[222]

Electricity sector

Primary energy consumption of India is the third-largest after China and the US with 5.3% global share in the year 2015.[223] Coal and crude oil together account for 85% of the primary energy consumption of India. India’s oil reserves meet 25% of the country’s domestic oil demand.[224][225] As of April 2015, India’s total proven crude oil reserves are 763.476 million metric tons, while gas reserves stood at 1,490 billion cubic metres (53 trillion cubic feet).[226] Oil and natural gas fields are located offshore at Bombay HighKrishna Godavari Basin and the Cauvery Delta, and onshore mainly in the states of Assam, Gujarat and Rajasthan. India is the fourth-largest consumer of oil and net oil imports were nearly ₹8,200 billion (US$110 billion) in 2014–15,[226] which had an adverse effect on the country’s current account deficit. The petroleum industry in India mostly consists of public sector companies such as Oil and Natural Gas Corporation (ONGC), Hindustan Petroleum Corporation Limited (HPCL), Bharat Petroleum Corporation Limited (BPCL) and Indian Oil Corporation Limited (IOCL). There are some major private Indian companies in the oil sector such as Reliance Industries Limited (RIL) which operates the world’s largest oil refining complex.[227]

India became the world’s third-largest producer of electricity in 2013 with a 4.8% global share in electricity generation, surpassing Japan and Russia.[228] By the end of calendar year 2015, India had an electricity surplus with many power stations idling for want of demand.[229] The utility electricity sector had an installed capacity of 303 GW as of May 2016 of which thermal power contributed 69.8%, hydroelectricity 15.2%, other sources of renewable energy 13.0%, and nuclear power 2.1%.[230] India meets most of its domestic electricity demand through its 106 billion tonnes of proven coal reserves.[231] India is also rich in certain alternative sources of energy with significant future potential such as solarwind and biofuels (jatropha, sugarcane). India’s dwindling uranium reserves stagnated the growth of nuclear energy in the country for many years.[232] Recent discoveries in the Tummalapalle belt may be among the top 20 natural uranium reserves worldwide,[233][234][235][needs update] and an estimated reserve of 846,477 metric tons (933,081 short tons) of thorium[236] – about 25% of world’s reserves – are expected to fuel the country’s ambitious nuclear energy program in the long-run. The Indo-US nuclear deal has also paved the way for India to import uranium from other countries.[237]


Mahindra XUV500 is made in India

Engineering is the largest sub-sector of India’s industrial sector, by GDP, and the third-largest by exports.[238] It includes transport equipment, machine tools, capital goods, transformers, switchgear, furnaces, and cast and forged parts for turbines, automobiles, and railways. The industry employs about four million workers. On a value-added basis, India’s engineering subsector exported $67 billion worth of engineering goods in the 2013–14 fiscal year, and served part of the domestic demand for engineering goods.[239]

The engineering industry of India includes its growing car, motorcycle and scooters industry, and productivity machinery such as tractors. India manufactured and assembled about 18 million passenger and utility vehicles in 2011, of which 2.3 million were exported.[240] India is the largest producer and the largest market for tractors, accounting for 29% of global tractor production in 2013.[240][241] India is the 12th-largest producer and 7th-largest consumer of machine tools.[240]

The automotive manufacturing industry contributed $79 billion (4% of GDP) and employed 6.76 million people (2% of the workforce) in 2016.[196]

Gems and jewellery

Many famous stones such as the Koh-i-Noor and Hope Diamond (above), came from India.[242][243]

India is one of the largest centres for polishing diamonds and gems and manufacturing jewellery; it is also one of the two largest consumers of gold.[244][245] After crude oil and petroleum products, the export and import of gold, precious metals, precious stones, gems and jewellery accounts for the largest portion of India’s global trade. The industry contributes about 7% of India’s GDP, employs millions, and is a major source of its foreign-exchange earnings.[246] The gems and jewellery industry created $60 billion in economic output on value-added basis in 2017, and is projected to grow to $110 billion by 2022.[247]

The gems and jewellery industry has been economically active in India for several thousand years.[248] Until the 18th century, India was the only major reliable source of diamonds.[244] Now, South Africa and Australia are the major sources of diamonds and precious metals, but along with Antwerp, New York City, and Ramat Gan, Indian cities such as Surat and Mumbai are the hubs of world’s jewellery polishing, cutting, precision finishing, supply and trade. Unlike other centres, the gems and jewellery industry in India is primarily artisan-driven; the sector is manual, highly fragmented, and almost entirely served by family-owned operations.

The particular strength of this sub-sector is in precision cutting, polishing and processing small diamonds (below one carat).[244] India is also a hub for processing of larger diamonds, pearls, and other precious stones. Statistically, 11 out of 12 diamonds set in any jewellery in the world are cut and polished in India.[249]


India’s infrastructure and transport sector contributes about 5% of its GDP. India has a road network of over 5,472,144 kilometres (3,400,233 mi) as of 31 March 2015, the second-largest road network in the world only behind the United States. At 1.66 km of roads per square kilometre of land (2.68 miles per square mile), the quantitative density of India’s road network is higher than that of Japan (0.91) and the United States (0.67), and far higher than that of China (0.46), Brazil (0.18) or Russia (0.08).[250] Qualitatively, India’s roads are a mix of modern highways and narrow, unpaved roads, and are being improved.[251] As of 31 March 2015, 87.05% of Indian roads were paved.[250] India has the lowest kilometre-lane road density per 100,000 people among G-27 countries, leading to traffic congestion. It is upgrading its infrastructure. As of May 2014, India had completed over 22,600 kilometres (14,000 mi) of 4- or 6-lane highways, connecting most of its major manufacturing, commercial and cultural centres.[252] India’s road infrastructure carries 60% of freight and 87% of passenger traffic.[253]

Indian Railways is the fourth-largest rail network in the world, with a track length of 114,500 kilometres (71,100 mi) and 7,172 stations. This government-owned-and-operated railway network carried an average of 23 million passengers a day, and over a billion tonnes of freight in 2013.[254] India has a coastline of 7,500 kilometres (4,700 mi) with 13 major ports and 60 operational non-major ports, which together handle 95% of the country’s external trade by volume and 70% by value (most of the remainder handled by air).[255] Nhava Sheva, Mumbai is the largest public port, while Mundra is the largest private sea port.[256] The airport infrastructure of India includes 125 airports,[257] of which 66 airports are licensed to handle both passengers and cargo.[258]

Petroleum products and chemicals

Petroleum products and chemicals are a major contributor to India’s industrial GDP, and together they contribute over 34% of its export earnings. India hosts many oil refinery and petrochemical operations, including the world’s largest refinery complex in Jamnagar that processes 1.24 million barrels of crude per day.[259] By volume, the Indian chemical industry was the third-largest producer in Asia, and contributed 5% of the country’s GDP. India is one of the five-largest producers of agrochemicals, polymers and plastics, dyes and various organic and inorganic chemicals.[260] Despite being a large producer and exporter, India is a net importer of chemicals due to domestic demands.[261]

The chemical industry contributed $163 billion to the economy in FY18 and is expected to reach $300–400 billion by 2025.[262][263] The industry employed 17.33 million people (4% of the workforce) in 2016.[196]


The Indian pharmaceutical industry has grown in recent years to become a major manufacturer of health care products for the world. India holds a 20% market share in the global supply of generics by volume.[264] The Indian pharmaceutical sector also supplies over 62% of the global demand for various vaccines.[265] India’s pharmaceutical exports stood at $17.27 billion in 2017–18 and are expected to reach $20 billion by 2020.[264] The industry grew from $6 billion in 2005 to $36.7 billion in 2016, a compound annual growth rate (CAGR) of 17.46%. It is expected to grow at a CAGR of 15.92% to reach $55 billion in 2020. India is expected to become the sixth-largest pharmaceutical market in the world by 2020.[266] It is one of the fastest-growing industrial sub-sectors and a significant contributor to India’s export earnings. The state of Gujarat has become a hub for the manufacture and export of pharmaceuticals and active pharmaceutical ingredients (APIs).[267]


The textile and apparel market in India was estimated to be $108.5 billion in 2015. It is expected to reach a size of $226 billion by 2023. The industry employees over 35 million people. By value, the textile industry accounts for 7% of India’s industrial, 2% of GDP and 15% of the country’s export earnings. India exported $39.2 billion worth of textiles in the 2017–18 fiscal year.[268]

India’s textile industry has transformed in recent years from a declining sector to a rapidly developing one. After freeing the industry in 2004–2005 from a number of limitations, primarily financial, the government permitted massive investment inflows, both domestic and foreign. From 2004 to 2008, total investment into the textile sector increased by 27 billion dollars. Ludhiana produces 90% of woollens in India and is known as the Manchester of India. Tirupur has gained universal recognition as the leading source of hosiery, knitted garments, casual wear, and sportswear. Expanding textile centres such as Ichalkaranji enjoy one of the highest per-capita incomes in the country.[269] India’s cotton farms, fibre and textile industry provides employment to 45 million people in India,[270] including some child labour (1%). The sector is estimated to employ around 400,000 children under the age of 18.[271]

Pulp and paper

The pulp and paper industry in India is one of the major producers of paper in the world and has adopted new manufacturing technology.[272] The paper market in India was estimated to be worth ₹600 billion (US$8.4 billion) in 2017–18 recording a CAGR of 6–7%. Domestic demand for paper almost doubled from around 9 million tonnes in the 2007–08 fiscal to over 17 million tonnes in 2017–18. The per capita consumption of paper in India is around 13–14 kg annually, lower than the global average of 57 kg.[273]


Hyderabad is a major IT services centre.

The services sector has the largest share of India’s GDP, accounting for 57% in 2012, up from 15% in 1950.[215] It is the seventh-largest services sector by nominal GDP, and third largest when purchasing power is taken into account. The services sector provides employment to 27% of the workforce. Information technology and business process outsourcing are among the fastest-growing sectors, having a cumulative growth rate of revenue 33.6% between fiscal years 1997–98 and 2002–03, and contributing to 25% of the country’s total exports in 2007–08.[274][needs update]


Air India became the first Asian carrier to induct a jet aircraft, with the Boeing 707–420 Gauri Shankar.

India is the fourth-largest civil aviation market in the world recording an air traffic of 158 million passengers in 2017.[275][276] The market is estimated to have 800 aircraft by 2020, which would account for 4.3% of global volumes,[277] and is expected to record annual passenger traffic of 520 million by 2037.[276] IATA estimated that aviation contributed $30 billion to India’s GDP in 2017, and supported 7.5 million jobs – 390,000 directly, 570,000 in the value chain, and 6.2 million through tourism.[276]

Civil aviation in India traces its beginnings to 18 February 1911, when Henri Pequet, a French aviator, carried 6,500 pieces of mail on a Humber biplane from Allahabad to Naini.[278] Later on 15 October 1932, J.R.D. Tata flew a consignment of mail from Karachi to Juhu Airport. His airline later became Air India and was the first Asian airline to cross the Atlantic Ocean as well as first Asian airline to fly jets.[279]


In March 1953, the Indian Parliament passed the Air Corporations Act to streamline and nationalise the then existing privately owned eight domestic airlines into Indian Airlines for domestic services and the Tata group-owned Air India for international services.[278] The International Airports Authority of India (IAAI) was constituted in 1972 while the National Airports Authority was constituted in 1986. The Bureau of Civil Aviation Security was established in 1987 following the crash of Air India Flight 182.


The government de-regularised the civil aviation sector in 1991 when the government allowed private airlines to operate charter and non-scheduled services under the ‘Air Taxi’ Scheme until 1994, when the Air Corporation Act was repealed and private airlines could now operate scheduled services. Private airlines including Jet AirwaysAir SaharaModiluftDamania Airways and NEPC Airlines commenced domestic operations during this period.[278]

The aviation industry experienced a rapid transformation following deregulation. Several low-cost carriers entered the Indian market in 2004–05. Major new entrants included Air DeccanAir SaharaKingfisher AirlinesSpiceJetGoAirParamount Airways and IndiGo. Kingfisher Airlines became the first Indian air carrier on 15 June 2005 to order Airbus A380 aircraft worth US$3 billion.[280][281] However, Indian aviation would struggle due to an economic slowdown and rising fuel and operation costs. This led to consolidation, buyouts and discontinuations. In 2007, Air Sahara and Air Deccan were acquired by Jet Airways and Kingfisher Airlines respectively. Paramount Airways ceased operations in 2010 and Kingfisher shut down in 2012. Etihad Airways agreed to acquire a 24% stake in Jet Airways in 2013. AirAsia India, a low-cost carrier operating as a joint venture between Air Asia and Tata Sons launched in 2014. As of 2013–14, only IndiGo and GoAir were generating profits.[282][needs update] The average domestic passenger air fare dropped by 70% between 2005 and 2017, after adjusting for inflation.[276]

Banking and financial services

State Bank of India is the largest bank in India.

The financial services industry contributed $809 billion (37% of GDP) and employed 14.17 million people (3% of the workforce) in 2016, and the banking sector contributed $407 billion (19% of GDP) and employed 5.5 million people (1% of the workforce) in 2016.[196] The Indian money market is classified into the organised sector, comprising private, public and foreign-owned commercial banks and cooperative banks, together known as ‘scheduled banks’; and the unorganised sector, which includes individual or family-owned indigenous bankers or money lenders and non-banking financial companies.[283] The unorganised sector and microcredit are preferred over traditional banks in rural and sub-urban areas, especially for non-productive purposes such as short-term loans for ceremonies.[284]

Prime Minister Indira Gandhi nationalised 14 banks in 1969, followed by six others in 1980, and made it mandatory for banks to provide 40% of their net credit to priority sectors including agriculture, small-scale industry, retail trade and small business, to ensure that the banks fulfilled their social and developmental goals. Since then, the number of bank branches has increased from 8,260 in 1969 to 72,170 in 2007 and the population covered by a branch decreased from 63,800 to 15,000 during the same period. The total bank deposits increased from ₹59.1 billion (equivalent to ₹2.3 trillion or US$32 billion in 2019) in 1970–71 to ₹38,309 billion (equivalent to ₹78 trillion or US$1.1 trillion in 2019) in 2008–09. Despite an increase of rural branches – from 1,860 or 22% of the total in 1969 to 30,590 or 42% in 2007 – only 32,270 of 500,000 villages are served by a scheduled bank.[285][286]

India’s gross domestic savings in 2006–07 as a percentage of GDP stood at a high 32.8%.[287] More than half of personal savings are invested in physical assets such as land, houses, cattle, and gold.[288] The government-owned public-sector banks hold over 75% of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.[289] Since liberalisation, the government has approved significant banking reforms. While some of these relate to nationalised banks – such as reforms encouraging mergers, reducing government interference and increasing profitability and competitiveness – other reforms have opened the banking and insurance sectors to private and foreign companies.[224][290]

Financial technology

According to the report of The National Association of Software and Services Companies (NASSCOM), India has a presence of around 400 companies in the fintech space, with an investment of about $420 million in 2015. The NASSCOM report also estimated the fintech software and services market to grow 1.7 times by 2020, making it worth $8 billion.[291] The Indian fintech landscape is segmented as follows – 34% in payment processing, followed by 32% in banking and 12% in the trading, public and private markets.[292]

Information technology

Infosys Media Centre in Bangalore, India. Infosys is one of the largest Indian IT companies.

Tidel Park, the then largest IT park in Asia when it was opened in 2000.

The information technology (IT) industry in India consists of two major components: IT Services and business process outsourcing (BPO). The sector has increased its contribution to India’s GDP from 1.2% in 1998 to 7.5% in 2012.[293] According to NASSCOM, the sector aggregated revenues of US$147 billion in 2015, where export revenue stood at US$99 billion and domestic at US$48 billion, growing by over 13%.[293]

The growth in the IT sector is attributed to increased specialisation, and an availability of a large pool of low-cost, highly skilled, fluent English-speaking workers – matched by increased demand from foreign consumers interested in India’s service exports, or looking to outsource their operations. The share of the Indian IT industry in the country’s GDP increased from 4.8% in 2005–06 to 7% in 2008.[294] In 2009, seven Indian firms were listed among the top 15 technology outsourcing companies in the world.[295]

The business process outsourcing services in the outsourcing industry in India caters mainly to Western operations of multinational corporations. As of 2012, around 2.8 million people work in the outsourcing sector.[296] Annual revenues are around $11 billion,[296] around 1% of GDP. Around 2.5 million people graduate in India every year. Wages are rising by 10–15 percent as a result of skill shortages.[296]


India became the tenth-largest insurance market in the world in 2013, rising from 15th in 2011.[297][298] At a total market size of US$66.4 billion in 2013, it remains small compared to world’s major economies,[299] and the Indian insurance market accounted for just 2% of the world’s insurance business in 2017. India’s life and non-life insurance industry collected ₹6.10 trillion (US$86 billion) in total gross insurance premiums in 2018. Life insurance accounts for 75.41% of the insurance market and the rest is general insurance.[300] Of the 52 insurance companies in India, 24 are active in life-insurance business.[299]

Specialised insurers Export Credit Guarantee Corporation and Agriculture Insurance Company (AIC) offer credit guarantee and crop insurance. It has introduced several innovative products such as weather insurance and insurance related to specific crops. The premium underwritten by the non-life insurers during 2010–11 was ₹425 billion (equivalent to ₹700 billion or US$9.9 billion in 2019) against ₹346 billion (equivalent to ₹620 billion or US$8.8 billion in 2019) in 2009–10. The growth was satisfactory,[according to whom?] particularly given across-the-broad cuts in the tariff rates. The private insurers underwrote premiums of ₹174 billion (equivalent to ₹290 billion or US$4.0 billion in 2019) against ₹140 billion (equivalent to ₹250 billion or US$3.5 billion in 2019) in 2009–10.

The Indian insurance business had been under-developed with low levels of insurance penetration.


Neighbourhood grocery shops handle much of retail trade in India.

The retail industry, excluding wholesale, contributed $482 billion (22% of GDP) and employed 249.94 million people (57% of the workforce) in 2016. The industry is the second largest employer in India, after agriculture.[196] The Indian retail market is estimated to be US$600 billion and one of the top-five retail markets in the world by economic value. India has one of the fastest-growing retail markets in the world,[301][302] and is projected to reach $1.3 trillion by 2020.[303][304] The e-commerce retail market in India was valued at $32.7 billion in 2018, and is expected to reach $71.9 billion by 2022.[305]

India’s retail industry mostly consists of local mom-and-pop stores, owner-manned shops and street vendors. Retail supermarkets are expanding, with a market share of 4% in 2008.[306] In 2012, the government permitted 51% FDI in multi-brand retail and 100% FDI in single-brand retail. However, a lack of back-end warehouse infrastructure and state-level permits and red tape continue to limit growth of organised retail.[307] Compliance with over thirty regulations such as “signboard licences” and “anti-hoarding measures” must be made before a store can open for business. There are taxes for moving goods from state to state, and even within states.[306] According to The Wall Street Journal, the lack of infrastructure and efficient retail networks cause a third of India’s agriculture produce to be lost from spoilage.[214]


Kerala became a major tourist destination after the state government promoted its natural coastline.

The World Travel & Tourism Council calculated that tourism generated ₹15.24 trillion (US$210 billion) or 9.4% of the nation’s GDP in 2017 and supported 41.622 million jobs, 8% of its total employment. The sector is predicted to grow at an annual rate of 6.9% to ₹32.05 trillion (US$450 billion) by 2028 (9.9% of GDP).[308] Over 10 million foreign tourists arrived in India in 2017 compared to 8.89 million in 2016, recording a growth of 15.6%.[309] India earned $21.07 billion in foreign exchange from tourism receipts in 2015.[310] International tourism to India has seen a steady growth from 2.37 million arrivals in 1997 to 8.03 million arrivals in 2015. The United States is the largest source of international tourists to India, while European Union nations and Japan are other major sources of international tourists.[311][312] Less than 10% of international tourists visit the Taj Mahal, with the majority visiting other cultural, thematic and holiday circuits.[313] Over 12 million Indian citizens take international trips each year for tourism, while domestic tourism within India adds about 740 million Indian travellers.[311]

India has a fast-growing medical tourism sector of its health care economy, offering low-cost health services and long-term care.[314][315] In October 2015, the medical tourism sector was estimated to be worth US$3 billion. It is projected to grow to $7–8 billion by 2020.[316] In 2014, 184,298 foreign patients traveled to India to seek medical treatment.[317]

Media and entertainment industry

An ASSOCHAMPwC joint study projected that the Indian media and entertainment industry would grow from a size of $30.364 billion in 2017 to $52.683 billion by 2022, recording a CAGR of 11.7%. The study also predicted that television, cinema and over-the-top services would account for nearly half of the overall industry growth during the period.[318]


India’s healthcare sector is expected to grow at a CAGR of 29% between 2015 and 2020, to reach US$280 billion, buoyed by rising incomes, greater health awareness, increased precedence of lifestyle diseases, and improved access to health insurance.[266]

The ayurveda industry in India recorded a market size of $4.4 billion in 2018. The Confederation of Indian Industry estimates that the industry will grow at a CAGR 16% until 2025. Nearly 75% of the market comprises over-the-counter personal care and beauty products, while ayurvedic well-being or ayurvedic tourism services accounted for 15% of the market.[319]


The logistics industry in India was worth over $160 billion in 2016, and grew at a CAGR of 7.8% in the previous five-year period. The industry employs about 22 million people.[320][321] It is expected to reach of a size of $215 billion by 2020.[322] India was ranked 35th out of 160 countries in the World Bank’s 2016 Logistics Performance Index.[323]



INSAT-1B satellite: Broadcasting sector in India is highly dependent on INSAT system.

The telecommunication sector generated ₹2.20 trillion (US$31 billion) in revenue in 2014–15, accounting for 1.94% of total GDP.[324] India is the second-largest market in the world by number of telephone users (both fixed and mobile phones) with 1.053 billion subscribers as of 31 August 2016. It has one of the lowest call-tariffs in the world, due to fierce competition among telecom operators. India has the world’s third-largest Internet user-base. As of 31 March 2016, there were 342.65 million Internet subscribers in the country.[325]

Industry estimates indicate that there are over 554 million TV consumers in India as of 2012.[326] India is the largest direct-to-home (DTH) television market in the world by number of subscribers. As of May 2016, there were 84.80 million DTH subscribers in the country.[327]

Mining and construction


Indian coal production is the 3rd highest in the world according to the 2008 Indian Ministry of Mines estimates. Shown above is a coal mine in Jharkhand.

Mining contributed $63 billion (3% of GDP) and employed 20.14 million people (5% of the workforce) in 2016.[196] India’s mining industry was the fourth-largest producer of minerals in the world by volume, and eighth-largest producer by value in 2009.[328] In 2013, it mined and processed 89 minerals, of which four were fuel, three were atomic energy minerals, and 80 non-fuel.[329] The government-owned public sector accounted for 68% of mineral production by volume in 2011–12.[330]

Nearly 50% of India’s mining industry, by output value, is concentrated in eight states: Odisha, Rajasthan, Chhattisgarh, Andhra Pradesh, Telangana, Jharkhand, Madhya Pradesh and Karnataka. Another 25% of the output by value comes from offshore oil and gas resources.[330] India operated about 3,000 mines in 2010, half of which were coal, limestone and iron ore.[331] On output-value basis, India was one of the five largest producers of mica, chromite, coal, lignite, iron ore, bauxite, barite, zinc and manganese; while being one of the ten largest global producers of many other minerals.[328][330] India was the fourth-largest producer of steel in 2013,[332] and the seventh-largest producer of aluminium.[333]

India’s mineral resources are vast.[334] However, its mining industry has declined – contributing 2.3% of its GDP in 2010 compared to 3% in 2000, and employed 2.9 million people – a decreasing percentage of its total labour. India is a net importer of many minerals including coal. India’s mining sector decline is because of complex permit, regulatory and administrative procedures, inadequate infrastructure, shortage of capital resources, and slow adoption of environmentally sustainable technologies.[330][335]

Iron and steel

In fiscal year 2014–15, India was the third-largest producer of raw steel[336] and the largest producer of sponge iron. The industry produced 91.46 million tons of finished steel and 9.7 million tons of pig iron. Most iron and steel in India is produced from iron ore.[337]


The construction industry contributed $288 billion (13% of GDP) and employed 60.42 million people (14% of the workforce) in 2016.[196]

Foreign trade and investment

A map showing the global distribution of Indian exports in 2006 as a percentage of the top market (US at $20.9 billion).

Foreign trade

India’s exports (top) and imports (bottom), by value, in 2013–14.

Until the liberalisation of 1991, India was largely and intentionally isolated from world markets, to protect its economy and to achieve self-reliance. Foreign trade was subject to import tariffs, export taxes and quantitative restrictions, while foreign direct investment (FDI) was restricted by upper-limit equity participation, restrictions on technology transfer, export obligations and government approvals; these approvals were needed for nearly 60% of new FDI in the industrial sector. The restrictions ensured that FDI averaged only around $200 million annually between 1985 and 1991; a large percentage of the capital flows consisted of foreign aid, commercial borrowing and deposits of non-resident Indians.[338] India’s exports were stagnant for the first 15 years after independence, due to general neglect of trade policy by the government of that period; imports in the same period, with early industrialisation, consisted predominantly of machinery, raw materials and consumer goods.[339] Since liberalisation, the value of India’s international trade has increased sharply,[340] with the contribution of total trade in goods and services to the GDP rising from 16% in 1990–91 to 47% in 2009–10.[341][342] Foreign trade accounted for 48.8% of India’s GDP in 2015.[17] Globally, India accounts for 1.44% of exports and 2.12% of imports for merchandise trade and 3.34% of exports and 3.31% of imports for commercial services trade.[342] India’s major trading partners are the European Union, China, the United States and the United Arab Emirates.[343] In 2006–07, major export commodities included engineering goods, petroleum products, chemicals and pharmaceuticals, gems and jewellery, textiles and garments, agricultural products, iron ore and other minerals. Major import commodities included crude oil and related products, machinery, electronic goods, gold and silver.[344] In November 2010, exports increased 22.3% year-on-year to ₹851 billion (equivalent to ₹1.5 trillion or US$22 billion in 2019), while imports were up 7.5% at ₹1,251 billion (equivalent to ₹2.3 trillion or US$32 billion in 2019). The trade deficit for the same month dropped from ₹469 billion (equivalent to ₹950 billion or US$13 billion in 2019) in 2009 to ₹401 billion (equivalent to ₹720 billion or US$10 billion in 2019) in 2010.[345]

India is a founding-member of General Agreement on Tariffs and Trade (GATT) and its successor, the WTO. While participating actively in its general council meetings, India has been crucial in voicing the concerns of the developing world. For instance, India has continued its opposition to the inclusion of labour, environmental issues and other non-tariff barriers to trade in WTO policies.[346]

India secured 43rd place in competitiveness index.[347]