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Top 7 Fastest Growing Industries in India

Created on 17 Oct 2023

Wraps up in 11 Min

Read by 21.1k people

Updated on 30 Jun 2024

Top 7 Fastest Growing Industries in India 2024

A nation with diversity at the surface and unity at the core, India is a symbol of astonishment and sustainable development for the world. With busy streets and cloud-touching skyscrapers, the nation is expected to see a GDP rise to 6.7% annually from 2024 to 2031. This would make the Indian economy touch the $4 trillion (โ‚น332 lakh crore) mark making it one of the world's largest and create millions of jobs.

Both beginners and experienced investors are always on the lookout for industries with good growth potential.

In this article, we will cover the top sectors developing the Indian economy, the factors contributing to the development, and the opportunities they offer for businesses and individuals alike.

So, get ready for a vital lesson and assess which of these growing industries can be a part of your portfolio.

Top Industries Likely to Boost the Indian Economy

  • Primary, such as agriculture, is the most important and largest sector
  • Secondary, like real estate, is the sector with the largest consumerism and employment
  • Tertiary, like the IT sector, contributes the most to India's GDP

The sectors included all play a major role in making our lives better. Some products and services from these industries are utilised by you almost every day. Let's see which of these sectors are involved in boosting our nation's economy the best.

1. IT Sector

The IT sector is the lifeblood of the modern world, responsible for making India tech-savvy. It powers our businesses, governments, and everyday lives. From the smartphones in our pockets to the self-driving cars on our roads, IT is transforming how we live and work.

When you look at the figures, the IT industry’s contribution to India’s GDP is around 7.4%. Alongside employing over 5 million of the population, this sector is expected to grow Y-O-Y with a CAGR of 15%.

The world is becoming digitised rapidly, and India is not far behind. The nation has been a hotbed for foreign investments for the past few years, and the Information Technology (IT) sector plays a significant role in it. In fact, this particular industry attracted Foreign Direct Investment (FDI) inflows worth โ‚น7,70,683.30 crore between April 2000 and March 2023.  

Alongside investments, the IT sector is a major driver in innovation, employment, exports, and economic growth. That’s right! Our IT industry is surely the popular kid with all the coolest gadgets and big plans. ๐Ÿ˜Ž

Factors Driving the Indian Economy in the IT Industry

  • IT companies are helping to develop India's digital infrastructure. Advanced products and services are making daily life more efficient and increasing living standards. It is a big ๐Ÿ‘ to the Digital India vision.
  • IT companies are also developing solutions to address India's social and economic challenges, improving financial inclusion and access to healthcare & education.
  • These companies are promoting entrepreneurship and innovation in India. Many of them have their own startup incubators and accelerators.
  • Indian IT companies also play a role in India's global economic integration. Along with exporting products and services to countries worldwide, these companies are helping create jobs for millions.

To get a deep understanding of the workings and issues of the IT sector from an investor’s perspective, read the article IT Sector: Investor Challenges & Solutions.

It's time to check out the next sector on the list. Without this specific industry, all our lives and well-being would be drastically impacted. ๐Ÿ’Ÿ

2. Health & Insurance Sector

The health and insurance sectors are two of the key drivers of India's economy, collectively contributing over 6% to the country's GDP. The 21st century's epidemic, COVID-19, has reminded people of the importance of health and wellness. With the gruelling aftereffects of the pandemic, the government is more focused towards making this sector boom.

The health and insurance sector is vital for India's economy as it provides essential services that help improve the population's health and well-being. A healthy population is more productive and contributes more to the economy. The health and insurance sector also provides employment and investment opportunities.

If you look at the rise in health insurance policyholders in India ๐Ÿ‘‡, you will see a constant rise in penetration.

Who knew our health could have such a significant impact on the nation's well-being? ๐Ÿ˜Œ

Here’s How the Health & Insurance Industry is Boosting the Nation’s Economy

  • The health and insurance sector is creating new jobs for citizens and opportunities for Indian businesses. For example, there is a growing demand for healthcare professionals, such as doctors, nurses, and technicians, as well as pharmaceuticals, medical devices, and diagnostic services.
  • The government's focus on digital healthcare is also helping to boost this sector. Ayushman Bharat scheme is providing health insurance to millions of low-income Indians. This is helping to increase access to healthcare and reduce the financial burden on individuals and families.
  • Private health insurance companies are offering a variety of innovative products and services to meet the needs of different segments of the population. This is helping to improve the quality and accessibility of healthcare services.

Overall, the health and insurance sector is a major contributor to India's economic growth and development. It is helping to improve the health of the population, reduce the financial burden on individuals and families, create jobs and opportunities, and generate tax revenue.

So, let’s all join the cause and be a part of this rising sector by getting that health coverage for yourself and your family.

Click here to discover the secrets to finding the right insurance policy and start your investment journey with a bang!

Now that the physical and mental wellness has been checked, it's time to move towards the most stable option on the list. Could you guess which sector I am talking about?

It's the ๐Ÿฅ…

3. Real Estate Sector

Real estate is a complex and sophisticated sector, but it's also one that can be very rewarding. It is the only sector where you can make a killing by buying low and selling high, even if you're not an expert.

You should never make a decision without thorough research, and this applies to a piece of land or your house. After all, you don't want to sell too soon or too late, right?

Expected to reach โ‚น479.49 lakh crore by 2047, India's real estate industry is at its best. People have been enthusiasts of investing in real estate since ancient times. Where gifting lands has been a custom in Indian culture, it is now acknowledged as the most stable investment option.

With an estimated market size of โ‚น27.39 lakh crore in 2024, India's real estate industry is witnessing rapid rise with government initiatives like "The Smart City Project" and schemes like "Pradhan Mantri Awas Yojana". Being the second largest employment sector, with 7 crore citizens' livelihoods on the line, it's unsurprising that the government has major plans.

Real Estate Sector’s Factors Boosting the Indian Economy

  • The growth of the real estate sector is closely tied to infrastructure development. For example, when new residential and commercial projects are developed, roads, schools, hospitals, and other infrastructure facilities are also needed. This investment in infrastructure helps to improve the quality of life, and it also boosts economic growth.
  • The real estate sector generates significant revenue for the government through various channels, such as property registration fees, stamp duty, and taxes on capital gains. This revenue can be used to finance public services and architecture, which also contribute to economic growth.

To learn more about why the real estate market is a booming industry, consider reading the article India’s Real Estate Industry: A Booming Sector for Investors.

Well, after getting a roof over your head, the next wish of every individual is not that hard to guess, right? Yes, it's time to drive-into the next sector in the list. ๐Ÿš˜

4. Automobile Sector

This sector is one of the most anticipated ones to give a tremendous boost to our nation’s economy. With a 7.1% GDP contribution, the automobile industry is now witnessing a major revamping with the rise in demand for Electric Vehicles (EVs).

The Indian government has launched a slew of initiatives to support the growth of the automotive industry, one of which is the Faster Adoption and Manufacture of Electric Vehicles (FAME) plan. This ambitious plan aims to accelerate the adoption of electric cars across the country.

Alongside FAME, the Production Linked Incentive (PLI) Scheme is also increasing the sector’s chances of fast development.

See how the automobile industry is uplifting the nation’s economy:

  • The automobile sector attracts significant Foreign Direct Investment (FDI), around โ‚น2.8 lakh crore, which helps to finance India's economic development. The capital generated from FDI also assists in the development of new technologies and skills in India, which can be used to boost productivity and growth in other sectors of the economy.
  • The Indian automobile sector is one of the largest exporters in the country, accounting for exports worth โ‚น1.6 lakh crore. The infographic below showcases the constant rise in export numbers through the years. โฌ‡๏ธ
See how the automobile industry is uplifting the nationโ€™s economy:
Source: Ministry of Commerce & Industry

Wish to know more about this booming industry? Click here and jump right into the land of unlimited knowledge with Insider.

Last but not least is the sector electrifying our nation with its never-ending power supply. The booming EV sector will require a helping hand from this next industry on our list. ๐Ÿค

5. Renewable Energy Sector

Renewable energy is a clean and affordable source of energy. It can help reduce India's dependence on imported fossil fuels, saving the country crores of rupees in foreign exchange.

Additionally, India is currently the world's third-largest importer of oil. The rise in this sector would ensure India's energy security by reducing its reliance on imported fossil fuels.

Pointers that prove the renewable energy sector's contribution to India's economic growth are:

  • The Indian government has set a target of achieving 450 GW of renewable energy capacity by 2030, with 5 GW of small hydropower, 10 GW of biofuels, 280 GW of solar power, and 140 GW of wind power. This is expected to generate millions of jobs and attract significant investment in the renewable energy sector.
  • The solar energy sector is one of the fastest-growing sectors in the Indian economy. India is the world's fourth-largest solar energy producer.
  • The wind energy sector is rapidly expanding in India, making our nation the fifth-largest wind energy producer in the world.
  • Indian renewable energy companies are exporting their products and services to countries all over the world. This is helping to boost India's foreign exchange earnings and create jobs.

6. Infrastructure Sector

With PM Narendra Modi's "Make In India" initiative and the dream to make India the 3rd largest economy in India by 2030, the infrastructure sector has been booming. This sector is crucial in flourishing nations and cities and reducing the gap in development between urban and rural areas.

Affecting around 3.3% of GDP, the infrastructure sector received a โ‚น10 lakh crore allocation in budget 2023-24. Robust infrastructure serves as the launchpad for modern, well-connected cities. 

The consistently advancing infrastructure sector keeps airports buzzing with activity, hospitals equipped with cutting-edge technology, schools fostering young minds, and efficient transportation networks seamlessly weaving through vibrant communities. This transformative power doesn't stop there. The same sturdy foundation has unveiled hidden gems, turning them into thriving tourist destinations, further propelling India's tourism industry onto the global stage.

Infrastructure Sector Affecting the Indian Economy:

The infrastructure sector plays a crucial and multifaceted role in shaping the Indian economy. Here's a breakdown of its impact:

  • Infrastructure spending acts as a multiplier, boosting various sectors like construction, steel, cement, and transportation. As per estimates, a 1.2-1.5x return on investment is expected in terms of GDP growth.
  • Infrastructure projects generate significant employment opportunities (11.4% rise in 2023), both skilled and unskilled, across various regions. This improves livelihoods and contributes to poverty reduction.
  • Well-developed infrastructure, including reliable power, clean water, sanitation, and efficient transportation, enhances the overall quality of life for citizens.
  • Investments in smart cities, urban transport, and waste management contribute to sustainable and inclusive urban growth.
  • Improved rural infrastructure, like roads, irrigation systems, and internet connectivity, empowers rural communities and boosts agricultural productivity.

7. E-Commerce Sector

India's e-commerce landscape has undergone a meteoric rise in recent years, transforming from a niche market into a vibrant ecosystem projected. The sector is expected to read $300 billlion by 2030, which is about โ‚น24.9 lakh crore. This growth story is fueled by a confluence of factors, each playing a crucial role in shaping the industry's trajectory.

India's e-commerce market continues to soar, reaching a record-breaking Gross Merchandise Value (GMV) of $60 billion (โ‚น4.98 lakh crore) in FY23! This impressive 22% year-over-year growth highlights the immense potential of the industry. Further fueling this growth, India permits 100% Foreign Direct Investment (FDI) in the B2B e-commerce marketplace model.

This open policy welcomes foreign investment, fostering innovation and further propelling the sector's expansion.

a. Digital Explosion: India's internet penetration has witnessed a staggering surge, reaching over 918 million users as of September 2023. This digital revolution has opened a gateway to online shopping, making it accessible to a vast and diverse population.

b. Smartphone Revolution: Affordable smartphones have become ubiquitous, empowering consumers across demographics to browse, compare, and purchase products conveniently. This mobile-first approach has redefined the e-commerce experience, making it seamless and on-the-go.

c. Rising Affluence: India's growing middle class boasts increased disposable income, fostering a desire for a wider variety of goods and services. E-commerce platforms cater to this evolving demand, offering a plethora of choices at competitive prices.

d. Logistics Leap: The Indian logistics sector has undergone significant improvements, with increased investment in infrastructure, delivery networks, and last-mile connectivity. This improved efficiency ensures timely and reliable product deliveries, enhancing customer satisfaction.

e. Government Initiatives: The Indian government actively promotes the growth of e-commerce through initiatives like Digital India and Startup India. These programs provide crucial support in terms of infrastructure development, policy reforms, and fostering a conducive environment for e-commerce businesses.

And that’s a wrap!

The Bottom Line

These are the industries on the frontline of the war India is waging to upgrade to a developed nation. Other sectors, such as Fast-Moving Consumer Goods (FMCG) or the Pharmaceutical Industry, also have a big hand in this fight. Which of the other sectors do you believe should be on the list? Comment and let us know your reasons for thinking the same.

*Disclaimer: The stocks and companies discussed above aren't a recommendation from Insider by Finology and shall not be construed as a replacement for professional advice. Consult a professional or conduct the necessary research before making investment decisions.

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A book-lover who adores everything fictional, Preeti has undertaken the life mission of tasting every flavour available in the pantry. A science student with a Master's in Mass Communication, she now wishes to conquer the Finance world as a writer. With the power invested by the randomly chosen music, she is here to make Finance fun for you.

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