Skills and Reforms Key to India's Next Phase of Economic Growth

Speaking at the New India Conference here, Hemang Jani, Public Policy & Governance expert at the World Bank and former OSD to the Prime Minister's Office, said India remains well-positioned globally but must accelerate reforms to fully realise its potential.

"India remains the world's fastest growing major economy" and is "on pace to become the third largest economy by 2030," Jani said, while cautioning that "India's potential is immense, but so are challenges."

He stressed that sustaining momentum would require a sharper growth trajectory.

"To achieve these ambitions, India's economic growth would need to be at least 8 per cent, if not higher, for two decades," he said, highlighting unemployment, underemployment and skilling constraints.

India is targeting sustained expansion through "very definitive investments in human capital" alongside improvements in "regulatory... predictability," adding that skills development and workforce participation, particularly among women, remain critical "binding constraints," he said.

From the US perspective, Nisha Biswal, Partner at The Asia Group and former US Assistant Secretary of State for South and Central Asian Affairs, said India's economic rise is reshaping bilateral engagement.

"There has been enormous progress," Biswal said, noting that two-way trade has grown "from 50 billion... to... about 212 billion" even without a formal trade agreement.

She said shifting global supply chains and concerns over dependence on China are driving greater interest in India. Businesses are increasingly assessing "what does a de-risking from China look like," she said, pointing to India's market size and talent pool as major advantages.

Biswal described the current phase as "India's moment on the economic space," while noting that the pace of growth in trade and investment will depend on how quickly the two countries can deepen economic ties.

She said a US-India trade agreement is likely to emerge over time, though it may initially take the form of a phased arrangement rather than a comprehensive pact.

Adding to the discussion, Ashok Malik, Partner and Chair of India Practice at The Asia Group, said New Delhi has recalibrated its trade strategy after earlier agreements exposed domestic vulnerabilities.

"That did cause a recalibration of approach to trade," Malik said, citing concerns over "cheap consumer goods imports from... China-linked supply chains."

He said India is now pursuing trade agreements that support domestic manufacturing while safeguarding sensitive sectors, but noted that differences over scope have slowed progress with Washington. "The search for a maximalist trade agreement is coming in the way of a very workable... arrangement," he said.

At the subnational level, Richard Rossow, Senior Adviser and Chair on India and Emerging Asia Economics at CSIS, said reforms in Indian states will be decisive in attracting investment.

"States run the country," Rossow said, emphasising that companies prioritise reliable power, labour flexibility and access to land and water when making investment decisions.

He added that these factors form the "first 20 slides" in corporate decision-making, underscoring the need for consistent policy execution across states.

The panel, moderated by Aparna Pande, Senior Fellow at Hudson Institute, was part of the New India Conference in Washington, which brought together policymakers and analysts to assess India's economic trajectory and its implications for US-India ties.

India's economic outlook comes amid global uncertainty, including supply chain shifts and geopolitical tensions. The country has expanded infrastructure, digital systems and manufacturing capacity in recent years, positioning itself as a key player in global supply chains.

As India seeks to sustain high growth and deepen its partnership with the United States, experts said progress in skills development, regulatory reforms and state-level governance will be critical in shaping the next phase of its economic rise.

- IANS