When you step off the plane in Mumbai, it does not take long to sense that India is going through a period of drastic change.
Traffic congestion has long been a major challenge in India. It leads to lost productivity, high pollution, fuel wastage, inefficient supply chains, and restricts the mobility of labour. It is estimated that congestion has cost the country in the region of 1-2% of GDP per annum over recent decades. What was apparent from my visit, is that the government has taken drastic steps to address the issue in recent years.
Since 2016, India has constructed 92 new airports and plans to build another 200 by 2047. The hurdle preventing an even greater rate of construction is an order backlog of 900 aeroplanes that will take around eight years to deliver. It has also introduced new metro systems to 21 cities, trebled the length of the rail network, nearly doubled the length of intercity highways, and invested extensively in port infrastructure.
It does not take long to see the infrastructure spending first hand. On the way to my hotel in Nariman Point, I travelled via the city’s new Sea Link Road, an 8.2km expressway bridge built offshore alongside the coast to bypass congestion in the city centre. Opened in 2024, it has cut the journey from the airport to Nariman Point from 1 hour 15 minutes to just 30 minutes.
Even more striking was the scale of Mumbai’s metro expansion: seven new metro lines are under construction, in addition to the four that have opened since 2014. Once completed, Mumbai’s metro network will be around 25% larger than the London Underground, and dozens of cities across India are also undertaking similar projects. Improved connectivity has fuelled a domestic tourism boom in recent years: more than 99% of tourism in India is domestic, with families taking their first holidays to destinations that were previously too costly or difficult to reach.
During my visit, I spent time with industry experts, macroeconomists, fund managers and representatives from the Bombay Stock Exchange. I met companies spanning sectors such as healthcare, defence, electric vehicles, travel agencies, ecommerce and financial services. What became apparent was that Indian companies, rather than western brands, are providing the innovation in goods and services to support their economy. The penetration of western brands remains low; domestic companies understand the consumer trends and issues that Indians face – and are therefore best placed to resolve them. It is expected that there will be around 180 IPOs in the Indian market this year.
More than 85% of India's crude oil needs are met through imports.
Perhaps the most exceptional example of Indian innovation has been the rapid expansion in digital payments. In 2016, the National Payments Corporation of India launched a new payments system called ‘Unified Payments Interface’: instant bank-to-bank transfers between individuals and businesses, executed by scanning a QR code. The system has expanded from handling 100m transactions in 2017, to over 172 billion in 2024 – more digital transactions annually than the US, China and Europe combined.
However, India has a number of issues. It has long been a hub for IT services – representing a quarter of the global IT services market and accounting for around 7% of Indian GDP. Many multinational businesses including Google, Microsoft, JP Morgan and Goldman Sachs have back office support centres in India. With the rapid expansion of Artificial Intelligence, the demand for lower value services such as call centres has waned, leading to layoffs. Indian technology firms are also not considered to be AI innovators, and have little involvement in the semiconductor supply chain. These factors have affected investor sentiment to the country.
India remains heavily reliant on imported energy, particularly oil and gas. More than 85% of its crude oil needs are met through imports, with the majority arriving from the Middle East, leaving the economy exposed to external shocks. Higher oil prices that have resulted from the US-Iran war have increased pressure on India’s foreign exchange reserves and weighed on the Rupee. There are also growing concerns that rising living costs are affecting households across the country.
Throughout my visit, I was struck by the energy, optimism and entrepreneurial spirit on display. India’s median age is just 28 years old, and 45% of its workforce remain employed in agriculture, highlighting the scale of the opportunity in the coming years. The infrastructure expansion will benefit the Indian economy for decades to come. Whilst the war has disproportionately impacted India in the short term, the long-term growth potential remains firmly intact. I came away with a sense that India truly is an emerging market like no other.
