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What is the story about?
India has set itself an ambitious target: becoming a developed economy by 2047, the centenary year of its Independence.
Can it achieve that goal? Yes, in principle — but only if India can sustain very high economic growth for decades while sharply increasing investment, attracting large amounts of foreign capital, building globally competitive companies and developing strategic capabilities in areas such as artificial intelligence, semiconductors and energy.
According to Amitabh Kant, former G20 Sherpa and former CEO of NITI Aayog, India needs to grow at around 9% annually if it is to become a developed economy by 2047.
“We grew at 7.7% last year. To my mind, we should be growing at 9%. If you want to be a developed economy by 2047, you should grow at 9%. Nothing less than 9%,” Kant said in an interview with CNBC-TV18.
But 9% growth is not the definition of a developed economy. It is the pace of expansion that Kant believes India needs to achieve the scale of economic transformation required by 2047.
For that growth to be sustained, India will need more investment, higher productivity, globally competitive businesses, stronger manufacturing ecosystems and a strategic position in the technology economy.
Why does India need 9% growth?
The reason is compounding.
At 9% annual growth, an economy roughly doubles in size in about eight years. Sustained over several decades, that can dramatically increase the size of the economy.
But the challenge is not simply to grow rapidly for a few years. India would need to maintain a high rate of expansion over a prolonged period while also ensuring that growth translates into higher incomes, productivity and living standards.
That is why Kant believes the growth rate needs to be significantly higher than the current pace.
“9% growth over a three-decade period is critical for India to become a developed economy. Without that, it's not possible,” he said.
The implication is significant. A temporary growth surge will not be enough. India will need sustained investment and productivity gains across manufacturing, services, infrastructure, technology and energy.
That leads to the next question: where will the money required for this transformation come from?
Why India needs to invest much more
Kant estimates that India's investment rate is currently around 29-30% of the economy. To sustain growth of around 9%, he believes this needs to rise to approximately 40%.
That is a substantial increase.
Investment is critical because economies need to continually expand their productive capacity. New factories, roads, ports, power plants, data centres, technology infrastructure and businesses all require capital.
India cannot rely entirely on domestic savings to fund the increase in investment that such rapid growth would require.
This is where foreign capital becomes important.
Kant believes India needs to attract between $180 billion and $200 billion in foreign direct investment every year.
That would make FDI more than simply a source of foreign exchange. It would become an important part of India's growth strategy by bringing in capital, technology, management expertise and access to global supply chains.
But attracting that scale of investment requires more than a large domestic market.
Why policy predictability matters to foreign investors
For companies investing billions of dollars, the size of a market is only one factor in the decision-making process.
Investors also assess how predictable the business environment is.
Uncertainty over taxation, customs procedures, regulatory decisions, dispute resolution and approvals can affect the economics of a long-term investment.
Kant argued that India needs greater consistency in its policies and faster decision-making by government departments.
He pointed to issues such as delays in advance rulings, inconsistent tax treatment and regulatory uncertainty as factors that can undermine investor confidence.
“Foreign direct investment requires policy predictability and stability,” Kant said.
The message is straightforward: if India wants to attract $180-200 billion in annual FDI, it will need to compete not only on market size and labour costs, but also on the reliability and predictability of its policy environment.
Why Indian companies must become globally competitive
Foreign investment can help build capacity in India. But the country's development also depends on the competitiveness of Indian companies.
Free trade agreements make this challenge more urgent.
An FTA can give Indian companies better access to overseas markets. At the same time, companies from partner countries can gain easier access to the Indian market.
That creates a two-way competitive environment.
Kant believes Indian companies must use this opportunity to improve their size, scale, technology and innovation.
“If you don't become globally competitive, if you do not have size and scale of manufacturing for Indian companies, the European companies will come and dump goods here. The UK companies will come and compete you out here,” he said.
The implication is that Indian companies will increasingly need to compete on more than cost.
Scale, productivity, technology, innovation, product quality and the ability to sell in global markets will become increasingly important.
This also means companies will need to invest more in research and development.
Why R&D and innovation could determine which companies survive
Kant has been particularly critical of what he sees as insufficient investment by the Indian private sector in innovation.
His argument is that companies need to use the resources available to them to improve technology and productivity rather than focusing excessively on short-term shareholder returns.
The broader challenge is that Indian companies cannot expect protection from global competition indefinitely.
As trade barriers fall and foreign companies gain greater access to the Indian market, companies that do not invest in technology and innovation could face increasing competitive pressure.
The transition India needs is therefore from companies that primarily compete on low costs to companies that can develop globally competitive products, technologies and business models.
The PLI lesson: incentives work when the ecosystem is right
The Production Linked Incentive, or PLI, scheme has become one of the central pillars of India's manufacturing strategy.
The objective is to encourage companies to increase production in India by offering financial incentives linked to output.
The results have varied across sectors.
Mobile manufacturing is one of the clearest examples of a PLI-led expansion. India has emerged as a major mobile manufacturing and export base, while domestic value addition and employment have also increased.
Kant said the scheme worked in mobile manufacturing because it was designed around the requirements of the industry. He also cited air conditioners and some other sectors as examples where the policy has produced positive results.
But the broader lesson is that incentives alone cannot create a complete manufacturing industry.
Why manufacturing needs more than incentives
A production incentive can encourage a company to set up an assembly line. But assembly is only one part of a manufacturing ecosystem.
A globally competitive industry also needs:
If these supporting capabilities are not available domestically, a country may assemble a product locally while continuing to import much of the value contained in it.
This is why the development of complete value chains is important.
Kant cited battery manufacturing as an example of an area where India could have moved faster.
“We should have, by now, had about 50 gigawatt-hours of battery storage here in this country,” he said.
The lesson is that manufacturing policy must focus not just on the final product, but also on the suppliers, technologies and infrastructure required to produce it competitively.
Why opening more sectors to private companies matters
Kant believes India has made progress by opening sectors that were traditionally dominated or controlled by the government.
He pointed to space, drones, geospatial technology and defence as examples.
The significance of opening these sectors is not simply that more companies can operate in them.
Private companies and startups can also introduce new technologies, business models and approaches to industries that have traditionally been dominated by established institutions.
“The public sector will not be able to do innovation. The public sector will not be able to do disruption. Young startups need to do that,” Kant said.
This becomes particularly important in sectors where technological change is rapid.
Why semiconductors are central to India's AI ambitions
Artificial intelligence depends on a complex global technology chain.
That chain includes:
Different parts of this ecosystem are dominated by different companies and countries.
Advanced AI computing depends heavily on specialised processors. Chip manufacturing is led by major foundries such as TSMC and Samsung, while memory is a major strength of companies such as SK Hynix and other large manufacturers. Advanced lithography equipment is dominated by ASML.
This means India does not necessarily need to replicate every part of the global technology chain.
The more important question is: which strategic parts of that chain can India build globally competitive capabilities in?
That could include semiconductor design, packaging and testing, selected manufacturing capabilities, computing infrastructure, AI applications, data centers and energy.
Where could India find an advantage in AI?
Kant believes India has two important assets: data and talent.
India generates a large amount of digital data and has a substantial pool of engineers and technology professionals.
But data volume alone does not automatically create an AI advantage.
For data to become economically valuable, it must be legally accessible, appropriately governed, processed and converted into useful datasets or applications.
India's opportunity could therefore lie in building capabilities around data, AI applications, specialised models and technology services.
Kant believes India should focus on controlling key parts, or “nodes”, of the AI ecosystem rather than trying to replicate the entire global technology chain.
That could mean developing strengths in areas such as:
The opportunity is therefore broader than simply building a large AI model.
Why renewable energy is becoming an AI issue
The growth of AI is also an energy challenge.
Training and running AI systems requires computing infrastructure. Data centers require large and reliable supplies of electricity.
As AI adoption expands, demand for computing power is expected to increase.
This makes energy availability an important part of the AI economy.
Kant argues that India needs to raise its renewable energy ambitions significantly if it wants to support the growth of data centers and become a major AI economy.
He believes India's renewable energy target should ultimately be much higher than the current 500 GW ambition, arguing for a target of 1,500 GW.
The logic is that India has significant solar and renewable energy potential, a growing private sector and the ability to attract investment into the energy sector.
Renewable energy is therefore increasingly linked not only to climate policy, but also to:
The argument for 9% growth cannot be separated from the other challenges facing India.
A 9% growth target requires higher investment.
Higher investment requires more domestic and foreign capital.
Attracting large amounts of FDI requires policy predictability.
Manufacturing growth requires companies that can compete globally and complete ecosystems that can support production.
AI requires chips, computing power, data and talent.
Computing power requires large amounts of energy.
And the energy system will increasingly need to provide reliable, affordable and cleaner electricity.
These are not separate challenges. They are interconnected parts of the same development strategy.
India has several advantages: a large domestic market, a substantial technology talent pool, a growing start-up ecosystem and significant renewable energy potential.
But the scale of the challenge is equally large.
Becoming a developed economy by 2047 will require more than achieving a high GDP growth rate. India will also need to convert that growth into higher per-capita incomes, greater productivity, better jobs and improved living standards.
The question, therefore, is not simply whether India can grow rapidly for a few years.
It is whether India can sustain high growth for three decades while simultaneously increasing investment, attracting hundreds of billions of dollars in capital, building globally competitive companies, developing critical technologies and securing a meaningful position in the AI economy.
If it can, the 2047 ambition could become more than a target.
It could become the result of a transformation in the way India invests, produces, innovates and competes with the world.
Can it achieve that goal? Yes, in principle — but only if India can sustain very high economic growth for decades while sharply increasing investment, attracting large amounts of foreign capital, building globally competitive companies and developing strategic capabilities in areas such as artificial intelligence, semiconductors and energy.
According to Amitabh Kant, former G20 Sherpa and former CEO of NITI Aayog, India needs to grow at around 9% annually if it is to become a developed economy by 2047.
“We grew at 7.7% last year. To my mind, we should be growing at 9%. If you want to be a developed economy by 2047, you should grow at 9%. Nothing less than 9%,” Kant said in an interview with CNBC-TV18.
But 9% growth is not the definition of a developed economy. It is the pace of expansion that Kant believes India needs to achieve the scale of economic transformation required by 2047.
For that growth to be sustained, India will need more investment, higher productivity, globally competitive businesses, stronger manufacturing ecosystems and a strategic position in the technology economy.
Why does India need 9% growth?
The reason is compounding.
At 9% annual growth, an economy roughly doubles in size in about eight years. Sustained over several decades, that can dramatically increase the size of the economy.
But the challenge is not simply to grow rapidly for a few years. India would need to maintain a high rate of expansion over a prolonged period while also ensuring that growth translates into higher incomes, productivity and living standards.
That is why Kant believes the growth rate needs to be significantly higher than the current pace.
“9% growth over a three-decade period is critical for India to become a developed economy. Without that, it's not possible,” he said.
The implication is significant. A temporary growth surge will not be enough. India will need sustained investment and productivity gains across manufacturing, services, infrastructure, technology and energy.
That leads to the next question: where will the money required for this transformation come from?
Why India needs to invest much more
Kant estimates that India's investment rate is currently around 29-30% of the economy. To sustain growth of around 9%, he believes this needs to rise to approximately 40%.
That is a substantial increase.
Investment is critical because economies need to continually expand their productive capacity. New factories, roads, ports, power plants, data centres, technology infrastructure and businesses all require capital.
India cannot rely entirely on domestic savings to fund the increase in investment that such rapid growth would require.
This is where foreign capital becomes important.
Kant believes India needs to attract between $180 billion and $200 billion in foreign direct investment every year.
That would make FDI more than simply a source of foreign exchange. It would become an important part of India's growth strategy by bringing in capital, technology, management expertise and access to global supply chains.
But attracting that scale of investment requires more than a large domestic market.
Why policy predictability matters to foreign investors
For companies investing billions of dollars, the size of a market is only one factor in the decision-making process.
Investors also assess how predictable the business environment is.
Uncertainty over taxation, customs procedures, regulatory decisions, dispute resolution and approvals can affect the economics of a long-term investment.
Kant argued that India needs greater consistency in its policies and faster decision-making by government departments.
He pointed to issues such as delays in advance rulings, inconsistent tax treatment and regulatory uncertainty as factors that can undermine investor confidence.
“Foreign direct investment requires policy predictability and stability,” Kant said.
The message is straightforward: if India wants to attract $180-200 billion in annual FDI, it will need to compete not only on market size and labour costs, but also on the reliability and predictability of its policy environment.
Why Indian companies must become globally competitive
Foreign investment can help build capacity in India. But the country's development also depends on the competitiveness of Indian companies.
Free trade agreements make this challenge more urgent.
An FTA can give Indian companies better access to overseas markets. At the same time, companies from partner countries can gain easier access to the Indian market.
That creates a two-way competitive environment.
Kant believes Indian companies must use this opportunity to improve their size, scale, technology and innovation.
“If you don't become globally competitive, if you do not have size and scale of manufacturing for Indian companies, the European companies will come and dump goods here. The UK companies will come and compete you out here,” he said.
The implication is that Indian companies will increasingly need to compete on more than cost.
Scale, productivity, technology, innovation, product quality and the ability to sell in global markets will become increasingly important.
This also means companies will need to invest more in research and development.
Why R&D and innovation could determine which companies survive
Kant has been particularly critical of what he sees as insufficient investment by the Indian private sector in innovation.
His argument is that companies need to use the resources available to them to improve technology and productivity rather than focusing excessively on short-term shareholder returns.
The broader challenge is that Indian companies cannot expect protection from global competition indefinitely.
As trade barriers fall and foreign companies gain greater access to the Indian market, companies that do not invest in technology and innovation could face increasing competitive pressure.
The transition India needs is therefore from companies that primarily compete on low costs to companies that can develop globally competitive products, technologies and business models.
The PLI lesson: incentives work when the ecosystem is right
The Production Linked Incentive, or PLI, scheme has become one of the central pillars of India's manufacturing strategy.
The objective is to encourage companies to increase production in India by offering financial incentives linked to output.
The results have varied across sectors.
Mobile manufacturing is one of the clearest examples of a PLI-led expansion. India has emerged as a major mobile manufacturing and export base, while domestic value addition and employment have also increased.
Kant said the scheme worked in mobile manufacturing because it was designed around the requirements of the industry. He also cited air conditioners and some other sectors as examples where the policy has produced positive results.
But the broader lesson is that incentives alone cannot create a complete manufacturing industry.
Why manufacturing needs more than incentives
A production incentive can encourage a company to set up an assembly line. But assembly is only one part of a manufacturing ecosystem.
A globally competitive industry also needs:
- Component manufacturers
- Machinery and equipment suppliers
- Raw materials
- Skilled workers
- Research and development
- Logistics networks
- Technology and intellectual property
If these supporting capabilities are not available domestically, a country may assemble a product locally while continuing to import much of the value contained in it.
This is why the development of complete value chains is important.
Kant cited battery manufacturing as an example of an area where India could have moved faster.
“We should have, by now, had about 50 gigawatt-hours of battery storage here in this country,” he said.
The lesson is that manufacturing policy must focus not just on the final product, but also on the suppliers, technologies and infrastructure required to produce it competitively.
Why opening more sectors to private companies matters
Kant believes India has made progress by opening sectors that were traditionally dominated or controlled by the government.
He pointed to space, drones, geospatial technology and defence as examples.
The significance of opening these sectors is not simply that more companies can operate in them.
Private companies and startups can also introduce new technologies, business models and approaches to industries that have traditionally been dominated by established institutions.
“The public sector will not be able to do innovation. The public sector will not be able to do disruption. Young startups need to do that,” Kant said.
This becomes particularly important in sectors where technological change is rapid.
Why semiconductors are central to India's AI ambitions
Artificial intelligence depends on a complex global technology chain.
That chain includes:
- Chip design
- Semiconductor manufacturing
- Memory
- Advanced packaging
- Computing infrastructure
- Specialised equipment
- Materials
- Data
- Energy
Different parts of this ecosystem are dominated by different companies and countries.
Advanced AI computing depends heavily on specialised processors. Chip manufacturing is led by major foundries such as TSMC and Samsung, while memory is a major strength of companies such as SK Hynix and other large manufacturers. Advanced lithography equipment is dominated by ASML.
This means India does not necessarily need to replicate every part of the global technology chain.
The more important question is: which strategic parts of that chain can India build globally competitive capabilities in?
That could include semiconductor design, packaging and testing, selected manufacturing capabilities, computing infrastructure, AI applications, data centers and energy.
Where could India find an advantage in AI?
Kant believes India has two important assets: data and talent.
India generates a large amount of digital data and has a substantial pool of engineers and technology professionals.
But data volume alone does not automatically create an AI advantage.
For data to become economically valuable, it must be legally accessible, appropriately governed, processed and converted into useful datasets or applications.
India's opportunity could therefore lie in building capabilities around data, AI applications, specialised models and technology services.
Kant believes India should focus on controlling key parts, or “nodes”, of the AI ecosystem rather than trying to replicate the entire global technology chain.
That could mean developing strengths in areas such as:
- AI applications
- Specialised models
- Semiconductor design
- Computing infrastructure
- Data centers
- AI talent
- Energy
The opportunity is therefore broader than simply building a large AI model.
Why renewable energy is becoming an AI issue
The growth of AI is also an energy challenge.
Training and running AI systems requires computing infrastructure. Data centers require large and reliable supplies of electricity.
As AI adoption expands, demand for computing power is expected to increase.
This makes energy availability an important part of the AI economy.
Kant argues that India needs to raise its renewable energy ambitions significantly if it wants to support the growth of data centers and become a major AI economy.
He believes India's renewable energy target should ultimately be much higher than the current 500 GW ambition, arguing for a target of 1,500 GW.
The logic is that India has significant solar and renewable energy potential, a growing private sector and the ability to attract investment into the energy sector.
Renewable energy is therefore increasingly linked not only to climate policy, but also to:
- AI infrastructure
- Data centers
- Energy security
- Industrial competitiveness
- Economic growth
The argument for 9% growth cannot be separated from the other challenges facing India.
A 9% growth target requires higher investment.
Higher investment requires more domestic and foreign capital.
Attracting large amounts of FDI requires policy predictability.
Manufacturing growth requires companies that can compete globally and complete ecosystems that can support production.
AI requires chips, computing power, data and talent.
Computing power requires large amounts of energy.
And the energy system will increasingly need to provide reliable, affordable and cleaner electricity.
These are not separate challenges. They are interconnected parts of the same development strategy.
India has several advantages: a large domestic market, a substantial technology talent pool, a growing start-up ecosystem and significant renewable energy potential.
But the scale of the challenge is equally large.
Becoming a developed economy by 2047 will require more than achieving a high GDP growth rate. India will also need to convert that growth into higher per-capita incomes, greater productivity, better jobs and improved living standards.
The question, therefore, is not simply whether India can grow rapidly for a few years.
It is whether India can sustain high growth for three decades while simultaneously increasing investment, attracting hundreds of billions of dollars in capital, building globally competitive companies, developing critical technologies and securing a meaningful position in the AI economy.
If it can, the 2047 ambition could become more than a target.
It could become the result of a transformation in the way India invests, produces, innovates and competes with the world.
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