The Business of Bharat: Sectors Driving India’s Next Growth Wave

India’s next decade of growth isn’t coming — it’s already underway

There’s no shortage of noise around “Make in India”, “India’s decade”, or “China+1”. Between glossy headlines and bullish GDP charts, the idea that India is poised for breakout growth has already been priced into conversations, but not always into portfolios. As of 2025, India has overtaken Japan to become the world’s fourth-largest economy, with a nominal GDP of approximately $4.19 trillion, according to the International Monetary Fund’s projections.

That scale is impressive, but what’s more important is what’s driving it.

Everyone’s talking about manufacturing and infra, but not many are breaking down where exactly the action is, or how it translates into long-term, investible trends. Beyond the obvious suspects like capital goods and autos, Bharat’s economic resurgence is quietly spreading across sectors you might not expect: chemicals, railways, ports, even defence exports.

This report is our attempt to cut through the clutter. To go past buzzwords and take a hard look at sector-level shifts, backed by market data, government capex flows, and global tailwinds. Most importantly, to ask:

Let’s zoom in on how each sector is benefiting from structural momentum, not just policy promises.

From broad-based credit growth and policy stimulus to structural programs like PLI, “Atmanirbhar” manufacturing and digitalisation, India’s growth engines are running on multiple tracks. Demographics and urbanisation are expanding the consumer base. Retail participation in equities has surged — demat accounts jumped from ~2.3 Cr to ~15 Cr over 2014–24, and mutual funds added millions of new investors.

Against this backdrop, several sectors stand out in 2024–25, both as earnings drivers and long-term bets.

• Real Estate & Construction – The Nifty Realty index rallied nearly 40% in 2024. Low interest rates, affordable mortgages and housing missions (Smart Cities, PM Awas Yojana) have fueled a residential boom. Commercial and infra-linked developers (roads, metros, smart-city projects) are benefiting from government spending and land-reuse programs.
  • Insight: Housing and realty stocks have outperformed on strong fundamentals – continued low rates and urban demand may sustain this trend.
    
• Information Technology & Digital – Indian IT services returned ~24% in 2024 and remain well-placed. The industry (≈ $245 bn market) is riding global cloud, AI and digital-transformation demand. Investments in data centres, 5G/IoT and fintech platforms are rising. Notably, India’s AI opportunity is projected to grow ~15× by 2027.
  • Insight: Tech/IT names combine high earnings growth with secular tailwinds. Investors should focus on cloud/AI leaders and emerging digital platforms.
    
• Automobiles & Auto Components – The Nifty Auto index gained ~27% in 2024. Record car and two-wheeler sales (fueled by rural demand and festive season), EV adoption and export opportunities are key drivers. The Government’s extension of the Auto PLI (₹67,690 Cr over 2023–28) is attracting ~US$8.1 bn investment. (NITI Aayog projects auto-component output growing to US$145 bn by 2030.)
  • Insight: Domestic auto and parts makers benefit from policy support and pent-up demand. EV-related supply chains (batteries, electronics) merit special attention.
    
• Pharmaceuticals & Healthcare – The Pharma index surged ~37% in 2024. India is a global generic-drug hub, and healthcare spending (9–12% CAGR in drugs) is expected to stay strong. Innovations in biotech, medical devices and telemedicine add growth prospects.
  • Insight: Leading pharma companies and healthcare service providers stand to gain from both export markets and rising domestic health spend. Select biotech and diagnostic plays offer incremental upside.
    
• Financial Services & Banking – The financial services sector encompasses a broad range of institutions and services that facilitate financial transactions and the management of money for individuals and corporations. This sector is integral to the economy, providing the infrastructure for capital flow, investment, and risk management. The financial services sector was the best-performing large-cap segment in FY25 (≈+19%). Credit demand is robust (15–20% growth in many banks), driven by consumption and corporate capex. Digital payments and fintech continue to scale.
  • Insight: Mid-size private banks and NBFCs with strong asset quality are attractive – Kotak AMC notes banks are fairly valued against long-term averages. Insurance and fintech companies also offer growth exposure to India’s rising savings.
    
• Infrastructure & Capital Goods – India’s infrastructure story isn’t just alive — it’s accelerating. With ₹11.21 lakh crore earmarked for capital expenditure in FY 2025–26, and sector-specific allocations (roads: ₹2.87L Cr, railways: ₹2.55L Cr), the government’s intent is clear: build Bharat, bottom up. EPC and capital goods companies have 3–4 year order visibility from ongoing projects in roads, railways, and urban renewal. With 15–20% revenue growth potential and strong policy tailwinds, this sector offers long-duration, government-backed investability for retail and institutional investors alike.
  • Insight: For investors, infrastructure and capital goods offer exposure to a policy-backed, long-duration theme. Companies linked to public works (like metro, rail, smart cities), as well as capital equipment manufacturers serving these projects, stand to benefit from both volume growth and margin tailwinds as execution ramps up.
    
• Chemicals, Food Processing & Textiles – These sectors are quietly powering Bharat’s next growth phase. FY26 budget allocations saw sharp increases — food processing (+56%) and textiles (+15%) — backed by expanded PLI outlays to boost local manufacturing and global competitiveness. Specialty chemicals, packaged foods, and technical textiles are well-placed to benefit from both export tailwinds and rising domestic consumption. For investors, these represent scalable, government-supported plays on India’s consumption and production story.
  • Insight: Manufacturers of chemicals (paints, polymers, agrochemicals) and packaged foods are getting tailwinds from domestic demand and export initiatives. Textiles and agro-industries aligned with PLI schemes could outperform.
    
• Consumer & Tourism – This discretionary segment corrected through late 2024, but signs of revival are emerging. RBI data and analysts note easing input costs, a normal monsoon and rising rural wages point to ~13% earnings growth for consumer companies in FY26. Leisure travel and hospitality are in a multi-year upcycle (wedding boom, infrastructure-linked tourism), with FY26 revenue growth expected in double digits.
  • Insight: As urban/rural incomes rise, selective consumer plays (especially in packaged foods, QSR/restaurants, personal-care) and hospitality stocks may be attractive at current valuations.
    
• Renewable Energy & Green Tech – India has set ambitious climate targets: 50% of power capacity from non-fossil sources by 2030, implying ~500 GW of clean energy (solar, wind, biomass, hydro). In 2024, investments surged in solar projects and wind parks, aided by tax incentives and PLI for advanced batteries and green hydrogen.
  • Insight: Solar manufacturers, EV charging and battery firms, and utilities pivoting to renewables are positioned for structural growth. Subsidy schemes (solar PLI, wind auctions) and global ESG flows support this “green wave.”

Outlook (2025–2030): What’s Powering the Next Leg of Growth

India isn’t just growing — it’s compounding momentum across sectors. Over the next 3–5 years, the economy is expected to expand at a steady 6–7% annual rate, with estimates placing nominal GDP in the $7–9 trillion range by 2030. But it’s not just top-line growth that matters — it’s what’s driving it under the hood.

The next phase of India’s economic trajectory will be defined by deep structural shifts, not just cyclical tailwinds. Here’s what’s likely to power the engine:

• Manufacturing & PLI-led Industry – The Production-Linked Incentive (PLI) program (covering electronics, auto components, pharmaceuticals, telecom, food processing, textiles, specialty steel, etc.) is catalysing a manufacturing revival. Over 764 PLI approvals have yielded ~₹1.61 Lakh Cr of committed investments to date, driving domestic output and exports (electronics, pharma and food exports have surged). This is part of “Make in Bharat” – expect continued government push (PLI expansions, export incentives) to build global supply-chain share.
  • Insight: Investors should track PLI sectors (e.g. electronics, medical devices, auto, steel) for early-stage growth. Companies expanding capacities under PLI stand to capture market share.
    
• Capital Expenditure & Infrastructure Expansion – India is in the thick of a multi-year capex cycle, with the FY2025–26 Union Budget earmarking a record ₹11.21 lakh crore—roughly 3.1% of GDP—toward capital investments. This builds on a sustained public push across roads, railways, and urban transport, including a 5% rise in highway allocation and a 100%+ increase for Mumbai’s urban rail. Simultaneously, the government is courting private players through PPPs, with a ₹1 lakh crore Urban Challenge Fund and a forward-looking 3-year project pipeline. Corporate order books reflect this momentum: players like NCC (₹55,000+ crore backlog) and others across infra and defence are securing long-duration contracts, ensuring steady revenue streams. As the groundwork is laid for transportation corridors, semiconductor hubs, and smart cities, this capex thrust is set to benefit cement, engineering, and steel over the medium term. Firms with operational leverage and strong financial discipline are likely to be key beneficiaries.
  
• Digital Economy & Technology Innovation – Digital India initiatives and global tech trends (cloud computing, AI, blockchain, 5G/6G) will drive new industries. NASSCOM estimates Indian digital services could contribute ~$380 billion to GDP by 2026. Kotak highlights a 15× rise in AI demand (2022–27). Emerging areas like ed-tech, fintech, health-tech and B2B SaaS are developing rapidly.
  • Insight: Beyond traditional IT exporters, watch “new-age” tech names in domestic B2B and platform businesses. Data-center REITs and 5G infrastructure providers may also benefit from digitalisation.
    
• Clean Energy & Electric Mobility – The push for decarbonization is unprecedented. India’s renewable capacity will expand aggressively (targeting 500 GW by 2030). Electric vehicles (EVs) are slated to be 30%+ of 2/3-wheeler sales by 2030 under NDC goals. Battery storage and green hydrogen initiatives (PLI for energy storage, hydrogen corridors) will emerge.
  • Insight: Key plays include solar panel and wind-turbine manufacturers, EPC contractors for renewable projects, EV manufacturers/suppliers, and utility firms pivoting to green power.
    
• Banking, NBFCs & Fintech – India’s financial sector is poised for robust growth in FY2025–26. The Reserve Bank of India’s recent policy easing, including a 25 basis point repo rate cut to 6.00% in April 2025, is expected to support credit expansion. ICRA projects a year-on-year credit growth of approximately 10.8%, translating to an increase of ₹19–20.5 lakh crore in FY2025–26 . Non-Banking Financial Companies (NBFCs) continue to play a pivotal role, especially in serving micro, small, and medium enterprises (MSMEs). NBFCs are expanding their lending activities, though credit growth is expected to moderate to 13–15% in FY2025–26, down from 17% in previous years. The fintech sector is also witnessing significant traction; fintech NBFCs sanctioned 8.3 crore loans amounting to ₹81,365 crore in the first three quarters of FY2024–25, indicating a strong demand for digital lending solutions. This growth is further fueled by the expansion of India’s fintech ecosystem, now the third largest globally, growing at a 14% CAGR with over 10,000 fintechs operating. As financial inclusion deepens and digital adoption rises, private banks with strong retail franchises and fintech innovators are well-positioned to capitalise on India’s evolving financial landscape.
  • Insight: Private banks with strong retail franchises and fintech innovators (payment gateways, microfinance platforms) offer growth leverage to India’s savings boom.
    
• Healthcare & Life Sciences – With per-capita income rising and an aging population, healthcare outlays will grow substantially. Domestic production of generics, APIs, vaccines and medical devices will scale up (COVID-era learnings). Government support (PLI for bulk drugs/medical devices, expanded health insurance) will sustain industry growth.
  • Insight: Core pharma companies remain steady bets, while specialty, pharma, diagnostics, and telemedicine providers offer differentiated growth.
    
• Consumer & Rural Economy – A growing middle class and better rural incomes (supported by agri-reforms, MNREGA and revival in farm prices) will drive consumption. Nuclear-family trends and urbanization (Kotak notes nuclear families up from 34% of households in 2008 to ~50% in 2022) underpin long-term demand for goods and services. Organized retail, D2C brands, food processing and consumer durables should expand. (Insight: Retail chains, packaged-food firms, and consumer-tech companies are poised to gain from rising affluence. Tracking rural demand indicators (two-wheeler sales, tractor sales) can provide early signals.
  
• Defence & Aerospace – India is boosting defence R&D and indigenization. Planned capex of ~₹1.8 Lakh Cr over FY25–29 and a ₹13,000 crore export opportunity suggest 7–10% sector CAGR. Private sector participation is rising in aerospace, missiles and defence electronics.
  • Insight: Listed defence suppliers and PSU defense-PSUs may see higher orders. Investors should monitor policy shifts (DRDO, offsets, joint ventures) driving private defence growth.
    
• Exports & Global Trade – India’s role in global value chains is expanding (textiles, electronics and chemicals). Trade corridors (like GIFT City for finance, bilateral trade deals) will open markets. Firms with global competitiveness – in chemicals, speciality textiles, or IT-enabled exports – will benefit.
  • Insight: Export-oriented sectors with government incentives (e.g. SEZs, tax breaks) and diversified markets (US, EU) offer defensive growth amid global volatility.

Conclusion: Investing in the India That’s Being Built

India’s economic story is no longer about potential — it’s about participation.

The next leg of Bharat’s growth isn’t a monologue driven by a few headline sectors. It’s a multi-sector, policy-backed, entrepreneur-led movement playing out in real time. And while the macro narrative is priced into headlines, it isn’t always reflected in investor portfolios.

This is where the opportunity lies.

The smartest capital over the next five years will be that which identifies and rides structural shifts, not quarterly fads. Whether it’s the electrification of transport, the formalisation of logistics, or the re-industrialisation of Bharat via PLI and defence exports, the signals are already visible.

Investors who stay curious, data-informed, and flexible in their horizon will be best positioned to benefit. This decade won’t reward passive hope — it will reward active conviction.

The Business of Bharat is already open. The question is: which sectors will you back before the crowd does?

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