Need more structural growth that stays high without policy support: Pranjul Bhandari, Chief India Economist/Strategist, Asean Economist, HSBC

Currently, India's economic growth is robust, not just as reflected in official GDP figures, but also evident in various economic indicators. This surge in growth is mainly cyclical, boosted by pro-growth fiscal and monetary policies. However, a sustained and high level of growth is desired, growth that can continue even without policy support.

One area where India can see increased growth is in goods exports. This is partially due to the depreciation of the rupee, which has made exports, particularly manufactured ones, more competitive. The rupee has weakened by 24% against the euro, 20% against the pound, and about 15% in real trade-weighted terms since early 2025.

Moreover, India is forging new trade agreements with numerous countries. As these agreements go into effect and tariffs are reduced, either significantly or somewhat, they can significantly bolster exports and growth in new markets. Export figures are already on the rise, and if these trade deals are correctly implemented, this trend could accelerate in the next year or so.

However, India's export landscape has a limitation. High-tech exports are flourishing, but mid-tech exports, primarily labour-intensive goods like textiles, furniture, and footwear, have lagged. India excels in manufacturing and exporting mobile phones, but many of the components are still imported. This 'missing middle' is a significant issue for India.

To address this, improvements in ease of doing business, policy certainty, regulatory reforms, and better infrastructure are necessary. However, there is a specific challenge as well. India's tariff disadvantage is more pronounced for mid-tech exports, especially intermediate and component exports. High tariffs discourage manufacturing these products domestically. Once free trade agreements are implemented and tariff rates decline, this segment should witness improvement.