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

Growth right now is genuinely quite strong because the strength is visible not just in the official GDP numbers, but also in indicators such as credit growth, manufacturing and services PMI, and automobile sales and production. However, much of the current growth is cyclical, supported by pro-growth fiscal and monetary policies. Eventually, what is needed is more structural growth— growth that remains high even without policy support.

India is also at a point where goods exports may do better than they have in the past. One reason is that the currency has depreciated, making exports, especially manufactured exports, more competitive. Since early 2025, the rupee has depreciated 24% against the euro, 20% against the pound, and about 15% in real trade-weighted terms.

Another factor is that India is now signing trade deals with many countries. As tariff rates come down, sometimes significantly, these agreements can provide a strong boost to exports and growth into new markets.


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Strong export numbers are already being seen, and if these trade deals are implemented properly, this momentum could pick up over the next year or so.

India’s high-tech exports have risen rapidly, but mid-tech exports, mostly labourintensive goods such as textiles, furniture and footwear, have been sluggish over the last decade.

India is now very good at manufacturing and exporting mobile phones, but many of the components are still imported. This is India’s missing middle: high-tech is doing well, low-tech is fine, but mid-tech is struggling, both in manufacturing and exports.

Fixing this requires ease of doing business, policy certainty, regulatory improvements and better infrastructure. But there is also a specific issue: India’s tariff disadvantage is greater for mid-tech, particularly intermediate and components exports. High tariffs reduce the incentive to manufacture these products domestically. Once FTAs are implemented and tariff rates come down, this segment should benefit.

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After a very long time, labour-intensive manufacturing and exports could get a better opportunity than they have had in the past.

(As told to Anoushka Sawhney)