BUILDING A VIKSIT BHARAT

The Indian economy is expected to grow between 6.4 and 6.7 per cent in FY26, according to the estimates of the CII Growth Model. Thus, India is likely to remain the world’s fastest growing big economy this year as well. This is an indicator of our country’s remarkable resilience amid all the global uncertainty. It showcases the strength of our economic fundamentals.

The 7.8 per cent real GDP growth recorded in Q1 FY26 was powered by renewed government capital expenditure momentum. Resurgent manufacturing output in July and August gives us confidence that the Make in India and Atmanirbhar programmes are picking up steam.

Our financial indicators remain strong. Inflation is expected to remain well below the RBI’s target, GST collections and corporate earnings have remained buoyant, and surging UPI transactions and fuel consumption signal a healthy momentum across the industry.

The government has just rolled out GST 2.0, sending a strong signal that it is committed to putting more money in the hands of consumers, and while also simplifying and improving the business environment.

Since GST’s introduction in 2016, India’s corporate tax rates have become very competitive. It now appears the revenue neutral rate of GST will settle around 10 per cent, which is positive. That should leave USD 10–12 billion in consumers’ hands, and help boost the GDP by between 0.3–0.5 per cent.

It is now important that the reduced GST rates are followed up by reforms that include decriminalisation and a statute of limitations for compliance errors. Even in Direct Tax, Alternate Dispute Resolution (ADR) remains crucial. Vacancies in the Commissioner of Income Tax (Appeals) and ADR bodies must be filled to ensure proper staffing, and new ADR channels should be created so that disputes resolve quickly. This will go a long way in reducing time to settle taxation disputes, thus improving the ease of doing business.

Strengthening trade ties

On the trade front, India’s approach of engaging meaningfully and create win–win partnerships, as equals, with all nations is the right one. After the successful conclusion of the Free Trade Agreement (FTA) with the UK, we now need to work towards an early conclusion of the FTA with the EU on similar lines and principles. EU is a large market with an economy of USD 20 trillion and a population of approximately 450 million.

In addition, Indian businesses should look at leveraging the existing trade agreements such as the ones with Australia and Gulf countries, among others. One of the outcomes of the current economic changes is that all countries in their capacity as both importers or exporters are seeking to diversify their trade partners. This will open opportunity for Indian businesses to become a part of those global supply chains, where the dependence on one country is very high.

Making India the most competitive economy

Besides improving access to the markets around the globe, this is the right time to further improve the competitiveness of the Indian economy by undertaking the next generation of economic reforms. There are broadly three aspects to these reforms. These are, improving the ease of doing business, reforms in the factor markets, that is, land, labour, logistics, and energy to lower the cost of doing business in India, particularly for manufacturing, and finally some sectoral reforms that accelerate capital expenditure.

• Delays in approvals remain a key pain point for the industry. A legislated framework for time-bound, transparent, and faceless clearances, coupled with a time bar for government queries on business filings, can bring predictability and attract more investments.
• Environmental and building permits should be simplified through a unified clearance framework integrated with PARIVESH 2.0, exemptions for pre-approved industrial parks, and single-window municipal systems.
• Judicial reforms are also critical—especially in sectors like power, mining, and infrastructure, where dispute resolution delays hamper progress. Dedicated, properly staffed commercial courts and a strengthened National Judicial Data Grid will speed up dispute resolution.
• Building on the Government’s progress in regulatory simplification and the decriminalisation of minor business laws, the next phase should ensure that technical and procedural violations attract only monetary penalties, reducing the fear of criminal action against enterprises and business leaders.

Ease of business reforms are on the agenda of the government and many of them require the Centre and States to work together. These need to be supplemented with reforms to reduce the factor cost of production.

• Reforms that will make more land available, easier transfers and clearer titles all help companies by reducing time and costs of land acquisition for projects. Public Sector Undertakings (PSUs) and government bodies hold a lot of surplus land which can be made available. Easier procedures to change land use, and higher Floor Area Ratios, along with digitising and tokenising tiles will all reduce time required for completing projects.
• Labour reforms will facilitate both the ease of doing business and making enterprises more competitive. Ability to hire manpower for all business activities for fixed periods, including through contractors, flexibility in the number of daily working hours subject to a weekly cap, rationalisation in compliance requirements can make industry globally competitive.
• Privatisation of power distribution together with rationalisation of tariffs will have the biggest impact. No manufacturing sector can be competitive if its power costs are out of sync with global power costs. In addition, reduced regulatory complexity for example for captive power plants can make Indian enterprises more competitive.
• Dedicated freight corridors, improved last-mile port connectivity, and rationalised rail freight tariffs will go a long way in making our exports more competitive.

To build resilient supply chains, India needs to reduce import dependence on critical products like magnets and semiconductors through targeted programmes and actions. At the same time, attracting global original equipment manufacturers (OEMs) to replicate the success of the electronics value chain will boost advanced manufacturing.

Unlocking sectoral opportunities

In addition to manufacturing, there are opportunities to increase economic activity.

• Mining: More mineral deposits need to be discovered and mining leases should be implemented expeditiously. The current mineral exploration expenditure in India is estimated to be less than 1 per cent of global spend. Amending the terms of exploration licences to include right to mine in case of a successful discovery and increasing the area limits for a player to prospect and mine can make Indian mineral exploration more attractive especially for specialist exploration companies.

A single window approval process for various environmental clearances for mining leases can result in faster implementation of mining operations after the award of lease.

• Tourism is a highly labour-intensive sector with the potential to employ millions, especially in tier-2 and tier-3 towns. There are several actions that can be taken to drive tourism e.g., creating institutional capacity to develop 50 hubs, providing visa on arrival in India for tourists from more countries, industry status to attract investment, etc.
• Similarly, overseas employment remains an avenue for absorbing our excess workforce. Setting up an International Mobility Authority to identify global job opportunities, provide targeted skill and language training, and embedding labour mobility provisions into trade agreements would allow Indian workers to participate in the global workforce

The Indian economy has great potential and its fundamentals are very strong. What is now needed is to carry out the next generation of deep structural reforms to accelerate our economic growth further so that the goal of ‘Viksit Bharat’ can be achieved even before time.

This article first appeared in CII Policy Watch, Volume 13, Issue 6 (September 2025).