India needs to create at least eight million jobs annually and significantly raise the share of manufacturing in GDP over the next decade if it hopes to achieve the goal of becoming a developed country by 2047, Chief Economic Advisor V Anantha Nageswaran said on Saturday.
Speaking at the Columbia India Summit 2025 in New York, Nageswaran highlighted the scale of the economic challenge ahead. “We have a vision to achieve a developed India by 2047. The biggest challenge, apart from India’s size, is that the external environment is not going to be so benign for the next 10-20 years as one might have had in the last 30 years, starting from 1990 or so.”
“But within this context — that’s a given, you can’t choose your external environment beyond a point—we have to generate 8 million jobs per year at least for the next 10 to 12 years…And raise the manufacturing share of GDP, in the context of China having achieved such a tremendous manufacturing dominance, especially post-COVID,” he added.
He warned that India’s developmental journey faces headwinds that earlier industrialised nations didn’t have to confront, including rapid advances in artificial intelligence and robotics. “India, with its size, has to navigate this huge, complex challenge, and there are no easy answers. If you look at the number of jobs we need to create, it’s about 8 million jobs a year. And Artificial Intelligence may have a big role in taking away entry-level jobs, or low IT-enabled services jobs may come under threat,” he said.
While preparing the population for an AI-dominated world is important, he said, public policy must strike a balance between labour-centric employment and tech-driven growth. “Technology at the end of the day is not just a choice to be made by technologists. It has to be made by public policymakers,” he stated.
As India marches toward the vision of ‘Viksit Bharat’ in its centennial year of independence, he said, integrating Indian businesses into global value chains and building a viable MSME sector will be crucial. “Countries that became manufacturing powerhouses did not do so without having a viable small and medium enterprise sector,” Nageswaran said.
He pointed out that India must either increase its current investment rate or better utilise existing capital amid a turbulent global backdrop. “Global capital flows are also going to be affected by ongoing conflicts between nations,” he said, stressing the importance of boosting external competitiveness.
“It is not that external trade is not going to matter. It will matter and we need to focus on that because external competitiveness is also a way to boost domestic innovation, domestic potential growth,” he said. However, he cautioned against relying too heavily on exports as a growth engine.
“We cannot expect that to contribute the way it did in the first decade, when India averaged 8 to 9 per cent GDP growth between 2003 and 2008. Every year, exports contributed 40% to GDP growth in the first decade, especially pre-crisis. In the second decade, that contribution came down to 20%, and in the third decade it might be even lower,” he explained.
He added that the solution lies in upgrading product quality, R&D investment, logistics, and last-mile connectivity. “From a policy perspective, it will make sense to assume that it will not be so easily possible to extract growth out of exports as we used to do before,” he said.
In the post-COVID period, India’s growth has averaged more than 8%, but Nageswaran acknowledged that maintaining such momentum will be difficult. “Obviously, in the current environment, sustaining an 8% growth rate is going to be a very tall order. But if we can maintain growth rates of even 6.5 per cent on a sustainable basis over the next decade or two and look to opportunistically increase it to over 7 per cent by focusing on domestic deregulation, that will be the way to go,” he said.
