India’s 6 Fastest Growing Sectors to Watch Over the Next Decade

India is currently witnessing a rapid transformation across multiple industries, driven by a combination of government initiatives, technological advances, and growing consumer demands. 

These changes are reshaping the country’s economy, positioning it as one of the world’s fastest-growing markets. From traditional sectors like real estate and automobiles to newer ones like renewable energy and IT, the growth trajectory is undeniable.

In this blog, we will explore six of the fastest-growing sectors in India, highlighting the factors driving their success, their projected growth, and the opportunities they present.

1. FMCG (Fast-Moving Consumer Goods) Sector

The FMCG sector in India is a powerhouse, providing essential goods that consumers use daily. This sector has expanded due to consumer-driven growth and higher product prices, especially for necessities like food, personal care items, and household goods. 

In rural India, FMCG products account for 50% of total spending, and with over 780 million internet users by 2025, e-commerce is only expected to drive this growth further. It contributes around 5% to India’s total factory employment and provides jobs to over 3 million people.

Why Is FMCG Growing?

• Rising incomes and urbanisation: As more Indians move to cities and earn higher incomes, they spend more on branded and premium goods.
• E-commerce and digital marketing: With the rise of e-commerce platforms, FMCG companies have a broader reach, even in remote areas.
• Organic products: A growing demand for organic and natural products is contributing to the sector’s expansion.

As of 2022-2023, FMCG sales in India grew by 7-9%, with the highest volume growth in rural areas. The sector’s resilience is evident through government policies, new branded products, and the rising youth population, which all contribute to ongoing growth. It is projected to grow at a CAGR of 27.9% between 2021 and 2027, reaching an estimated market size of US$ 615.87 billion.

2. IT Sector

The IT sector in India has long been a significant contributor to the economy, and it continues to be at the forefront of the country’s growth. The Digital India initiative, along with the rapid adoption of new technologies like cloud computing, artificial intelligence (AI), and the Internet of Things (IoT), has fueled this growth.

In 2023, India’s IT sector is projected to reach a revenue of $300 billion, due to strong government initiatives like Digital India. The IT sector contributes significantly to India’s GDP, currently accounting for around 7.5% and expected to grow further to 10% by 2025.

Key Drivers of Growth:

• Technological advancements: The IT sector is booming thanks to technologies such as AI, cloud computing, and IoT. Companies across the globe seek Indian expertise in these areas.
• Government support: Initiatives like Digital India have helped create a favourable environment for IT companies.

India’s IT sector is expected to grow at a CAGR of 23.4% from 2023 to 2027. The sector’s focus on IT exports and the integration of technology in every aspect of the economy will continue to expand.

The sector has also emerged as a leading job creator, with 2.9 lakh new jobs added in FY23, and continues to be a magnet for talent, contributing to India’s position as a digital superpower.

3. Renewable Energy Sector

India’s renewable energy sector is one of the most exciting spaces for innovation and growth. With the country’s commitment to combating climate change, there is a clear push toward clean energy sources, particularly solar and wind power.

India aims to achieve 450 GW of renewable energy capacity by 2030. The declining costs of renewable energy technologies, coupled with government programmes, are driving the sector’s growth.

Solar energy, in particular, plays a pivotal role, contributing nearly 40% of the total renewable capacity. India is already ranked 4th in the world for wind and solar power capacity. As a sign of its commitment, the government has rolled out various programs such as the Pradhan Mantri Kisan Urja Suraksha Evam Utthan Mahabhiyan (PM-KUSUM) and rooftop solar schemes to further boost adoption.

Key Achievements:

• India is already one of the world’s top renewable energy producers.
• The sector grew at a CAGR of 15.4% over the past seven years and is expected to grow at 10.1% until 2027.

The focus on clean energy, coupled with the cost-effectiveness of renewable energy sources, is making this sector an attractive opportunity for both investors and consumers.

4. Real Estate Sector

The real estate sector in India is undergoing rapid changes, driven by urbanisation, rising incomes, and government reforms. This sector includes housing, retail, hospitality, and commercial real estate.

Government Initiatives:

• Reforms like the Real Estate (Regulation and Development) Act (RERA) and the Affordable Housing Programme have helped make the market more transparent and attractive to investors.
• Increased urbanisation is fueling demand for both residential and commercial properties.

In FY23, India’s residential property market saw an all-time high in sales, with the value of home sales reaching a whopping ₹3.47 lakh crore. Commercial real estate is also seeing rapid growth, with tech companies and flexible workspace providers driving demand. The sector’s growth is supported by the government’s smart cities initiative, which is transforming urban spaces across the country.

The real estate sector is expected to grow at a CAGR of 9.2% from 2023 to 2028. The growth is not limited to major cities but also extends to smaller urban areas and tier-two cities, making it an essential driver of India’s economy.

5. Automobile Sector

India’s automobile sector is one of the most dynamic industries in the country. It contributes 7% to India’s GDP and provides employment to millions. The sector is dominated by two-wheelers, but rising incomes and the growing interest in electric vehicles (EVs) are reshaping the market.

Key Growth Drivers:

• Electric vehicles: Government initiatives like FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) and PLI (Production-Linked Incentive) schemes are encouraging the adoption of EVs.
• Urbanisation and income growth: As more people move to cities and earn higher incomes, the demand for personal and commercial vehicles increases.

The automobile sector is expected to grow at a CAGR of over 9% between 2022 and 2027. India’s status as the largest producer of tractors and a significant player in the heavy vehicles market only adds to its global significance.

6. Healthcare Sector

The healthcare sector in India has emerged as one of the largest and fastest-growing industries, driven by rising demand for quality healthcare services, technological innovations, and government support through initiatives like Ayushman Bharat.

What’s Driving Growth?

• An ageing population and chronic diseases: With a growing elderly population and an increase in chronic diseases, healthcare services are more in demand than ever.
• Digital health platforms: The rise of telemedicine and digital health platforms has further boosted the sector, making healthcare more accessible.

The healthcare sector is expected to grow at a CAGR of 8.0% from 2024 to 2032, with an increasing focus on technological integration and improving access to services.

India is also becoming a hub for medical tourism, attracting patients from across the globe due to its high-quality yet affordable healthcare services. The Indian medical tourism market is expected to grow to $14.31 billion by 2029 as patients seek advanced medical treatments in the country.

Conclusion

India is a land of incredible opportunity and growth. The sectors outlined above demonstrate how the country is evolving, not just economically but also technologically and socially. Whether it’s the rapid expansion of the FMCG and IT sectors, the government-backed growth in renewable energy, or the massive opportunities in real estate, automobiles, and healthcare, India’s future looks bright.

For investors and businesses alike, these sectors offer numerous opportunities for growth and success. As India continues to innovate and embrace technological advancements, these industries will remain at the forefront of the country’s economic development. Keep an eye on these sectors as they continue to shape the future of India’s economy.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.