Sunrise sectors are booming in India, and Prime Minister Narendra Modi has taken the edge off since he assumed office as the new PM of India. Indeed, the Modi government has truly brought in a new era of growth and opportunity, which centered on encouraging innovation, entrepreneurship and development through technology. The renewable energy, information technology, biotechnology and e-commerce sectors have expanded considerably on the back of enabling policies, significant investment in infrastructure and initiatives such as “Make in India“, “Digital India“, etc. This was done by the New India which nurtured not just local entrepreneurship but one that made strides in emerging markets, leading to job growth and global competencies.
Ever since the Indian government has implemented a bunch of policies and programs cushioning several small and large Indian businesses. Here are some of the notable examples of the benefits enjoyed by Indian businesses
- Digital India:
Digital India has changed the way businesses function in India. By encouraging digitization and the use of technology across sectors, the program has facilitated wider digital usage, e-commerce growth and increased business processes.
UPI (Unified Payments Interface) has revolutionized the payment landscape for businesses in India by offering customers a simple and convenient way to access payments through smartphone-based transactions, which has increased transactions, especially in retail, e-commerce and several other industries. Moreover, the UPI network is cost-effective with lower costs compared to conventional methods, improving profitability. Its real-time invoicing ensures immediate access to funds, which benefits small businesses with cash flow constraints.
It aligns with the vision, encourages innovation in payment solutions and facilitates business growth in the digital age.
- Startup India:
The Startup India initiative has been a game-changer for the Indian startup ecosystem. The government has encouraged innovation and entrepreneurship through tax exemptions, subsidies and simple compliance mechanisms. Since then, the start-up culture has grown manifold times, hence creating new job opportunities, fostering technological advancement, and ultimately bolstering the Indian economy. The inventive and thriving startup ecosystem has captivated venture capitalists and angel investors for investment, further fueling its overall growth trajectory. - Make in India:
This initiative has played an important role in improving domestic manufacturing and attracting foreign investment. Promotion of key industries like automobiles, electronics and pharmaceuticals facilitated the establishment of manufacturing plants in India. This has not only created job opportunities but also strengthened India’s position as a global manufacturer. With incentives like tax breaks and infrastructure support, Make in India has encouraged companies to manufacture locally, leading to reduced imports, balanced trade and increased self-reliance. - Goods and Service Tax (GST):
The Modi government’s unrelenting focus on improving the ease of doing business in India has emerged as the standpoint for attracting investment and boosting infrastructure. The introduction of GST simplified the tax system, reducing the compliance burden on businesses. Digitalization has streamlined business processes, reduced bureaucratic barriers and increased productivity. These reforms have made it easier for domestic and international companies to do business in India, leading to increased productivity and economic growth. - Financial Inclusion:
Schemes like Jan Dhan Yojana and Pradhan Mantri Mudra Yojana have a vital role to play in promoting financial inclusion and supporting small businesses. By providing access to banking services and credit facilities, these programs have empowered millions of unbanked individuals and entrepreneurs. Tailored financial services enable small businesses to grow, invest and create job opportunities. Financial inclusion not only strengthens the economy but also improves social involvement and reduces poverty. - Infrastructure Development
Launched by the Modi government, Gati Shakti is a strategic initiative to revolutionize India’s transport and logistics sector. The term “Gati Shakti” refers to the “power of mobility” and refers to a vision of seamless connectivity and efficient movement of goods and people across the country. This strategy focuses on modes of transport such as roads, railways, waterways and air networks to increase connectivity and reduce logistics costs. Gati Shakti aims to unlock the potential of India’s overall geographical advantage, increase economic growth, create jobs and improve the lives of the people. Through strategic planning and implementation, Gati Shakti seeks to tackle large-scale infrastructure concerns, and optimize freight and passenger transportation, therefore making India a global export hub.
The country’s youth, which is educated, aware and enthusiastic is no longer dependent on government employment to fulfil its aspirations. The nation is now home to whole new breed of entrepreneurs who operate in the small to medium-scale ambit. And it’s the perfect time to take a look at the sunrise sectors which SMEs can leverage to achieve entrepreneurial success.
Renewable Energy
India ranks 4th in renewable energy installed capacity (including large hydropower), wind power capacity & 5th in solar power (according to REN21 Renewable Energy 2023 global status report). The country has set an enhanced COP26 target of 500 GW of non-fossil fuel-based energy by 2030. This is the world’s largest expansion program for renewable energy.
India’s installed non-fossil energy capacity has grown by 396% in the last 8.5 years and stands at over 198.75 GW (including hydro and large nuclear), about 45% of the country’s total capacity (as of March 2024); adding renewable energy in India by 2022 It recorded the highest annual growth rate of 9.83%. Solar installed capacity has increased 30 times in the last 9 years and reached 81.81 GW as of March 2024. India’s solar potential is estimated at 748 GWp by the National Institute of Solar Energy (NISE). Renewable energy installations (including large hydro) have increased by nearly 128% since 2014.
FDI of up to 100% is permitted under the automatic mode of renewable energy generation and distribution projects which fall under the provisions of The Electricity Act 2003.
Electric Vehicles
Data from the government’s Vahan website shows that between April 2023 and March 2024, India saw 1,665,270 EV purchases, with an average of 4,562 EVs per day, up from 3,242 daily sales last year. This growth reflects the growing interest in EVs despite the high prices of petrol, diesel and CNG.
Two-wheelers and three-wheelers drove the rise in EV sales. Two-wheelers accounted for 56 percent of all EV sales, up 29 percent year-on-year, while three-wheelers grew 57 percent and accounted for a percentage of sales 38 percent. Together, these vehicles represented 94 percent of all EV sales in the country.
India aims to reduce its carbon emissions by 45 percent by 2030 and sees EVs as crucial to this goal. Government policies such as tax breaks, subsidies and low GST encourage the use of EVs. By 2030, EVs could represent a large portion of the automotive market, potentially generating $100 billion in revenue. Factors such as cheaper batteries, government incentives, increasing consumer awareness, and more EV devices could for this requirement.
Artificial Intelligence
According to a study, AI could touch $957 billion or 15% of India’s GDP by 2035. India’s large population and abundant data will create fertile ground for the development and deployment of AI. For this reason, the Indian government has also started investing heavily in building AI capabilities and skills.
Artificial intelligence will drive digital transformation across industries and have a profound and lasting impact on India’s society and economy. AI has the potential to transform industries such as healthcare, agriculture and education dramatically.
In the coming years, government agencies like NITI Aayog will increase AI research and adoption in the country. Investment in AI has doubled. The AI software market in India will reach $7.8 billion by 2025, according to Nasscom.
We are likely to see an increase in the number of courses and training programs related to AI and ML to meet the growing demand for skills in India. The rationale is that cloud platforms like Google, Amazon and Microsoft will enable AI for startups in India.
The rapid growth of AI startups in India is commendable. Many AI and deep-tech startups are emerging in India to create new products and services based on AI. AI will boost productivity and economic growth. While AI and automation can change jobs, it will also create new jobs and boost economic growth.
Green Hydrogen
India launched the National Green Hydrogen Mission on February 4, 2023 with the aim of making the country a leading hub in the production, export and manufacture of natural resources.
The central government has sanctioned a budget of INR 197.44 Billion (US$2.37 billion) for the campaign. Its main objective is to make India a global hub for the production and export of green hydrogen for consumption.
Under the National Green Hydrogen Mission, USD $2.1 Billion has been allocated for the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme, which provides incentives for green hydrogen production and the mission aims to produce 5 MMTPA of green hydrogen by 2030.
GAIL Ltd and NTPC Ltd, along with other Public Utilities (PSUs) are leading Indian industry in integrating hydrogen into gas distribution networks and transport sectors. GAIL has successfully blended hydrogen to CNG and PNG grids, NTPC has achieved significant blending of hydrogen in Surat. In addition, NTPC is operating hydrogen-based fuel cell electric vehicle (FCEV) buses, and Oil India Limited is developing hydrogen fuel cell buses. Indian Oil is working to produce green hydrogen through various processes. MNRE has given guidance for pilot projects under the National Green Hydrogen Mission, with a budget of INR 4.96 Billion till FY 2025-26.
Sports Industry
The Indian sports industry continued to grow as it recorded 11% annual growth, according to the GroupM ESP Sporting Nation Report 2024.
The report found that the Indian sports industry is worth INR 15,766 Crore, almost four times as much as 10 years ago. While on-site revenue grew slightly (6%), the biggest growth in the business came from franchise fees, which rose 60% (from Rs 1,644 crore to Rs 2,628 crore) by 2023. This includes items of regular key income such as grants and large grants, which account for 24% and 22% respectively.
The introduction of free Indian Premier League (IPL) live streaming on Jio Cinema was one of the major drivers of volume growth for digital media. Jio Cinema’s holding company Reliance Industries Ltd’s Media and Entertainment earned Rs. 3,239 crore from advertising during April-June 2023, according to its quarterly report. This is a significant increase from the amount it announced in the same quarter of 2022 (Rs 1,340 crore).
Auto spare parts manufacturing
The Indian automotive spare parts manufacturing industry is experiencing explosive growth, with a projected turnover of $200 billion by 2026. The sector has already generated 3 million jobs, and it will certainly amplify an outstanding industry growth rate of 14.5%. With the expanding domestic automobile industry and demand for high-quality raw materials for automotive aftermarkets, automotive component manufacturing has emerged as a “sunrise industry” in India. The industry is witnessing a boom with an escalating demand for automotive components involving genuine consumer goods and aftermarket products.
As India is a global auto industry hub, the sector presents lucrative opportunities for investors and manufacturers due to factors like large domestic markets, favorable government policies, skilled workforce etc. Also, the shift towards electrification and hybrid vehicles drives innovation and technological advancement in spare parts manufacturing. With the adoption of the Industry 4.0 practices, India is poised to increase manufacturing of auto parts, and contribute significantly to the industrial development and economic growth of the country.
Automobile production
India’s automobile manufacturing industry is the 4th largest in the world, contributing more than 7% of India’s GDP. It has employed 3.5+ crore people and has a whopping 40% share of global R&D. The sector also contributes 4.3% of overall Indian exports. Automotive manufacturing in India has emerged as a sunrise industry, reflecting the country’s rapid technological development and growing demand for automobiles domestically and globally.
India has become one of the world’s largest automobile manufacturing hubs, and has attracted significant investment from leading global automakers. The program caters to a variety of customer preferences and market segments including passenger vehicles, commercial vehicles, two-wheelers and three-wheelers.
Through a strong ecosystem that includes a skilled workforce, with an extensive supplier network and supportive government policies, India provides a favorable environment for automobile manufacturing with initiatives like “Make in India“. As India continues to urbanize and witness rising disposable incomes, the demand for automobiles will increase, making the automotive sector a key driver of economic growth and employment for the country.
Banking, Fintech & Financial Services
India’s fintech ecosystem is the third largest in the world, and its market size is expected to reach the USD $150 Billion by 2025.
Banking, fintech and financial services have emerged as sunrise industries in India, with technological advances, changing consumer preferences and supportive regulatory framework. Population and increasing internet penetration gives India a huge boost for innovative financial services and digital banking solutions. Fintech startups are revolutionizing the financial landscape by offering services such as digital payments, peer-to-peer lending, robo-advisors and blockchain-based solutions to meet the evolving needs of consumers and businesses. Traditional banks are also adopting digital transformation to enhance customer experience, improve operational efficiency and extend their communication.
It is backed by government policies and financial inclusion initiatives such as Digital India, aimed at promoting digital payments and expanding banking services in underserved areas. As India moves towards a cashless economy and embraces new technologies, the growth of the industry continues. It is poised to play a vital role in boosting economic growth in the country.
Biotechnology
India ranks as the third largest biotech hub in Asia and ranks 12th globally. It is among the top global biotech destinations. Over the years, the biotech startup landscape has undergone a phenomenal transformation, experiencing exponential growth in startups from just 52 in 2014 to an impressive 5300 and counting at present.
Biotechnology has emerged as a sunrise industry in India, reflecting the country’s strength in scientific research, innovation and entrepreneurship. With a strong foundation in biotech and a growing skilled workforce, India is positioned as a key player in the global biotech industry. Activities cover a range of sectors such as healthcare, agriculture, pharmaceuticals and environment environmental sustainability. It also provides solutions to pressing challenges and drives the economic growth of companies.
There is a vibrant ecosystem, fostering collaboration and innovation. Government agencies such as the National Biotechnology Development Strategy, research funding and technology transfer programs have further enhanced this role. As India continues to invest in biotechnology R&D, attract investment and encourage entrepreneurship, it is emerging as a global leader in biotechnology innovation, contributing significantly to social welfare and economic development.
Capital goods production
Capital goods contribute 12% to the overall manufacturing in India with manufacturing goods contributing a similar share to India’s GDP. The fast-growing sector generates about 5 million direct employment opportunities powered by 40% equipment demand. The sector has achieved an impressive $5.5+ billion electrical machinery export.
Capital goods production in India reflects the increasing industrial development of the country. These services include machinery, equipment and other needs used in various industries such as construction, manufacturing and transportation.
Government emphasis on initiatives like Make in India and Atmanirbhar Brarat is a significant push towards domestic manufacturing and self-reliance in large-scale manufacturing India’s demographic dividend, skilled workforce and business environment are strengthened, driving investment and technological advancement in the sector.
Furthermore, increasing demand for infrastructure development, modernization of manufacturing and expansion of basic infrastructure are driving massive manufacturing growth in India, contributing significantly to India’s economic growth and technological competitiveness.
Chemical production
India ranks 6th in the world in chemicals sales and possess 12.5% chemical products exports share with 3.5% contribution to global chemical industry. The sector’s export potential is also powered by 16% dyestuff and dye intermediates share globally.
This is a sector driven by factors such as domestic raw materials, skilled labor and growing domestic and global demand. The pharmaceutical industry in India covers several segments including basic chemicals, specialty chemicals, agricultural chemicals and pharmaceuticals.
With sound government policies, initiatives like Make in India and increased investments in R&D, the company has seen tremendous growth and innovation. India’s competitive advantage in pharmaceuticals and cost-effective manufacturing capacity, R&D infrastructure strength and development focusing on sustainable green chemicals.
India aims to become a global manufacturing hub and reduce its dependence on imports, the pharmaceutical industry is likely to play an important role in generating economic growth, creating job opportunities and innovation in the coming years.
Construction
The rapidly expanding domain contributes about 9% share in Indian GDP backed by 10,000KM highway construction and $16.5 billion investment in road infrastructure. Currently there are more than 51 million people employed in the sector.
Construction has emerged as a sunrise industry in India, driven by rapid urbanisation, infrastructure and government initiatives like Make in India and Smart Cities Mission The construction industry has a wide range of functions including residential, commercial, industrial and infrastructure.
The demand for housing, commercial space and modern amenities is increasing due to the growing population and increasing disposable income. India’s major infrastructure projects, such as highways, railways, airports and metro systems, are continuously improving productivity that claims to improve efficiency in the sector through new construction technologies, sustainable practices and digitalisation.
As one of the largest contributors to GDP and employment, construction plays an important role in India’s economic growth and urban transformation.
Defence manufacturing
India has the 5th largest defence budget in the world and about 2.3% of GDP is spent on defence. The country’s defence manufacturing sector has 15% share in global arms & import. India’s defence production domain is powered by $1.5 billion exports making it a lucrative sector.
With the government’s emphasis on defence and growing demand for advanced military equipment, the defence industry in India has emerged as a sunrise industry with “Make in India” initiatives and authorized security measures. The program includes a wide range of security equipment including aircraft, ships, ground systems and electronics.
Additionally, partnerships and technology transfers with international defence agencies generate innovation and domestic manufacturing capabilities. As India seeks to enhance its defence capabilities and reduce its dependence on imports, defence components manufacturers are here to play a vital role in strengthening national defence, in the enhancement of technological development and economic growth.
Electronics production
The sector is driven by an annual growth rate of 26% and is one of the largest consumer electronics markets in Asia Pacific region. The major components of this sector include mobile manufacturing with an annual growth rate of 185%, domestic manufacturing with 17% annual growth rate and hardware production with 8.5% annual growth rate.
Electronics manufacturing has emerged as a sector driven by rapid digitization, growing consumer demand and government initiatives like Make in India and Digital India. The electronics industry in India includes the manufacturing of a wide range of products such as consumer electronics, mobile phones, semiconductors, electronic components and more.
With a large and growing domestic market, including a wide range of products such as raw materials, India offers huge opportunities for electronics manufacturers. The government’s focus on encouraging domestic manufacturing through incentives, subsidies and sound policies has attracted investments from domestic and international players besides creating jobs for local electronics manufacturers.
Growth and attracting investment in semiconductor manufacturing facilities have further stimulated the growth of the sector. As India aims to become a global power manufacturer, electronics manufacturers are here to play a vital role in boosting economic growth, creating job opportunities and innovation and of the enhancement of technical development
Food processing
India is the world’s largest milk-producing nation with 32% share in the country’s overall food market. The sector generates about 11.6% share in total employment across all the sectors in the country. It has 10.6% share in India’s exports.
Food processing emerged as a sunrise segment in India, driven by factors such as changing consumer preferences, urbanization and rising disposable income. Food processing in India touches on a wide range of activities such as packaging, storage and value addition of agricultural products. India offers huge opportunities for food processing and processing companies. Government initiatives like the Prime Minister’s Kisan Sampada Yojana and Ease of Doing Business reforms further encouraged investment in the sector. Furthermore, growing demand for fresh and convenient foods, coupled with increasing exports, are boosting the food processing sector as India aims to reduce food waste, improve food safety standards and increase the prices of agricultural products. The food processing sector is poised to play an important role in increasing agricultural productivity, employment and boosting rural economies.
The food processing technology industry in India will continue to grow, projected to register a 7.5% compound annual growth rate (CAGR) from 2021 to 2027. Indian manufacturing companies excel in manufacturing machinery and food services in a variety of important sectors, both of which are in high demand domestically and internationally.
IT, BPO
India is the world’s largest BPO destination. The country is also a major software development destination. Availability of low-cost skill manpower gives India a head start. The sector contributes 8% share in India’s GDP. It holds a massive 55% share in global outsourcing market. India has registered 19% e-commerce growth and has 45% share in Indian services export.
The Information Technology (IT) and Business Process Outsourcing (BPO) sectors have emerged as a sunrise industry in India, driving economic growth and innovation. With contributions from skilled workforce, strong infrastructure and good government policies, India has become a global leader in IT and BPO sectors.
The role offers a wide range of services, including software development, IT consulting, digital marketing, customer support and back office services. India’s competitive advantage is its cost-effective solutions, quality of service and proficiency in English. Furthermore, with technological advancements such as artificial intelligence, cloud computing and data analytics driving the growth of the IT BPO sector, businesses around the world increasingly rely on digital solutions and outsourcing.
The Indian IT BPO industry is open for further expansion, job creation and contribution to the economic growth of the country. The value of the IT and BPO sectors in the Indian economy is estimated to reach US$1.5 billion. $50 billion by 2025.
Leather goods production
India is the top producer of leather products like shoes, belts, wallets, bags etc., and is the world’s 2nd largest footwear producer. The country’s leather goods manufacturing sector has registered 2.8 billion footwear exports and 519 million leather garments exports. The sector employs around 4.5+ million people involved in producing 874 million finished leather exports.
Leather goods have emerged as a sunrise sector in India, with the country’s rich tradition of leather craftsmanship, the availability of abundant raw leather materials and the availability of skilled labor. India is one of the world’s largest producers of leather and leather products. With the growing demand, the Indian leather industry is witnessing tremendous growth due to sourcing preference.
Government initiatives like the Leather Sector Skills Council, technological development and modernization programs keep the competitiveness of the sector high. Besides, India’s good export policy and favorable location make it an attractive destination for leather goods, which consume both domestic and international markets.
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