India’s ambition to become a $5 trillion economy by the latter half of this decade rests critically on three pillars: strengthening its manufacturing sector, accelerating urbanisation, and expanding research and development (R&D) capacities, according to top Indian industry leaders who spoke at the Oxford India Forum 2025 held in Oxford University.
Key Highlights From Oxford India Forum
The annual flagship conference saw policymakers, economists, corporate leaders, and academicians debate India’s growth model amid global disruptions and domestic policy transitions. Consensus emerged that manufacturing competitiveness, urban economic productivity, and innovation ecosystems are the decisive levers to achieve sustainable high growth.
Manufacturing As The Core Driver
India’s manufacturing sector, which currently contributes about 17% to GDP, needs to expand towards the 25% share targeted under the National Manufacturing Policy to generate large-scale employment and diversify growth sources away from services dependence.
| Sector | Current Share of GDP | Target Share by 2030 |
|---|---|---|
| Manufacturing | 17% | 25% |
| Services | 54% | Stable |
| Agriculture | 15% | Declining |
| Others (construction, mining etc.) | 14% | Growing marginally |
Industry Leaders’ Perspectives
- Sanjiv Mehta, Chairman, FICCI:
“India must integrate deeper into global manufacturing value chains, focusing on electronics, defence, chemicals, and renewable energy components. Production Linked Incentives (PLI) are a step forward, but ease of doing business, compliance simplification, and logistics competitiveness remain critical.” - Vineet Mittal, Chairperson, Avaada Group:
“Manufacturing clean tech – solar modules, green hydrogen electrolysers, battery storage – will power India’s dual goals of economic growth and energy security.”
Urbanisation As Growth Engine
The forum highlighted that India’s urbanisation rate (~35%) is far below China (64%) or Indonesia (57%), limiting its economic productivity potential. Rapid urbanisation with planned infrastructure can:
- Generate higher per capita incomes via industrial and services clustering.
- Boost consumption demand due to rising middle class.
- Enable efficient service delivery through urban local bodies and smart city frameworks.
| Country | Urbanisation Rate (%) | Per Capita Income (USD) |
|---|---|---|
| China | 64 | 12,800 |
| Indonesia | 57 | 4,800 |
| India | 35 | 2,650 |
Dr. Arvind Panagariya, Former NITI Aayog Vice Chairman, emphasised:
“India needs 100 new cities to accommodate rural-to-urban migration and avoid slum-led urbanisation. Planned cities with integrated transport, housing, and industry will catalyse GDP growth.”
R&D And Innovation – The Missing Multiplier
India spends just 0.7% of GDP on R&D, far below China’s 2.4%, US’ 3.1%, or South Korea’s 4.5%. Forum speakers stressed that without a robust innovation ecosystem, manufacturing competitiveness and services export leadership will be hard to sustain.
| Country | R&D Spend (% of GDP) |
|---|---|
| South Korea | 4.5 |
| US | 3.1 |
| China | 2.4 |
| Brazil | 1.3 |
| India | 0.7 |
Recommendations To Strengthen R&D
- Incentivising private sector R&D investments through weighted tax deductions and public-private research grants.
- Scaling up applied research in semiconductors, AI, robotics, biotechnology, and clean energy.
- Strengthening university-industry linkages to convert academic research into commercial innovations.
Role Of Digital And Services Economy
While manufacturing, urbanisation, and R&D were core focus areas, leaders acknowledged that India’s services sector remains its global competitive strength, particularly in IT, digital services, and emerging AI-based analytics.
However, speakers like Debjani Ghosh, President, NASSCOM, cautioned:
“Generative AI and automation will disrupt traditional outsourcing models. India must reposition its IT workforce towards AI engineering, cybersecurity, and deep-tech services to sustain export growth.”
Macro Policy Environment
The Oxford India Forum also deliberated on the broader macro policy enablers required to achieve the $5 trillion goal:
- Stable and transparent regulatory regime to attract FDI and private investments.
- Labour market reforms to enable formal manufacturing employment.
- Infrastructure investments in logistics, power, and urban mass transit.
- Climate resilience and sustainability integrated into industrial policy.
Challenges Ahead
| Challenge | Impact |
|---|---|
| Infrastructure bottlenecks | Higher logistics cost (14% of GDP vs China’s 8%) |
| Skill gaps | Limits manufacturing employability |
| Regulatory complexity | Discourages MSME growth |
| Low female labour force participation | Restricts GDP growth potential |
Expert Forecasts
Economists at the forum projected that if manufacturing, urbanisation, and R&D investments scale up as intended under government policies, India can achieve:
- $5 trillion GDP by FY29, slightly delayed from FY27 target due to global economic headwinds.
- Per capita income doubling to ~$4,500 by 2030.
- ~90 million new non-farm jobs created in manufacturing, urban infrastructure, and digital sectors.
Conclusion
India’s $5 trillion dream is achievable but contingent on rapid structural shifts towards manufacturing expansion, planned urbanisation, and R&D-led innovation. The Oxford India Forum underscored that policy stability, institutional capacity building, and sustained political commitment are critical to navigate these transitions amid rising global uncertainties.
Disclaimer: This news report is for informational purposes only and does not constitute investment or policy advice. Readers are advised to consult economic experts, policymakers, and official government documents before making any decisions based on this report. The publication is not responsible for any economic, business, or investment decisions taken on the basis of the information presented.
