BCG report: The country’s total trade will reach $1.8 trillion by 2033, increasing strength in production

New Delhi| The country’s total trade is expected to grow from a compound annual rate (CAGR) of 6.4 per cent to reach $1.8 trillion by 2033. A key factor driving the surge is India’s growing strength as a production hub for companies looking to diversify supply chains beyond China, the Boston Consulting Group (BCG) reports.

According to the report, adequate incentives from the government to promote manufacturing domestically, huge low-cost workforce and rapid improvements in infrastructure are further strengthening India’s position. As a result, India is becoming the world’s preferred destination for foreign investment and trade cooperation. India’s trade growth will be quite diverse geographically. The report emphasizes that India’s trade with the US is projected to more than double in the next decade and will reach $116 billion in the next eight years, that is, by 2033.

India’s trade with the EU, ASEAN and Africa is expected to grow by close to 80 per cent, the report said. India’s trade, especially with Japan and Mercosur countries, is estimated to almost double. Furthermore, trade with Australia and South Korea is estimated to have more than tripled.

The country’s role in the global supply chain will be strengthened by the pick-up in Europe’s trade with India, Turkey and Africa. Information technology, pharmaceutical and manufacturing sectors will be major contributors to India’s trade growth with the EU. India is becoming cautious about Chinese investment in sensitive sectors.

BCG said in its report, India’s trade growth with western countries remains strong, while China’s trade is likely to slow down. In response, China is strengthening its economic relations with India, Russia, ASEAN, Africa and Mercosur countries. However, China’s huge trade surplus, driven by excess capacity in various industries, may face opposition not only from the US and EU but also from India and other trade partners.