India a $5 tn economy by 2025: This is how to do it?

A working group of the Commerce and Industry Ministry Wednesday came out with a blueprint suggesting a host of long and short-term measures to increase the size of India's economy to USD 5 trillion by 2025. According to its report, agriculture and manufacturing sectors can contribute USD 1 trillion each, while the contribution from the services sector has been pegged at USD 3 trillion.

The group was constituted by the Department of Industrial Policy and Promotion (DIPP) in the ministry with participation from the government and industry. It was tasked to develop a roadmap towards achieving a USD 5 trillion economy by 2025. "India's potential to achieve a USD 5 trillion GDP by 2024-25 is within the realm of possibility," the report said.

The report identified specific policy recommendations for the three sectors. For the agri sector, it has suggested encouraging public and private investments to develop infrastructure like cold chains; special attention for north-eastern, eastern and rain-fed states for augmenting scope of access to institutional credit; and rationalisation and targeting of input subsidies towards small and marginal farmers.

It has also recommended reform in land leasing laws to promote land consolidation and contract farming; and accelerating the pace of public investment in agriculture and ensure greater efficiency in capital use.

For manufacturing, the group has suggested a three-pillar strategy to achieve required expansion of output -- focus on existing high impact and emerging sectors as well as MSMEs.

It said in the defence sector, there is a need to identify key components and systems and encourage global leaders to set up manufacturing base in India by offering limited period incentives; and ensure incentives result in technology/process transfer.

"Where applicable, leverage Government purchases (Offset Policy), particularly for technology transfer; and ensure high-quality anchor investors capable of spurring growth of associated suppliers (including MSMEs) and offer limited period incentives to anchors, if required," the report said.

To boost electronics manufacturing, it said the government should consider offering additional fiscal incentives such as a limited-period tax holiday to players investing more than an identified threshold of investment.

Similarly for the auto and auto-components sector, it recommended encouragement of global leaders for the identified components to set up manufacturing bases, and incentivising players willing to invest more than a threshold in identified areas.

The report suggested measures to boost manufacturing in other areas including aeronautical, space, garments, organic/ayurvedic products besides emerging areas such as biotechnology, electric mobility,unmanned aerial vehicles, medical devices, robotics and chemicals.

For micro, small and medium enterprises, the working group said there is a need to improve access to funding by way of development of SME credit risk databases, SME credit rating, and creation of community-based funds.

Further, the group suggested that a focus on champion services sectors like IT, tourism, medical value travel and legal would be required to achieve the expansion of the services sector output and concerted efforts need to be made to increase exports.

The recommendations for services sector include improving rail connectivity and seamless connectivity to major attractions; facilitating visa regime for medical travel; allowing expatriate professional to perform surgeries in identified hospitals; and e-commerce policy and regulatory framework for logistics segment.

To promote growth of accounting and financial services, it pitched for promoting FDI in domestic accounting and auditing sector, transparent regulatory framework, and easing restriction on client base in the accounting and auditing sector.

Similarly, to push audio visual services, the report recommended measures like exploring introduction of insurance in the film industry, promoting private investments in film schools, exploring franchise business models to exploit film franchise, and promoting gaming industry value chains.

It added that the scope for expansion into advisory, arbitration and mediation services is large and unexplored.

"It is suggested that a clear roadmap for domestic reforms in the sector, liberalisation and promotion of arbitration and mediation services, is developed," it said.

For the education sector, the report suggested allowing foreign universities to set up campuses in India, easy visa regime for students and education service providers, removing regulatory bottlenecks, providing recognition of online degrees and setting up appropriate evaluation techniques for online courses.