The Indian Sectors That Are Going to Boom in 2023
--
There are many sectors that are going to boom in the Indian economy in the next few years. These include IT, BFSI, Industrials, Automobiles and Energy. All of these sectors are expected to grow over the next five to ten years.
BFSI
The Indian BFSI sector has been growing at a rapid pace over the past few years. This accelerated growth has been attributed to a number of factors.
One of the most important is digitalization. The latest developments in automation are expected to transform service quality. In the short-term, this may come at the cost of margins. However, in the longer term, digital business models will play a key role in shaping future developments in the banking industry.
Another notable feature is the co-lending trend. This involves banks and NBFCs coming together to boost credit access for the broader community. With this model in place, lenders and borrowers benefit from reduced friction and the resulting higher customer base.
There is an increasing emphasis on data analytics and self-service technology. These technologies are backed by advanced analytics to help clients make faster decisions. They are also likely to be the most efficient and economical ways to enhance the customer experience.
It is no secret that the financial industry is a crucial component of the Indian economy. Given the current state of affairs, the banking industry is under heavy pressure to make a transition. Various factors will determine the outcome.
The latest and most significant is the Bank as a Service concept. By utilizing open APIs, this model creates an open ecosystem for the banking industry. Using this model, banks can offer their services to other institutions and provide their own customers with a smorgasbord of consumer services.
For example, you can now order duty free goods, stay at hotels or cabs at airports without leaving your home. While this may be a novelty today, it could be one of the most coveted perks in the not so distant future.
Industrials
If you were to ask industry experts about the outlook for the Indian manufacturing sector in 2023, you would hear a lot about technology. In fact, 42% of business leaders in the country have highlighted the integration of emerging technologies as a major theme for the year.
Technology integration will also shape the offerings of various industries. The need for efficiency, reliability and quality will drive investment in automation technologies.
New developments, including 5G and the internet of things, will support the new development phase. These technologies will provide opportunities that will overcome the technological barriers that have hindered innovation.
There are many industries that are poised for strong growth in the coming years. B2C centric industries like retail and apparel and accessories are expected to see the most gains. However, industries with higher investment demand will face the biggest challenges.
A major hurdle for the industry in the first half of 2023 is supply chain disruptions. But these disruptions will ease in the second half. As a result, Applied Industrial’s growth is expected to pick up.
The manufacturing PMI has remained steady, with new orders and production both improving. However, geopolitical and economic risks are set to put pressure on manufacturers.
In the future, the economy of India will be based on digital and technological innovation. This will lead to greater emphasis on customer experience. It will also create new jobs.
As the economy continues to expand, the focus on job creation will remain a priority. The government is helping multinationals by supplying land for factories.
New tech will drive hiring in the coming years. However, it will be crucial to make sure that there is minimal displacement of the current workforce.
Automobiles
The automobile sector is one of the fastest growing sectors in India. With an increase in the population, rising disposable income, and a wide availability of credit, the industry will grow further. In fact, the auto industry is expected to expand at an average compound annual growth rate of 11.3% till 2027.
While the automotive industry will continue to face global disruptions, it is also undergoing major changes. Companies must adapt to the changing landscape and adopt new technologies, business models, and supply chains.
With the new BS VI emission norms kicking in in April of next year, the auto industry is likely to experience increased costs for manufacturing gas-powered vehicles. However, the sector is already starting to adapt cleaner technology, and has adopted advanced advancements such as ADAS, autonomous cars, and EVs.
Another factor that will drive the growth of the sector is the increasing need for mobility among the Indian populace. This demand is driven by the government’s focus on infrastructure development. Besides this, emerging markets are fuelling the demand for vehicles.
A number of companies have recently announced their plans to introduce more products and services for the emerging market. Some of the companies that are doing this include Maruti Suzuki, Tata Motors, and Hyundai.
New technology, and more specifically the integration of wireless technology in cars, will be another driver of growth. The sector will also need to monitor the impact of high commodity prices and inflation. There is also a need for companies to invest in battery management and mobility services.
Although the automotive industry has been able to withstand some disruptions, the sector still needs to make strategic acquisitions. It is also important for firms to understand the outlook for 2023.
Energy
India’s renewable energy sector is on the verge of another wave of reforms. While the country has long relied on oil and coal as its primary sources of energy, policy changes have spurred the private sector and state-owned enterprises to develop green technologies.
The Indian government is targeting a total investment of around Rs 2 lakh crore in the renewable energy sector in the next five years. This amount is about three times the current level of investment.
Aside from renewables, the government is also focused on green hydrogen. It has set targets for meeting 10% of global demand for hydrogen by 2030. Also, it plans to install 500 GW of renewable capacity by 2030.
Despite its booming economy, India hasn’t avoided the effects of global inflation. Inflation has sent global food and fuel prices soaring.
The cost of living crisis has driven social unrest. India’s economy is also not immune from the cyclical nature of manufacturing.
With the recent announcements by Prime Minister Narendra Modi, India is stepping up its commitment to clean energy. He has aimed to reduce a billion tonnes of CO2 emissions by 2030, and has set a target of sourcing at least 50 per cent of its energy needs from clean energy sources.
One of the major issues that are hindering the shift to renewables is the discriminatory utility practices. Utilities often block equitable interconnection agreements, and they are a major barrier to a just transition.
Another key new technology is battery energy storage systems. These can help to shift dispatch of solar and wind power.
The government is also attempting to convert captive coal-based power plants to renewables, and is launching the National Mission on Green Hydrogen.
IT
The Indian IT sector is a large and crucial part of the Indian industry. It contributes about 7.7% of GDP and serves as a source of export revenue for the country. In the next few years, it is expected to grow at a CAGR of 5.1 percent.
As the demand for technology increases, the demand for IT specialists is also on the rise. This is driven by the expansion of e-commerce. With the growth in the digital payment market, companies will have more opportunities for IT professionals.
The BFSI sector has expanded rapidly over the past couple of years. The sector has adopted many new technologies. For example, metaverse banking has boosted its growth. Also, the introduction of neo-banks and embedded finance has contributed to its growth.
However, the impact of the global recession is not over yet. A majority of Indian CEOs expect layoffs in the next two years. They also expect the cost of the labor to rise. Despite this, the sector is still a promising area for investment.
The digital payment market is projected to grow significantly in the coming years. This will create many job opportunities. Moreover, e-commerce is also a growing sector in the country.
During the coming years, the growth of the digital sector will also spur demand for cybersecurity and data analytics experts. Companies will need to find the right talent to meet this need.
During the next few years, the focus of companies will also shift to upskilling existing employees. Several businesses offer advanced skill training classes to ensure that their workforce is prepared for the future.
However, the paucity of good quality digital talent will remain a major challenge for CIOs during the next two years. Consequently, they will have to be creative in sourcing resources.
