Experts discuss whether India can rise to become the world’s third-largest economy, examining the opportunities, challenges, and trends shaping its growth.
At Davos, panelists agreed India’s rise to the world’s third-largest economy is largely “a matter of…math,” with Gita Gopinath projecting India reaches #3 by 2028 “unless something catastrophic happens.” Minister Ashwini Vaishnaw argued it’s “not a question of will,” crediting a decade-long, execution-focused strategy built on four pillars: public investment (physical, digital, social infrastructure), inclusive growth, manufacturing and innovation, and simplification. He cited tangible inclusion outcomes—“540 million new bank accounts,” “130 million toilets,” and “250 million people out of poverty”—and claimed extensive deregulation: “1600 laws…removed” and “35,000 compliances…removed.”
The discussion shifted from ranking to living standards: the real challenge is “raising per capita incomes,” requiring reforms in land acquisition and titling, judicial bottlenecks, labor flexibility, and large-scale skilling. Gopinath warned pollution is an under-discussed growth constraint, with “1.7 million lives…lost every year.”
Sunil Bharti Mittal emphasized geopolitics: India won’t get China’s export-led runway and must navigate a “new shift in…trading norms,” while scaling domestic demand and trade agreements. IKEA’s Juvencio Maeztu advised CEOs: “Don’t come to India for the short term payback,” “engage,” and “understand India from inside,” noting implementation and standards harmonization matter as much as intent.
Namaste and good morning. I'm so privileged to be leading a discussion on the future of India with those that have been deeply engaged with the India story and continue to drive it. Ashwini Vaishnav, Minister of Information and Broadcasting, Minister of Railways. Minister of Electronics and Information. He truly wears many hats at the same time. Modernizing it's modernizing India's railway, shaping the country's information and broadcasting, and also working on its digital ambitions. Gita Gopinath Gregory and Anya Coffee, professor of economics at Harvard. Gita is someone who has shaped global economic thinking on growth and risk. From her leadership at the IMF to now at Harvard, Sunil Bharti Mittal, Chairman of Bharti Enterprises, Sunil Bharti Mittal is an entrepreneur who has helped define modern Indian enterprise. Bharti Airtel is a global communication giant and is responsible for India's mobile revolution. Mr. Herrera, CEO and president, Ikea Group one of world's most recognizable brands. I'm sure all of us here have one piece of Ikea at some point in our life. As a CEO of the Ikea Group, you're looking at a deeper engagement in India. Welcome all of you. At a time when much of the global economy is grappling with uncertainty, India stands out as a rare bright spot. On Monday in its World Economic Outlook report. IMF revised upwards its estimate for India's economic growth for 2026 from 6% to 7.3. The fund projected global global growth at 3.3. While describing India as a key growth engine for the world. In fact, many describe India as having a Goldilocks phase, strong growth and moderate inflation. Many projections suggest India could overtake Japan and Germany over the next few years and move into the global top three. But momentum is not destiny. The real question is about timing, execution and choices. And what does India need to do to convert this moment of opportunity into economic transformation? I'm going to start with you, Minister. When you hear this framing, can India become the third largest economy? Do you feel we're asking the wrong question? Should it really be? When will India get there and if so, how will we get there? What are the two things that will help us? And what are the two things that could halt us?
India will become the third largest economy in the coming few years itself. It's not a question of will it become. It's certainly that's a certainty that will happen. It's a question of within the next few years, we will definitely become the third largest economy. What's working very well is the last decade of very transformational change, which has happened in our country. And it's a very well thought through, well defined and very focused execution. It's built on four pillars the pillar of public investment in physical, digital and social infra, the pillar of making sure that the entire society grows along with the growth of the country. So very inclusive growth. Third, the pillar of manufacturing and innovation. Fourth, pillar of simplification. All this, combined with the base of technology that we have put, we can very clearly say that India is going to grow with 6 to 8% real growth and a moderate 2 to 4% inflation and a nominal growth of 10 to 13%, with 95% confidence interval in the next five years. So that's the kind of growth journey which is there, we can say with a lot of confidence, us and what's working very well is that the entire society is seeing the benefit of it. When we look at 540 million new bank accounts opened, when we see 130 million toilets getting constructed, when we see 800 million people getting ration every month, month after month, that shows that the security of the poorest comes as a priority for our government, for Prime Minister Modi ji, and that has helped us bring 250 million people out of poverty. So these two factors are very well thought through growth path, very inclusive growth are very are going to be very good for our country. What's really a matter of concern on our minds is the global debt, which is there in the rich world, the huge amount of debt, the mountains of debt in the rich world, how that debt will unravel. What will be the impact we saw yesterday in Japan? There was a run on the bonds. So that kind of thing, if it happens on a very large scale, what will be the impact on our country is a matter of concern. Otherwise, everything else is in a very good shape that we will become the third largest economy in the coming years.
Okay. So we'll talk a little bit later about what are the things that you are doing to insulate us. But now on to you, Gita. Do you agree with that? Is India's ambition to break into the top three are reality? What's your view?
Without a doubt, India will become the third largest economy of the world. It's a matter of a few years. Unless something catastrophic happens. Just if you just look at the math in terms of India's growth rate relative to Germany and Japan, it would be very hard to see how India would not get there. And based on current projections, India gets there by 2028.
Wow.
It could be even sooner than that, depending upon how the revision of the GDP numbers happens at the start of this year, I guess relatively soon. What happens with the rebasing? So that is not the challenge for India. The challenge for India is not about becoming the third largest economy in the world. The challenge for India is about raising per capita incomes to higher levels. And indeed, I agree with the Minister that substantial reforms have been undertaken. The physical infrastructure build out is impressive. The digital infrastructure build out is impressive. What was done with the Goods and Services tax, including the simplification recently, extremely helpful. So to keep the momentum going and to keep raising per capita income and getting to the 1947, sorry, 2020 2047 goal of Bharat, I think that's the challenge. And that will require keeping up with the steady pace of reforms to get there. And but again, a lot of positive developments in India and very important is the macro stability that you have in the country, not just with growth where it is, but also with inflation being at the low single digit numbers. That is a good spot for India.
So you have said earlier that the two things that could hold us back. One is land acquisition is a little bit messy deregulation. And you have said we've not really used our demographic dividend to its fullest. So what are the things that you think we can do to fix some of those?
Yeah, I think a little bit messy is probably an understatement. It is a tremendous challenge in India to acquire land, to have clean land titles. And that is a constraint on growth. It is constraint on manufacturing. It's again, there are states in India that experimenting with, with techniques that other states can also adopt. I think Andhra Pradesh is doing a good job in finding very creative ways of helping with selling of land, shifting land from agriculture to commercial land, land titling, again, pushing on that is important. Judicial reforms, I think, are absolutely critical. That is a very important bottleneck for growth in India. And it's been there. I think people have seen it as a long standing challenge, but we're not seeing many changes in that front in terms of the labor force. You're right. We've been talking about the demographic dividend in India for a long time. But if you look at the contribution of labor to growth in India since the 1980s, only about 30% of India's growth has come from labor. So it is a very capital intensive production structure that India has because of the rules and regulations that exist and the complications of hiring labor. Now, it is a very positive step in terms of implementing the labor laws that were passed by Parliament a few years ago. I think that's great. The states need to take that and go ahead. Raising the number of the limit on the number of workers above which you have to face high regulation from 100 to 300 is good, though, if you want to be a part of the big global supply chain, you're going to have to be way more than 300 in terms of the size of the labor force that you have. So pushing on that front is important. Labor market flexibility is critical. On top of that is the skilling of of human capital. I think that is a very important part of the solution, too. It's not just about the fact that firms aren't creating jobs. There is a mismatch between what jobs can be created and the skill of the labor force in India. So pushing on that front in terms of the level of education and human capital and skilling, super critical.
Minister, would you like to come in into any of the comments that Gita has made? Anything you'd like to add?
We follow a model of cooperative federalism, where the central government and the state governments, we work together to bring out many of the reforms and some of the reforms which are happening in Maharashtra, in Andhra Pradesh and Odisha. Many of these reforms are now becoming the template for other states to follow. And the labor reforms implementation is a major, major, major step. GST simplification. Labor reforms. Opening the nuclear energy sector to private sector, and reforms in practically every sector. We have two groups of ministers which are working on, half the ministries in one group, half the ministries in other group, where we are going down to the procedural reforms, to legal reforms, to every, every possible reform that we can have. And I request all the participants present here in case you feel there is any particular point which is, hampering your growth in India, do come out. We are here to listen to your problems and solve them. We are here to wow. We are here to, be the catalyst for your growth in India. Yeah.
Excellent. Mr. Mittal, you are a pioneer of India's digital revolution. Much of its growth would not have happened without you. You helped build the networks on which we are now growing. What do you think is the next thing we can do to turbo our growth? And what do you think is leashing us?
Well, I think India is generally in a great spot. I mean, you already heard that it's a matter of numbers mathematics. We will get there to be number three. And if I put a spiritual metaphor around it, I would say it's written in the stars. The question is 6 or $7 trillion for 1.5 or 1.6 billion people, it doesn't stack up. So we will get to number three, but we need to get to 25, $30 trillion. And we can quibble about the year in which we'll get there. But we have to get there and we will get there. What do we need? My tribe, the business community needs an enabling environment. Need a committed government need stable, you know, situation in the country, all that is available now. One factor that is coming to challenge, our growth that we are currently on is massive competition that that has occurred in the world today. US was a huge market for China to grow itself. And they used 20, 30 years of that wonderful moment to build their factories, to build their manufacturing bases, go into deep tech, earn a tremendous amount of money to shore up the economy. That opportunity is not available for India. So we will have to find our own ways and means. Thankfully, we have a huge market India, the continent of consumers, young people consuming more and more. We will be signing hopefully the EU trade deal very soon. UK is done, Australia has done, New Zealand is done, UAE is done, many more are in the pipeline. But the big one with the US hopefully also gets done soon. We heard from Secretary Lutnick this morning. America must bring everything back to manufacturing in America. As a change. We need to deal with that new shift in the in the global sort of trading norms that we'll have to deal with, give us more, backing from the government, give us more freedom. We have a prime Minister who understands the power of business. He uses the industry and industry players to scale up the country, provide more employment. The PLI scheme that has come out. I never thought during my lifetime India will be a manufacturing destination for electronics or telecom equipment. All that has changed in the last five, seven, eight years. Just in the last five, seven, eight years, massive amount of exports of Apple phones and many other products are happening now. I remain very, very confident that the energy that I see in India and now I work in Europe, I work in France, I work in UK. And I can tell you, we will continue to grow at a rapid clip of six, seven, eight, hopefully in some years even higher, whereas the world will be settling at half a percent, 1% or minus in certain years. We have a good future for us. What can derail us is only the competitive intensity of the world play now that we need to deal with, and that really lies in the hands of the able government, how they deftly deal with the trade deals.
Okay. Thank you, Mr. Herrera. You've seen India, through many, many years. And, right now with Ikea on the ground, from a global CEOs perspective, how does the world view India's growth story?
First, I have to say that I always make a disclaimer when talking about India. I am emotionally biased with India because we live in the family, my wife and the two children for six years, and so I call myself an Indian ambassador in the business community, so.
Unpaid as well. This is the best.
Disclaimer made. Disclaimer made. No, of course India, you have to be in India. There is no option because it's you know, it's a big market. It's a jam population. It's also a democracy. It's the English speaking country. But also at the same time India has, has had, is having and will have the possibility to leapfrog, from agriculture to the most developed AI much faster than any other country, you know. So we see, of course, very positive India in that sense.
So, Minister, you said, in the first question I asked you that one of the pillars is simplification, which is basically deregulation. And many times whoever you speak to that is one of the concern areas. So can you talk a little bit more about what are you doing to make ease of business happen in India?
Absolutely. In the last ten years, 1600 laws, old antiquated statutes have been removed from the statute book. Can you give a similar example? Anywhere in the world, 1600 laws have been removed, 35,000 compliances have been removed. A big exercise is right now going to reshape the legal structure tuned to modern times, because many of the laws were written in a time when the government and the, political setup of that period, I am saying, of the early from 1950 to 1990, that was the period when the government governments were basically very inward looking. They were very protectionist. They were not looking at the energy of our people. They were trying to control that energy. So all many of those laws are being rewritten now. So that's a major exercise which is going on. Second, many of the procedural things are getting changed. Mr. Mittal is witnessed to the to get a telecom tower permit. It used to take 270 days. Now it takes seven days to get a railway terminal connected to the railway network. It used to take six years. Now it takes just about two and a half years, two and a half months. So that is the kind of simplification, procedural as well as legal is happening in the country. Our entire criminal justice system, which was of 1800, some vintage. So that is now totally been transformed into a new, structure. The Telecom Act was was of 1854 vintage that has been replaced by a brand new 2023 act. So practically every sector we are trying to bring in a totally new legal framework, a totally new procedural framework built on the technology stack that we have.
Okay. So, I don't know whether you know, but there's a Rajiv Guava Committee which is looking at deregulation. I want to ask you, is making another committee to get rid of bureaucratic red tape the best way forward?
Well, I assume that this is not just a committee for its own sake, but the hope is that it's going to come up with actual actionable plans.
Yes, absolutely.
I mean, India needs a lot more deregulation. It is still in terms of ease of doing business. It is still a challenging place to do business. I'd love to hear from you in terms of how what challenges you face. So taking out more and more of the archaic rules that have held back businesses as absolutely critical, but then all other aspects of India will also have to continue in terms of the reforms, will have to continue. The ones we talked about on land and labor. One of the areas I wanted to point out, which we usually don't talk about when you're talking about business development, is I want to talk about pollution. Pollution is a challenge in India. And if you look at the impact of pollution on the Indian economy, it is far more consequential than any impact of any tariffs that have been put on India so far. If you look at the annual cost to India's GDP, of the level of pollution that you have, and it's not just the effect on economic activity, but it's also the loss in lives. I mean, the numbers are really large, based on a world Bank study that was done, I think it was published in 22. About 1.7 million lives are lost every year in India because of pollution. That's 18% of the deaths in India. I think even from any international investor's perspective, who's thinking of coming in and putting up a shop in India? If you have to live there and you have the environment is not of the kind that you feel that, okay, this is going to be consequential for your health. It holds you back. And obviously not to say about all the Indians that are living, in, in, in this kind of pollution. So addressing that on a war footing is critical. I mean, this has to be a mission, a top mission for India.
Along with deregulation. We're putting it right.
With deregulation. Yes.
So, Mr. Mittal, you work in other countries you just mentioned in Europe, and you've been working in the US as well. What are the lessons that India can take from there for ease of doing business? You know, what are the things that we can adopt?
Well, I can say certainly nothing from France or UK. It's much harder, much, much harder. Oh my God, oh my God, it's much harder. And they also have the, you know, additional burden of the Brussels bureaucracy which they have to deal with. This is just multiple layers there. I would say us is a good model where business is really highly encouraged and, you know, the ease of doing business, I would say, is a good level. And of course, there are examples, fine examples in Singapore and, you know, UAE, etc. but I would echo, honorable minister's point of view here. India has come a long way. I mean, I'm a product of I started in 76, so I have.
Been giving your age away.
Yeah, it's fine, but I am telling you, I've seen this plethora of books, handbooks, manuals standing outside in DG, TD, you know, CCI, hundreds of departments getting one license to get something into the country. All that is gone. 1992 or 9192 was one big wave. And I would say in the last ten years a lot has been done. Can more be done? Yes. We as business community will keep on asking for more transfer, more faith onto us. Have faith we will do the right things. We will be more compliant. Indian companies have much better governance standards today than they were in the 90s and early 2000. I think this government is engaged, I hope, and really I'm confident that this committee is set up for a real reason, because the Prime Minister recognizes there is still much more to be done in ease of doing business. And I remain very hopeful something good will come out of this.
Okay, so I'm adding on to the question. Gita kind of asked you about doing business in India. Is it easier to do business in India or in China? And what would be your advice to a global CEO coming into India at this moment in time?
Yeah, we are present in many different forms in India, and I guess pressing in the sourcing side, engaging with many suppliers and not only producing in India for India, producing in India for the global supply chain with export. We are present with the retail business where we acquired land, where we really go full in with our retail business model, and we are present in many cities and we we will grow significantly. We are also present from the energy sector. We are a big investor of renewable energy worldwide. We produce double than we consume globally in from renewable and in India. We have recently announced an investment of solar park in Maharashtra, but also we are present from the digital side, which digital services for the global company, but also we are acquiring also investing in AI Indian companies, especially in last mile. So we touch many parts of the governments and we touch many parts of the different ministries and so on. So on that side, doing business in India, half full glass, what is really good and then what is the opportunity? Half empty glass and the half full. It is true that there is a process of simplification. And then what? It is even more important when you face a blocks, you knock the door and you are hurt. One of the I always praise the I officials. They are fantastic across the country because they listen to you, you meet them, you discuss and then it's important. Sometimes things are a bit more complex. You need to find a way, but they are with you so they don't ignore you. I think every time we have face issues, we sit down. You have to invest time, but you sit down and then you share and then you are helped. And I see something that is really, really recognize from India. What is needed to do more in the future is try to find ways harmonization with global standards. If I take an example, production of furniture, do you know how much in the accounts for the global production of furniture in the world? 1%. Can we agree that India deserves more than 1% of the global production? Of course we agree on that. That's why, for example, the new legislation on qco, increasing standards and the quality we welcome very much the the intent, we are really, really supporting that the India increases standards of quality because that will help us, for example, to export globally. Then the implementation is has to be done in a way that it is. It is done in a smooth way and it doesn't come as a low. It comes as a way to support the suppliers as well. So it is the implementation which is equally important for the future when it comes to harmonization of standard and then advice. The last question is coming from the advice from the CEO. I don't want to be pretending that I know everything, but with the experience, I would say three things don't come to India for the short term payback. If you come with short term, payback. India doesn't need you come with a really long chain. And we are here for the really long term. We are owned by a foundation. There is no profit that goes to private shareholders. Everything gets reinvested into the business. And we have a super long term approach. So long term. The second one is that engage engage with the Indian stakeholders, engage. And in a true in a true partnership and invest time. And the third one, try to understand India from inside and not from outside. You cannot come to India with your prejudgment. You are biases and to pretend you need to go. I invested a lot of time personally. We didn't take consulting company when we set up retail in India. I personally engage meeting customers on the shop floor. Customers on the homes meeting is official listening, so you have to really come with a genuine interest of understanding India from within and then things will work.
That's really good advice, but I'm still going to put you on the seat and ask India or China what's easier doing business?
You know we are a global company. We need to operate globally. So we have to we have to operate all over the world. And then the important thing is not choosing one or the other. The important thing is whenever you go, you have to go with your full set of values. As a company, you have to go fully and then you have to really find a partnership. I often say that we are in the home is the most important place in the world, and we are in the life at home business. It is because of that that we truly believe that we can help many Indians to have a better life at home. At the same time, I am saying quite often India is helping Ikea to be better. We are learning massively from India and we take this learning globally.
Okay, I'm going to take that as India. Okay, I'm going to come to a little bit on tariffs sir. India currently has one of the highest tariffs imposed by the US to any country almost 50%. How is India insulating its growth story from this?
We are a very resilient economy. The fundamentals macro as well as macro are very strong and that's really helped us through this turbulent period. Our exports have actually increased despite the tariffs are producers are finding new markets. We are growing our exports sector in multiple ways. For example, electronics exports has now become the third largest exported commodity out of India. After, of course, engineering engineered goods and petroleum products, which was like unbelievable even ten years ago, even five years ago. This was unbelievable. We are trying to expand the market, going to new geographies, and also simultaneously, we are engaging with many markets, many geographies for good, balanced, healthy, mutually complementary, trade agreements we have had with UK, we have had with Switzerland and two more countries we have had with the UAE, with Qatar, with Australia, with New Zealand. Another one is right now in works with Europe. So lots of engagement globally and a fundamental change which has happened in the last ten years is India has emerged as a very trusted value chain partner, not just supply chain partner. A supply chain partner would be manufacturing to your designs, manufacturing to your specs. A value chain partner will be partner to you in the journey of design, in the journey of understanding what the customers need. In the same room three years ago, when we discussed semiconductors, people thought that India will never be able to manufacture semiconductors. And when I say the value chain partner today, the entire semiconductor industry believes that India is the most important trusted value chain partner, right. So that that feeling, that positioning of the country is very important for us in resilience, in managing the turbulence that we see.
Okay. I don't know whether you caught Prime Minister Carney's speech yesterday in Davos. He basically declared independence from the American dominated past. I want to ask you the question about dealing with tariffs in that context.
I saw some of his, you know, what he's what he said. It was pretty powerful. Indeed. It was a statement about the current global economic order and how that has basically ended. And we have to, you know, form new alliances. I think that was a big call to that. I mean, first of all, I don't think the movie is over. We haven't hasn't ended yet. We will have an important speech later today.
Yes.
That could change everything. So I don't want to sit here and speak profoundly about what the consequences are of what we've heard so far, because it could all be very different tomorrow. Right? I mean, one of the reasons that the tariffs that have been announced so far from the US has not been hugely consequential on the world is because the actual level of tariffs. And I did some research on this with the co-author last year. This is the actual level of tariffs is a fraction of what the headline numbers and announcements are. Right. So the statutory rate is about 24%. The actual rate is about 14%. Right. So because there are so many exemptions there's so many carve outs. So every time I hear a number I'm like, I want to wait and see exactly where something sticks. So that will be my first piece, is that we just don't know where all of this is headed. What I will agree with, and I think that we don't need to wait for, is that we have permanently moved away from the previous last 80 years of the global economic order. It doesn't matter what comes next, but we're not going back to the time when we had completely close to free trade across all countries in the world. I think national security considerations, economic security considerations have become important for good reason, I think, and therefore the pure efficiency based model of we're going to buy from the cheapest source is not going to happen, and more countries are going to be looking inwards and building up their own shop, especially in sectors that are important for their security. So I think that has changed. There is no one West anymore. There never was a one East, you know, there was always India, there was China, there was you couldn't talk about a one East, but we used to talk about a one West, which was there was the US and Europe were always together and that's not there anymore. So I don't think there is a one West either. That doesn't mean there's going to be a wholescale breaking up, but we're not going back. This is this is a shift that's going to last a long time. And like I said, the movie isn't over, so keep watching.
So one of the things that the minister said actually, that they are looking to do deals with other countries and trying to sort of insulate, the impact of tariffs. Some people are saying this gunboat capitalism of the US is leading to mega, which is make Earth great again versus MAGA, which is Make America Great Again. What do you think about that?
Okay, so firstly I do want to mention that what we saw in 2025 was that not just India, but China, pretty much every country in the world found a different market to sell their goods to, or found a different market through which their goods went back to the US. Right. I honestly don't think that's a sustainable strategy either. So I don't think we are in a space where this can continue and everybody can have very high levels of tariffs in India, can have 36% tariff rate, and somehow India would find new markets to send their goods to. There is going to be retaliation. Europe will retaliate to all the flood of goods coming from China. Other countries will too. Maybe India will be concerned about this. The point that Sunil made. So it's not a viable strategy, but what is a viable strategy is indeed having more trade agreements with other countries, which India is doing right now. European Union is doing with Latin America, South America, Mercosur. So those kinds of, I think, you know, agreements moving on that front is important in terms of making Earth great. Again. Are you talking about the fact that we may be moving to something more sustainable or.
Yes, more sustainable, more markets not dependent on one country sort of bullying others into there?
I don't know why that becomes make Earth great again. But anyway, I do understand the sustainable part. So I mean, I think a lot of things have taken a bit of a backseat and sustainability has taken a bit of a backseat. There is an inherent momentum in it that I think will continue in many parts of the world, including in India. That momentum exists. But if you look at what the trajectory could have been, if the US was also a part of all of the climate activity, that would have been a much more stronger transition path. But that said, again, I think that that, you know, train has left the station. I do think and it's not just about sustainability and it's not just about the environment. For many countries, it's energy security. Instead of having to rely on fossil fuel imports, if you can rely on sunshine in your country and use that to produce energy, it's good for your, you know, your your economic growth. It's good for job creation. So yes. So I think that that is going that will continue among the risks that the planet faces are climate related risks. So that's not going away. You know, there's a lot of distraction right now. But we still have to deal with weather related shocks.
So one of the things that Gita said, and you've mentioned as well is uncertainty. I mean, she's saying you have a headline, they say a particular tariff, which she still waits to see. What is the effectiveness? You have dealt with uncertainty and very challenging situations. What would be your advice to CEOs in India and around the world that are dealing with this kind of a challenging situation?
So in the end, you know, you have to make yourself stronger to get the best deal. I mean, we have seen how China was not be was not pushed back by the US the way they wanted to, and they quickly backed off. We have to make ourselves big. I think one great advantage that we have is we are a market for everybody in the world. It's 1.5 billion consuming hungry young Indians, taking more products, more services every day. It's also producing for the world now. It will have a tremendous amount of leverage with many other parts of the world to have the right deals. 83% approximately of the world trade moves away from the US between everybody else. I don't think she'll ever come to that, that you will not trade with the US. But if it becomes completely untenable in terms of tariffs and all that, the world will react and they will find ways, as rightly pointed out, in other markets, other places. What India really needs to do is scale. Scale is technologies, scale is production. Get to a point where they have consumer surpluses so they can sell to the world like China. That will take some time. The good news is that India recognized very early on that this is time consuming and capital intensive. You have to build more roads, more ports, more airports, more railways. This would have taken ten, 15, 20 years and hundreds of billions of dollars. How did India mitigate this? They quickly recognized, I would say, you know, you know, credit to the government and the Prime Minister, get a digital highway in place of world order. The best provide enough energy to fire it, because there's no point having a digital highway with no energy. These two things were taken on a priority, very high priority. And on that, you dropped a digital stack to connect everybody for banking, for health services, for everything else. This has provided us cushion to wait for the hard infrastructure that is being built up in the manufacturing, in the real hard infrastructure. And you can see year after year after year, India is getting stronger. My own belief is eventually India will get a fair deal even from the US. I remain confident. Okay.
So how have the tariff tweets affected your assessment of doing business in India? Because you source and you have a marketplace as well?
Yeah, no, we have a big global supply all over the world. And then building on Gopinath, the trade is like water. If you close something the water will find another way. But then the point here is that the point I'm building, the point is that I think there is too much noise now on the here and now on the short term impact. And we are putting too much energy as a society on mitigating the pain. I strongly agree with you that these are the times. These are defining times. These are the times where you can build a new competitive advantage, where you can leap frog as a company, as a country. Let's take one example where we are heavily investing and at the same time we are advocating is the marriage in between sustainability and affordability, we are investing in circularity. And, you know, the more you invest there, the more you can secure a is good for the planet. B is good for the wallet because people many people today are struggling. So they to of the month almost the whole month is gone is gone. So it's good for the people, but also it builds independence. Independence not only in energy but on trade. What does it take that India produce with the waste that is created in India? Because if you have that approach, you start to depend less on global trade and the same will happen with other countries. So we need to find win win opportunity where we really decide not to put the money in mitigating the pain, but putting the money and really leapfrogging as a competitive advantage. And I think India is one of the countries where we can. India has proven India impressed me. I was living in India when the other identity got implemented. More than 900 million people got it over overnight the election, 900 people voted in one month with no disruption. Doesn't happen in other country. And then the interface payment, the demonetization. So India has proven that when things come together, it can really leapfrog significantly. So what does it take that India nowadays the opportunity to really be the leader on sustainability and affordability because it comes with these three big benefits?
Yeah I have four minutes and I do want to get into AI. So you will have to keep your answers short. So that I can, you know, give everyone a chance on this. Right now, the AI race seems to be between the US and China. Do you read that correctly, or does India have a place in this race?
India is making very significant progress in all the five layers of AI stack. We have already become one of the largest service AI based services provider to the world, and our IT industry has pivoted from software services to AI based solutions. Are the second layer, the model layer stack of sovereign models is progressing very well. We must understand today that 95% of the work can be done with the small 50 billion parameter model. You don't require a trillion parameter, model to do the things that you need in your day to day life and in your enterprises. Our focus on semiconductor industry, the third layer is very strong. We are investing $70 billion in the fourth layer, the infrastructure layer and energy, which is the fifth layer. We have opened it up the opened the entire energy sector, the nuclear energy sector to private sector so that we can have a sustainable, clean energy for the AI world.
Gita II AI is affecting jobs in coding and call centers, which is very big for India. Do you think we can make this pivot like the minister is suggesting.
It will take, directed, conscious effort to make that switch happen? It's not going to happen very quickly indeed. You know, business process outsourcing, which for which India was a big beneficiary of that, is going to be impacted by, by AI, these call centers, as you mentioned, coders and coding in general are going to be heavily affected. Now, India does have the plus that. It does have the a good digital infrastructure which it continues to build on. It has a lot of skilled engineers and and, and IT sector that supplies the world. So that gives it a good holding. But we're going to have to find ways of coming up with new kinds of jobs. That again, comes back to the original point about scaling up the workforce, making sure that they are able to benefit from AI in terms of if you look at the statistics about how much is India exposed to AI, how much of India's labor force is exposed to AI? It's about 26%. The average for the world is 40%. That's just a reflection of the fact that still a very large number of Indians work in agriculture. Right? So that transition has still not happened. Productivity in agriculture has not gone up enough to push people out of agriculture into industrial and into services. So that transition is still ongoing. So so there is some there is less exposure to AI in that sense for the entire labor market as a whole. But like every country in the world, I think this is going to be an important challenge. India is already capital intensive for the reasons that I mentioned earlier. If we end up with services also becoming capital intensive in India, then there is going to be a problem with enough job creation. And here labor market flexibility is again super important.
So we just have a few seconds. But I want to get into it because you offered perplexity free to your entire mobile network. Right. I want to ask you what your view on AI is, because we are offering pervasive access to our market, to foreign AI players. How do you see that?
Yeah, I think India will find this very frugal.
Tens of billions of dollars. India will do that parallelly as user of AI. We have now injected in various form factors in our, you know, business. Spam is one billions of messages, billions of calls from protecting our customers from fraud. Our whole network, you know, from design to management, is run on AI now. Agentic AI is pervasive all over. Yes, some call centers are getting affected and some different, you know, jobs will need to be found for those. But as a country, I would say India is well positioned to make good use of AI for its productivity, automation and improvement in economy.
I'm sorry. I'm completely out of time. I'm not going to be able to give you the question on AI. I'm going to conclude, I think this has been a very good news session. I think everyone agrees that India is a force for good, and it's written in the stars. And I hope that this Goldilocks fairy tale has a happily ever after. Thank you very much, all of you.
Thank you.