India’s $10 Trillion Ambition: The Foundations Must Be Built Today

As published on Moneycontrol


India will not reach $10 trillion on a policy framework designed for $2 trillion. What separates aspiration from deterministic achievement is structural reform engineered to last.

Norway discovered oil in 1969. Most countries in that position spend everything quickly, employ outrageous consultants that recommend extravagant projects, enrich a small elite, and watch their economies struggle when the resource runs dry. Norway made a fundamentally different choice.

In 1990, it created the Government Pension Fund Global, designed to save oil wealth for future generations. The rules were deliberately simple: most oil profits go into the fund, the money is invested globally, and only 3% can be withdrawn each year. Everything else stays invested. The first capital transfer came in 1996. Today, the fund is worth approximately $1.9 trillion, roughly $340,000 for every one of Norway’s 5.5 million citizens. More than half of that value came not from oil itself, but from investment returns. This was not luck. It was the collective forethought and willpower of a nation’s leadership to build an institution that would outlast any single government.

India has no oil windfall. But it has something more durable: a demographic dividend of 900 million working-age citizens, an economy growing at over 7% annually, and a services export engine that no other emerging economy can replicate. India is the only economy plausibly on track to cross $10 trillion in GDP before 2040. The question is whether we will treat these advantages with the same institutional discipline, or squander them through incremental policymaking, disappointing policy implementation, and electoral short-termism.

Why Incrementalism Will Not Get India to $10 Trillion

The path from here to $10 trillion is not simply a matter of sustaining current growth rates. The middle income trap, where nations stall between $4,000 and $12,000 per capita GDP after exhausting low-cost labour advantages, has claimed some of the most promising economies of the late twentieth century. Brazil’s per capita GDP stalled at roughly $8,000 for over a decade. Thailand and Malaysia have struggled to break through the same ceiling. Argentina, once among the ten richest nations on earth, has been stuck for the better part of a century. India’s per capita GDP currently sits at approximately $2,600. The ascent demands a fundamentally different policy architecture than the one that brought us this far.

The failure of Indian socialism and its political leadership until 1991 remains a debilitating burden. For too long, Indian policymaking has been consumed by quarrels about inclusion that have calcified into never-ending competitive victimhood, where grievance is rewarded more handsomely than enterprise, and political identity routinely trumps economic necessity. This is not an argument against inclusion. It is an argument against the weaponisation of equity as a substitute for growth. A nation where the pie is not growing fast enough cannot redistribute its way to prosperity. India’s primary policy objective must be the economic prosperity of every citizen. That requires growth at a pace and scale that incremental tinkering will never deliver.

Strengthen the Future Workforce Before the Window Closes

India produces roughly 1.5 million engineers and over 10 million graduates each year. It contributes 28% of the global STEM workforce. According to the Stanford AI Index Report 2025, India leads the world in AI talent acquisition with an annual relative hiring rate of approximately 33%, and its AI talent concentration has grown 252% since 2016.

What makes this moment significant is that Indian STEM graduates are already adopting AI faster than professionals in most advanced economies. This organic adoption, happening through individual and corporate initiative rather than governmental mandate, reveals something critical: the raw capability exists. Indian engineers are not waiting for permission to become globally competitive. The policy question is whether the wider economy will harness this signal deliberately or leave it to chance.

AI can be the catalyst for diffusing market-aligned skills far earlier into the educational pipeline. If graduates are already adopting frontier tools at world-leading rates after college, the opportunity is to embed that orientation from primary school onwards. The reform needed is not just more engineering seats, although that is still needed. It is a fundamental recalibration of curricula, working backwards from the skills the global economy will demand in 2035. India’s talent is its oil. The education pipeline is the equivalent of Norway’s fund. Without deliberate investment, the demographic dividend becomes a demographic burden within a generation.

Good Intentions, Glacial Implementation

India spends 0.64% of GDP on research and development. Israel spends 5.4%. South Korea spends 4.9%. The gap is not merely budgetary. It is institutional. India’s top universities remain primarily teaching institutions. The private sector accounts for only 36% of R&D expenditure, compared to over 70% in every major innovation-driven economy.

The government’s intent is not in question. The ₹1 lakh crore Research, Development and Innovation Scheme, approved by the Union Cabinet in July 2025 and launched by the Prime Minister in November 2025, is the most ambitious R&D financing initiative in India’s history. Combined with the Comprehensive Nuclear Energy Mission, the India Semiconductor Mission, the IndiaAI Mission, and the other Missions, this intent has delivered serious strategic commitments totalling ₹3.3 lakh crore. But intent and implementation are different things.

Consider the RDI Scheme. Cabinet approved ₹20,000 crore for FY 2025-26. The first two Second-Level Fund Managers, TDB and BIRAC, were approved months later and expected to issue calls for proposals by January 2026. Applications for additional fund managers closed on January 31, 2026, and the selection process remains underway. A ₹1 lakh crore programme has just two operational disbursement channels. The National Quantum Mission, approved in April 2023 with ₹6,003 crore, took until 2024-25 to establish its four Thematic Hubs. Even DST’s own assessment flags that delays in fund disbursal and restrictions on importing critical technologies must be removed.

Schemes announced with great urgency are implemented with glacial complacency. This pattern, good intentions poorly executed by a distracted bureaucracy, is the single greatest threat to India’s innovation future. 

From Trade Deficit to Export Surplus: A Decisive Transition

In our previous article, “The Great Rebalancing,” we argued that India’s services export surplus was quietly carrying the economy towards net export surplus. Recent data has only strengthened that case. Between April and November 2025, India ran a services trade surplus of $134 billion, up from $116 billion a year earlier. Services exports are growing at 8 to 9% annually. Remittances from the Indian diaspora add $135 billion a year.

India took 30 years to build a $270 billion services export base. The next $100 billion can come in less than five years if policy leans in. A nation that is a net exporter borrows on fundamentally different terms. This transition changes the current account, the sovereign rating trajectory, and the cost of capital itself.

But services surplus alone will not get India to $10 trillion. Labour code operationalisation remains incomplete, with barely half the states having notified final rules. Customs and export compliance still penalise SMEs. India’s 1,800 GCCs, employing two million professionals, demonstrate what happens when regulatory friction is reduced: global firms invest, create high-value jobs, and train specialised workforces. Urgent policy implementation is critical to accelerate the  accrual of benefits from the growing services trade surplus.

The Cost of Capital Is the Cost of Ambition

India’s regulatory architecture was designed for a $1 to $2 trillion economy. It cannot scale without fundamental reconstruction.

Start with the cost of capital. India’s weighted average cost of capital, at 10.5 to 11.5%, is nearly double the 6 to 8% in developed markets. Roughly 25% of Union government revenues service past debt. The economy’s annual interest bill runs to approximately ₹50 lakh crore, over 15% of GDP, against 4 to 6% in Germany or Japan. The corporate bond market stands at just 18% of GDP against over 100% in the United States. The sovereign rating at BBB- embeds a risk premium across the entire corporate spectrum. A reduction of 200 to 400 basis points in WACC would catalyse a virtuous cycle of investment, employment, and wages.

Beyond cost of capital, India must radically simplify corporate law and taxation. AI can leapfrog the government’s own faceless assessment initiative: automated compliance verification, algorithmic risk assessment targeting genuine malfeasance rather than harassing routine businesses, and digital interfaces that eliminate intermediaries. Every unnecessary compliance touchpoint is a tax on growth.

India Owes Its Citizens Nothing Less

Norway’s genius was not discovering oil. It was the collective forethought and willpower of its leadership to build an institution designed to outlast any single government, and the political discipline to protect that institution through economic cycles, transitions of power, and the constant temptation to spend today what belongs to tomorrow.

India’s equivalent challenge is policy durability. Too many reforms are vulnerable to the next government, the next bureaucratic reshuffle, or the next wave of populist pressure. If India is serious about $10 trillion, it must introduce structural protections that outlast individual administrations: safe harbour mechanisms that shield reformist policy from retroactive reversal, grandfathering provisions that sunset incompatible systems gracefully, and 15 to 25 year policy commitments that give stakeholders the confidence to invest with a clear runway.

India’s talent, its services export engine, its demographic weight, and its growing trade architecture are advantages that dwarf any oil field. They are our hard-earned windfall. Whether India’s leadership has the forethought to convert them into compounding national wealth, or allows them to dissipate through five-year policy cycles, is the only question that matters. Norway, a nation of 5.5 million, built an institution that secured prosperity for generations. India, with the largest working-age population on earth, owes its citizens nothing less.

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