India’s economic engine is picking up speed, with higher consumption, growing manufacturing, and fresh investment reinforcing the recovery. Union Minister Ashwini Vaishnaw outlined these trends in a new five-point assessment, arguing that tax reform and industrial policy are lifting real growth.
Speaking this week, the minister said demand for electronics is rising, factory output is expanding at a double-digit compound rate, and consumer spending is up nearly 10%. He also pointed to early signs of food deflation and a surge in capital formation that he linked to headline GDP.
Policy Background and Recent Momentum
India introduced the Goods and Services Tax (GST) in 2017 to replace a patchwork of indirect taxes with a unified system. The goal was to reduce friction, improve compliance, and widen the tax base. Collections have trended higher in recent years, helped by better digital invoicing, supply chain formalization, and stronger consumption.
Vaishnaw said the reforms have “simplified systems and boosted real growth,” tying them to stronger activity across manufacturing and services. He said consumption is rising, which he called a healthy sign for jobs and incomes.
“Electronics demand is rising, manufacturing is growing at a double-digit CAGR, and consumption has increased by nearly 10%,” Vaishnaw said. “Food deflation is beginning, and ₹98 lakh crore in investments are driving a ₹335 lakh crore GDP.”
Manufacturing and Electronics Push
The government has spent the past few years promoting domestic electronics assembly through incentives and supply chain support. The minister said momentum is clear in recent data, with electronics consumption up and factories scaling output.
He said India has surpassed its neighbor in smartphone exports to the United States. While he did not provide the figures, the shift suggests a larger share of high-value electronics leaving Indian ports.
“India has also surpassed its neighbour in smartphone exports to the US,” Vaishnaw said, adding that the trend reflects rising competitiveness under Make in India.
Semiconductors Enter Next Phase
Semiconductors are central to the electronics strategy. Vaishnaw said a second chip unit has begun operations, calling it a step toward deeper local capability. Officials view assembly and packaging as the first rung, with more advanced lines to follow over time.
Analysts note that building a full chip ecosystem will take years. It requires skilled labor, reliable power, clean water, and steady demand. Early progress can still anchor supplier networks and jobs in allied sectors.
What the Numbers Suggest
Vaishnaw tied investment to growth by citing ₹98 lakh crore in capital flows alongside a ₹335 lakh crore GDP figure. He also highlighted early food deflation, which could ease household budgets and support discretionary purchases if it lasts.
- Consumption up nearly 10%, supporting services and retail.
- Manufacturing growing at a double-digit compound rate.
- Electronics demand strengthening as exports increase.
- Food prices easing from recent highs, aiding real incomes.
Balancing Optimism with Caution
Economists welcome firmer consumption and export gains, but warn that growth must be broad-based. Rural demand has lagged in past cycles, and small firms can face GST compliance burdens. The durability of food deflation is also uncertain, given weather and supply risks.
Still, the push on electronics and chips aligns with efforts to raise manufacturing’s share of GDP. If smartphone exports hold and semiconductor activity scales, the spillovers could support logistics, design services, and skilled employment.
Vaishnaw’s message is clear: simpler taxes, rising investment, and a focus on production are lifting activity. The test ahead is sustaining these gains through stable prices, steady jobs, and export depth. Investors will watch whether electronics exports keep rising, how quickly chip units expand, and if consumption stays firm through the festive season.
