If you are feeling a bit exhausted as 2021 comes to a close, you aren’t alone. It has been a busy year for India in all sectors. A devastating second wave killing millions of people, Bengal-poll violence, Indians named in Pandora Paper leaks, and farmer protests have dominated the news. But amid the tragedies there was courage, there was grace, there was sacrifice, there was hope—there were people faced with the very worst rising up to be their very best. Few will recall the year just ending with anything close to fondness. But it will surely be recalled with no small measure of pride.
The year saw Harnaaz Kaur Sandhu getting home the Miss Universe crown after 21 years, Indian-origin CEOs who are ruling the world, and Indian athletes dominating, like perhaps, never before and not just in cricket but also Olympics. We witnessed Indian weightlifter Saikhom Mirabai Chanu winning silver at the Olympics and PV Sindhu winning bronze to become only the second Indian after wrestler Sushil Kumar — and the first woman — to earn two Olympic medals. While boxer Lovlina Borgohain clinched a bronze medal, Ravi Kumar Dahlia won Silver in freestyle wrestling, and wrestler Bajrang Punia won bronze. The Indian men’s hockey team, too, won the bronze medal after defeating Germany. However, the biggest sporting achievements were Neeraj Chopra and 20-year-old Avani Lekhara winning Gold in their respective field. While Neeraj won the first-ever Olympic Gold medal in track and Athletics, Avani scripted history as she won two back-to-back medals –- the Gold in 10m air rifle standing and bronze in 50m rifle 3 positions –- in Tokyo Paralympics, becoming the first Indian woman athlete to achieve so.
There are also many exciting development trends in Indian trade and industry. We can see that the economic downturns we have been through have made industries and individuals more innovative. There is increasing interest in entrepreneurship, technology and the healthcare sector. The infrastructure sector, too, is a key driver of the Indian economy, and critical for driving India’s overall development, offering enhanced growth prospects to strengthen India’s global competitiveness.
India transformed from an economy of scarcity in 1991 into an economy of sufficiency in 2021. Now, India has to transform itself into an economy of sustainable abundance and equitable prosperity for all in the future…
So, what will India really be like in 2022? Apart from the end of the pandemic, Hopefully, what does the future hold for the technology we use and the homes we live in? Read ahead to find out more… --- Anisha
AT THE HEART OF HEALTHCARE
Healthcare — comprising hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment — has become one of India’s largest sectors, both in terms of revenue and employment. Plus, the Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services and increasing expenditure by public as well private players.
Categorised into two major components public and private, the Government, i.e. public healthcare system, comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centres (PHCs) in rural areas. Whereas, the private sector provides a majority of secondary, tertiary, and quaternary care institutions with a major concentration in metros and tier I and tier-II cities.
India’s competitive advantage lies in its large pool of well-trained medical professionals. India is also cost-competitive compared to its peers in Asia and Western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe.
The healthcare market is estimated to increase three-fold to Rs. 8.6 trillion (US$ 133.44 billion) by 2022. In this year’s Budget, India’s public expenditure on healthcare stood at 1.2% as a percentage of the GDP.
A growing middle-class, coupled with a rising burden of new diseases, is boosting the demand for health insurance coverage. With the increasing demand for affordable and quality healthcare, penetration of health insurance is poised to expand in the coming years. In FY21, gross direct premium income underwritten by health insurance companies grew 13.3% YoY to Rs. 58,572.46 crore (US$ 7.9 billion). The health segment has a 29.5% share in the total gross written premiums earned in the country.
Recent developments. The Indian medical tourism market was valued at US$ 2.89 billion in 2020 and is expected to reach US$ 13.42 billion by 2026.
According to India Tourism Statistics at a Glance 2020 report, 697,300 foreign tourists came for medical treatment in India in FY19. India has been ranked 10th in the Medical Tourism Index (MTI) for 2020-21 out of 46 destinations by the Medical Tourism Association.
By FY22, Indian healthcare infrastructure is expected to reach US$ 349.1 billion. The e-health market size is estimated to reach US$ 10.6 billion by 2025.
Between April 2000 and June 2021, FDI inflows for the drugs and pharmaceuticals sector stood at US$ 18.12 billion, according to the data released by the Department for Promotion of Industry and Internal Trade (DPIIT).
India has become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population. Besides, Indian medical service consumers have become more conscious of their healthcare upkeep.
Our healthcare sector is much diversified and is full of opportunities in every segment, which includes providers, payers, and medical technology. With the increase in the competition, businesses are looking to explore the latest dynamics and trends which will have a positive impact on their business. The hospital industry in India is forecast to increase to Rs. 8.6 trillion (US$ 132.84 billion) by FY22 from Rs. 4 trillion (US$ 61.79 billion) in FY17 at a CAGR of 16–17%.
The Government is also planning to increase public health spending to 2.5% of the country’s GDP by 2025. India’s competitive advantage also lies in the increased success rate of Indian companies in getting Abbreviated New Drug Application (ANDA) approvals. India also offers vast opportunities in R&D as well as medical tourism. To sum up, there are vast opportunities for investment in healthcare infrastructure in both urban and rural India.
THE FUTURE OF IT
The global sourcing market in India continues to grow at a higher pace compared to the IT-BPM industry. India is the leading sourcing destination across the world, accounting for approximately 55% market share of the US$ 200-250 billion global services sourcing business in 2019-20. In fact, in the past few years, Indians, as well as Indian-origin execs, increasingly made their presence felt in the global business world, with many of them spearheading global roles in some of the world’s biggest companies.
This year saw Parag Agrawal, Twitter; Anand Eswaran, Veeam Software; and Arvind Krishna, IBM Group joining the growing power club of Indian-origin executives helming US-based global multinationals.
The IT industry accounted for 8% of India’s GDP in 2020. According to STPI (Software Technology Park of India), software exports by the IT companies connected to it stood at Rs. 1.20 lakh crore (US$ 16.29 billion) in the first quarter of FY22.
The IT & business service industry’s revenue was estimated at — US$ 6.96 billion in the first half of 2021, an increase of 6.4% YoY. The export revenue of the IT industry is estimated at US$ 150 billion in FY21. According to Gartner estimates, IT spending in India is estimated to reach US$ 93 billion in 2021 (7.3% YoY growth) and further increase to US$ 98.5 billion in 2022. The BPM sector in India currently employs >1.4 million people, while IT and BPM together have >4.5 million workers, as of FY21.
India’s software services exports (excluding exports through commercial presence) increased by 4% in FY21 compared with FY20 and are estimated at USD 133.7 billion during 2020-21.
The Indian software product industry is expected to reach US$ 100 billion by 2025. Indian companies are focusing to invest internationally to expand their global footprint and enhance their global delivery centres. In line with this, in February 2021, Tata Consultancy Services announced to recruit — 1,500 technology employees across the UK over the next year. The development would build capabilities for TCS to deliver efficiently to UK customers.
As of FY21, the IT industry employed 4.5 million people.
The data annotation market in India stood at — US$ 250 million in FY20, of which the US market contributed — 60% to the overall value. The market is expected to reach — US$ 7 billion by 2030 due to accelerated domestic demand for AI.
Indian IT’s core competencies and strengths have attracted significant investment from major countries. The computer software and hardware sector in India attracted cumulative foreign direct investment (FDI) inflows worth US$ 74.12 billion between April 2000 and June 2021. The sector ranked 2nd in FDI inflows as per the data released by the Department for Promotion of Industry and Internal Trade (DPIIT). Japanese investments in the Indian IT sector grew 4X between 2016 and 2020. Investments stood at US$ 9.2 billion in the review period.
Leading Indian IT firms like Infosys, Wipro, TCS and Tech Mahindra are diversifying their offerings and showcasing leading ideas in blockchain and artificial intelligence to clients using innovation hubs and research and development centres to create differentiated offerings.
India is the topmost offshoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. The Indian IT and business services industry is expected to grow to US$ 19.93 billion by 2025.
In November 2021, Piyush Goyal, Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, lauded the Indian IT sector for excelling its competitive strength with zero government interference. He further added that service exports from India has the potential to reach US$ 1 trillion by 2030.
THE STATE OF SCIENCE
India is likely to take a leading role in launching satellites for the SAARC nations, generating revenue by offering its space facilities for use to other countries.
As of November 2021, the number of universities in India stood at 1,019.
India now ranks 46 among 50 countries in the Global Innovation Index (GII); this is an improvement from the 48th position in 2020. The Government is extensively promoting research parks technology business incubators (TBIs) and (RPs), which would promote the innovative ideas till they become commercial ventures.
India’s gross expenditure in R&D was forecast to reach US$ 96.50 billion in 2020. By 2022, R&D expenditure is targeted to reach at least 2 per cent of the country’s GDP. The engineering R&D and product development market in India is forecast to post a CAGR of ~12% to reach US$ 63 billion by 2025, from US$ 31 billion in 2019.
IT spending in India is estimated to reach US$ 93 billion in 2021 (7.3% YoY growth) and further increase to US$ 98.5 billion in 2022.
The Union Budget 2021-22
Under the Union Budget 2021-22, the government announced an allocation of Rs. 14,794.03 crore (US$ 2.02 billion) to the Ministry of Science and Technology. The Department of Atomic Energy has been allocated Rs. 18,264.89 crore (US$ 2.50 billion). The Department of Science and Technology (DST) has been allocated Rs. 6,067.39 crore (US$ 831.63 million). The Ministry of Earth Sciences was allocated Rs. 1,897.13 crore (US$ 260.03 million).
The Road Ahead
India is aggressively working towards establishing itself as a leader in industrialisation and technological development. Significant developments in the nuclear energy sector are likely as India looks to expand its nuclear capacity. Moreover, nanotechnology is expected to transform India’s pharmaceutical industry. The agriculture sector is also likely to undergo a major revamp with the government investing heavily for a technology-driven Green Revolution. The Government of India, through the Science, Technology and Innovation (STI) Policy-2013, among other things, aspires to position India among the world’s top five scientific powers. Indian Space Research Organisation (ISRO) will launch its first Indian human mission by 2022.
India initiated a landmark policy called Science, Technology and Innovation Policy 2020 with the core vision of being decentralized, evidence informed, bottom-up, experts-driven, and inclusive. The policy aims to bring-in the concept of ‘dynamic policy’ with a robust policy governance mechanism incorporating features such as periodic review, policy evaluation, feedback, and adaptation, and a timely exit strategy for various policy instruments.
STAYING POWER OF INDIA’S ECONOMY
2021 was a strange year. We had a devastating second wave between March-June, but an equally roaring recovery from it, and ended the year on a positive note. Against that backdrop, how are we projecting economic growth in 2022 for India? According to The International Monetary Fund (IMF), India will be the world’s fastest-growing economy in fiscal 2022, with a growth of 8.5% from 9.5% in 2021 and, thus retaining its GDP growth rate irrespective of other major world economies like US 5.2%, Euro area 4.3%, and China 5.6%. The strong performance by India and China will lift the growth for “emerging and developing Asia” to 6.3%.
Unveiling the data in October 2021, the IMF said that New Delhi’s financial plan predictions were constant with accomplishing the Reserve Bank of India’s (RBI) inflation target. India’s central bank and regulatory body under the jurisdiction of the Ministry of Finance has also maintained its GDP growth target for this year at 9.5%.
On the other hand, Goldman Sachs in November forecasted India’s GDP to grow to 9.1% year-on-year in 2022 from 8% in 2021, following a sharp contraction of 7% in 2020, driven by consumption. Driven by a rise in core inflation as manufacturers pass on input cost increases to consumers, considering demand recovers as the economy recovers fully, the international banking giant predicted consumer price index (CPI) inflation to rise up to 5.8% year-over-year (YoY) in 2022 from 5.2% in 2021.
According to their report, the Reserve Bank of India (RBI) is currently in the second stage of liquidity tightening as part of its four-stage monetary policy normalization, which commenced with dovish comments from the Monetary Policy Committee (MPC) members.
The study observed that the apex bank would continue to exit the extraordinary monetary accommodation which has been in force since the beginning of the pandemic.
So what is helping India become the fastest-growing economy? As per Chief Economist of the International Monetary Fund, Gita Gopinath, “The Indian economy has already faced many challenges concerning the financial market, even as the pandemic continues to linger. The Indians are doing well in terms of vaccination rates, and that’s certainly helpful.”
According to another report in Gulf News, Suresh Kumar, Chairman of the consultancy Tricolour Values Group and the Indian Business & Professional Council (IBPC) Dubai said, “There is now a well-articulated strategy, a strong intent, and some positive early results in manufacturing across 13-odd sectors. Of course, manufacturing is long-haul and there are - and will be - challenges. But the country is clearly and consensually set on this course and attracting the top sectoral names in the world through a well-crafted PLI (Production Linked Incentives) scheme. This is half the battle won and created the momentum for a multiplier effect.”
In its Trade and Development Report 2021, United Nations Conference on Trade and Development (UNCTAD) said that although India’s economy grows 7.2% in 2021, the second-highest in the world after China, the growth will slow down to 6.7% in 2022.
“Given the inherent fragilities in coping with the pandemic and restoring employment and incomes, growth in 2021 as a whole is estimated at 7.2%, insufficient to regain the pre-Covid-19 income level,” UNCTAD stated.
Finally, the forecast expects “Food inflation has remained muted in recent months driven by subdued vegetable prices and has also benefited from the high base effect of last year.”