India’s Productivity Challenge: The Competitiveness Transformation India Needs for Pathway to 2047

Business Wire India

Highlights

• The State of India's Competitiveness Report was released on 11.05.2026 by the Institute for Competitiveness (IFC). In the run-up to its release, the Institute engaged in a series of high-level conversations across leading academic and policy institutions, spanning Stanford University, the University of Akron, Northeastern University and Harvard Kennedy School as part of a broader global dialogue on India's economic trajectory, the future of competitiveness, and the policy imperatives of a world in flux.
• The report, featuring a foreword by Chief Economic Advisor to the Government of India, V. Anantha Nageswaran, offers a comprehensive, data-driven examination of India's competitive landscape across its core factors of production.
• The report offers a comparison of India against advanced and emerging economies across six dimensions: productivity, human capital, financial systems, infrastructure, innovation, and environmental resilience.
• The report identifies four transformations (4Ts) as essential imperatives for India's journey to Viksit Bharat.

The State of India's Competitiveness Report was released on 11.05.2026 by the Institute for Competitiveness (IFC). In the run-up to its release, the report catalysed a series of substantive engagements across leading institutions as part of a broader global conversation on India's economic trajectory, the future of competitiveness, and the policy imperatives for a world in flux.

The report, featuring a foreword by Chief Economic Advisor to the Government of India, V. Anantha Nageswaran, arrives at a pivotal moment as India charts its path towards becoming a developed economy by 2047. In his foreword, Mr. Nageswaran notes that the report serves as "a useful stocktaking; identifying structural gaps, benchmarking performance, and anchoring the conversation about India's economic future in measurable, comparable data rather than assertion."

Key Engagements in the Lead-Up to the Report's Release:

On April 7, 2026, Prof. Amit Kapoor delivered a talk on "The Rise of the Startup Ecosystem in India and Its Societal Impact" at Bishop Auditorium, Stanford University. The talk was followed by a discussion with Dr. Richard Dasher, discussing the massive changes in India's market structure and evolving dynamics, highlighting how the startup ecosystem is reshaping both economic and social outcomes at scale.

On April 13, 2026, Prof. Kapoor delivered the University of Akron School of Law's prestigious Oldham Lecture “Policy, Economic Development and Competitiveness: What the Populist Moment Reveals About Growth and Governance" at the University of Akron, Cleveland, Ohio. Drawing on his work in global competitiveness, he situated recent political upheavals not as isolated events but as signals of deeper economic and institutional change, challenging conventional assumptions about what drives growth and exploring how technological shifts, including AI, are redefining talent, skills, and opportunity in the global economy.

On April 15, 2026, Prof. Kapoor delivered a talk to the Mason Fellows at Harvard Kennedy School; a programme that counts among its alumni 14 heads of state and Nobel Peace Prize laureates sharing his perspectives on India's economic growth journey, public policy, and the larger global role India can play to the mid-career leaders. He was also in a fireside conversation with Dr. Mark Esposito, Faculty Associate at the Centre for International Development, Harvard Kennedy School, Boston, on the theme of "How Technology is Remaking Global Power Dynamics and the Role of India in a World in Flux." The discussion, held at Harvard Kennedy School in partnership with the India Caucus, examined India's competitive positioning at a moment of global technological and geopolitical realignment.

Honorary Chairman of the Institute for Competitiveness, Prof. Amit Kapoor, said: "In 2022, Prof. Michael Porter, Prof. Christian Ketels, and I set the roadmap for the Economic Advisory Council of the Prime Minister (EAC-PM) and asked where India needed to go. This current report asks whether India's structural competitiveness foundations are strengthening in ways that allow the country to attain its vision for 2047."

Dr. Mark Esposito, Faculty Associate, Centre for International Development; Berkman Klein Venter and IQSS said: “This report gives India's innovation ambition something it has always deserved, which is a rigorous, honest, and forward-looking map of where the foundations are strong and where they need to go next.”

Productivity and Prosperity

The report places the bridging of the productivity gap at the centre of India's competitiveness agenda. India's GDP per capita stands at USD 2,397, below peer emerging economies such as Brazil (USD 9,567) and Vietnam (USD 4,018). While India has sustained a labour productivity CAGR of 3.76% between 2010 and 2024, output per worker of USD 5,964 remains significantly below that of both advanced economies and emerging peers. Alongside this, the report discusses the challenge of advancing social progress to build a more durable foundation for productive growth and long-term prosperity.

Financial Systems

Banking and financial systems enable productive investment, capital allocation, and economic growth. Non-food credit grew at an 11.73% CAGR between 2013-14 and 2024-25, gross NPAs fell to a two-decade low of 2.3% by March 2025, and near-universal financial inclusion has been achieved with 89% adult account ownership and UPI now active across multiple countries. Yet domestic private sector credit at ~50% of GDP remains well below China (170%), the US (220%), and Vietnam and Australia (120%). MSMEs, which represent over 90% of enterprises and ~30% of GVA, face an estimated credit gap of ₹20-30 lakh crore. This carries implications for enhancing the efficiency and quality of capital allocation.

Human Capital

Gaps in education, health, and skills risk undermining its productive potential. Mean years of schooling stand at 6.88, below advanced economies and most emerging peers, with learning outcomes weakening sharply by Grade 9. Health expenditure at 3.31% of GDP lags China, Brazil, and most advanced economies. On skills, only 3.74% of those aged 12–59 have received vocational or technical training, and 88% of the workforce remains in low-competency occupations. Women account for 42% of STEM graduates but hold only 14% of STEM jobs. With a Brain Drain Index of 4.8 and an outbound-to-inbound student mobility ratio of 28:1, converting demographic scale into productive capability remains the central human capital challenge.

Innovation Capacity

Enhancing a country’s innovation capacity requires sustained investment in knowledge creation to raise total productivity. India ranks 38th on the WIPO Global Innovation Index 2025 and has been an innovation overperformer for 15 consecutive years. However, R&D expenditure remains at 0.65% of GDP; researcher density is among the lowest; corporate R&D intensity among the top 2000 companies is low; only 4 innovative clusters drive the economy; and the startup ecosystem faces a conversion bottleneck from validation to scale, accompanied by low and concentrated investment.

Physical infrastructure

India has made significant strides in enhancing its physical infrastructure, from road connectivity to digital infrastructure, and its rise in the world’s renewable landscape. India has reduced logistics costs to around 8% of GDP. However, persistent gaps remain. Per capita electricity consumption is low at 1,182 kWh, transmission losses stand at 14%, and despite 82% population coverage of 5G, urban-rural digital divides and cyber vulnerabilities affect the quality of infrastructure.

Environment and Sustainability

The report has identified environmental sustainability as a core determinant of long-term competitiveness and examines five dimensions – natural endowments, water stress, carbon intensity, waste and circularity, and climate commitments through the lens of productivity, investment, and market access. India has progressed by achieving 52.57% non-fossil energy capacity early, reducing carbon intensity, and committing, through its updated NDC, to 60% non-fossil capacity and a 47% emissions-intensity reduction by 2035. However, gaps in water governance, industrial decarbonisation, and circularity remain.

The Four Transformations

The report concludes by identifying four transformations the 4Ts essential for India's journey to Viksit Bharat: Talent Development (converting demographic scale into productive human capital and social progress); Technological Evolution (translating digital reach into AI-enabled productivity); Transforming Existing Innovation Ecosystems (moving from fragmented innovation to a scaled industrial and investment ecosystem); and Transition to Climate-Resilient Growth (shifting from linear growth to climate-consistent and circular competitiveness).

The report can be looked at https://competitiveness.in/state-of-competitiveness-in-india/

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For more information, contact: Sheen Zutshi (sheen.zutshi@competitiveness.in)

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