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morgan stanley: India set to become 3rd-largest stock market by next decade: Morgan Stanley

India has the potential to drive a fifth of the global growth over the next decade, with market capitalization likely to grow by over 11% annually to $10 trillion, according to global investment bank Morgan Stanley.

Offshoring, investment in manufacturing, and energy transition will lead to an economic boom in India, and these drivers will make it the world’s third-largest economy and stock market before the end of the decade, the investment bank said in its report.

According to the bank, the four global trends of demographics, digitalization, decarbonization and deglobalization are favouring “New India”.

India’s GDP is likely to surpass $7.5 trillion by 2031, more than double the current levels, making it the third-largest economy, adding about $500 billion per annum on an incremental basis over the decade, Morgan Stanley said.

The government’s thrust to push local manufacturing through Make in India is likely to see manufacturing’s share of GDP rise to 21% by 2031, implying an incremental $1 trillion of manufacturing opportunity.

“We expect India’s global export market share to more than double to 4.5% by 2031, providing an incremental $1.2 trillion export opportunity,” the report said.

Digitalization will be another major driving force for India’s growth.

E-commerce gained significant traction during the pandemic as lockdown restrictions curtailed physical buying. Morgan Stanley expects e-commerce penetration to nearly double to 12.3% by 2031.

Internet users in India are seen increasing to 960 million from 650 million, while online shoppers may grow to 700 million from 250 million over the next 10 years.

The other area where India is set to see massive growth is property development.

“India should hit a major inflection point for the next residential property boom in 2030,” Morgan Stanley said.

However, a prolonged global recession or sluggish growth, adverse geopolitical developments, domestic politics, and steep rise in energy and commodity prices could pose risks to these projections, the investment bank said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)


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