India has emerged as the fourth-largest economy in the world by nominal GDP, overtaking Japan—a historic moment that underlines the shifting axis of global economic power. As per the IMF’s April 2024 World Economic Outlook, India’s GDP stood at $3.73 trillion, ahead of Japan’s $3.67 trillion.

This isn’t merely symbolic. For a nation that ranked 10th just a decade ago, the climb reflects a decade of sustained structural reforms, resilient domestic consumption, and favourable global macroeconomic tailwinds. While Japan grapples with demographic stagnation and deflationary pressures, India’s youthful economy is expanding in breadth and productivity.  Source: IMF World Economic Outlook 

From 5th to 4th: India’s Economic Ascent

India moved from the 5th spot in 2022, when it overtook the UK, to the 4th spot in under three years. This leap is significant because nominal GDP rankings are affected not just by real output but also by currency movements and inflation dynamics.

India’s growth story was buoyed by a 6.5 %+ real GDP growth rate, an expanding services sector, and domestic demand that remained resilient in the face of global shocks. In contrast, Japan’s economy contracted in late 2023 and early 2024, registering two consecutive quarters of negative growth, pushing it into a technical recession.

Structural differences between the two economies played a key role. While Japan has long relied on export-driven manufacturing, India’s services-led economy expanded with minimal global dependence, providing a growth buffer during global slowdowns. 

Metric	India (2024)	Japan (2024)
Nominal GDP (USD Trillion)	3.73	3.67
Real GDP Growth Rate (%)	6.5	1.3
Population (Billion)	1.43	0.124
GDP per Capita (USD)	~2,600	~29,000
Inflation Rate (%)	~5.0	~2.8
Fiscal Deficit (% of GDP)	5.8	6.3
Debt-to-GDP Ratio (%)	83	263

Sources: IMF, Statista, World Bank, Economic Times

The 5 Economic Engines Behind India’s Rise

1. Demographic Advantage

India’s demographic dividend is not just about size—it’s about timing. Over 65% of its population is working age (15–64), compared to just 59% for Japan. While Japan’s population is declining from 128 million in 2010 to under 124 million today, India recently became the most populous nation, surpassing China.

This demographic energy drives consumption, boosts productivity, and keeps healthcare and pension burdens low—something Japan has struggled to manage. By 2050, India is expected to contribute more than one-sixth of global workforce additions, a critical factor for sustainable GDP growth.

2. Resilient Domestic Demand & Services-Led Growth

Unlike Japan, which relies heavily on exports, India’s economy is consumption-driven, with nearly 60% of GDP coming from domestic consumption. Due to rapid digital adoption, sectors like IT services, financial services, e-commerce, and telecom have flourished.

India’s digital public infrastructure, including Aadhaar, UPI, and DigiLocker, has unlocked economic value by improving efficiency, reducing leakage, and creating inclusive systems. Services exports now exceed $325 billion annually, with IT and BPO services commanding over 50% share globally. Source: Livemint

3. Fiscal Management and Capital Expenditure

India has maintained a delicate balance between fiscal expansion and fiscal prudence. While the fiscal deficit remains high (~5.8%), much is directed towards capital creation, not subsidies. Government capex for FY24 reached a record ₹11.1 lakh crore, emphasizing infrastructure, railways, defence, and digital connectivity.

In contrast, though historically effective, Japan’s massive stimulus packages have ballooned its public debt to over 260% of GDP, limiting future fiscal maneuverability. India’s investments create long-term productive capacity, while Japan increasingly relies on monetary easing.

4. Currency Stability and the Weakening Yen

The Japanese yen has depreciated significantly, falling below ¥155 per USD in May 2024, its weakest in decades. This has eroded Japan’s nominal GDP when measured in dollar terms. Meanwhile, the Indian rupee, although volatile, has remained relatively more stable.

Nominal GDP calculations are sensitive to exchange rates. India’s stable rupee and better inflation targeting have given it a relative edge in dollar-based rankings. A stable INR also attracts more portfolio and FDI inflows, reinforcing GDP growth.

5. Global Geopolitics and Supply Chain Realignment

India has strategically positioned itself as a China+1 alternative, especially in electronics, semiconductors, and pharmaceuticals. The Production-Linked Incentive (PLI) schemes and improved Ease of Doing Business have supported this.

Japan, which pioneered many high-end manufacturing industries, is losing ground as companies look to diversify production bases. India, meanwhile, has emerged as a manufacturing hub for Apple, Samsung, and global auto giants.

India attracted $71 billion in FDI in FY23, with continued interest from sovereign wealth funds, VC firms, and industrial giants. 

The Road to Becoming the Third-Largest Economy

Germany currently ranks third with ~$ $5.1 trillion GDP. India needs to bridge a gap of around $1.4 trillion, which it could achieve by 2027 or 2028 if it maintains its current growth rate and avoids currency shocks.

Key to this transition will be:

• Accelerating manufacturing and exports 
• Investing in human capital and skilling 
• Strengthening urban infrastructure 
• Driving green energy adoption
  

As Anand Mahindra aptly remarked, India’s rise is not just about numbers—it signals what’s possible when aspirations meet execution. Source: NDTV

Challenges That Must Be Managed

Despite this milestone, several headwinds remain:

• Job creation hasn’t kept pace with GDP growth, especially in manufacturing. 
• Wealth disparity and rural-urban divides are widening. 
• Regulatory uncertainties, especially in tech and finance, need policy clarity. 
• Per capita income remains low, which could dampen consumption in the long term.
  

These challenges, if left unaddressed, could derail the momentum.

India Has Arrived, But the Journey Continues

India surpassing Japan is a marker of a new global reality: emerging markets are not just catching up but leading. India’s climb to the 4th spot reaffirms its potential, but its next phase, towards inclusive and sustainable growth, will be the actual test of leadership.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Introduction

India and Oman are close to finalizing a landmark Free Trade Agreement (FTA) that could recalibrate economic ties between South Asia and the Gulf. Talks, which began in earnest in May 2023, are now down to resolving one final issue: Oman’s policy of “Omanisation,” which aims to prioritize local employment.

From the perspective of trade, foreign direct investment (FDI), and strategic depth, this FTA has wide-ranging implications for both bilateral ties and India’s ambitions in the Gulf and the broader Indian Ocean region.

A Quick Look: India-Oman Economic Ties

India and Oman have long shared economic and strategic interests. Bilateral trade stood at $12.39 billion in FY23, with India exporting $4.48 billion of goods to Oman and importing $7.91 billion, primarily oil and gas (Source: Ministry of Commerce, India). Oman is India’s third-largest trading partner in the Gulf after the UAE and Saudi Arabia.

What Is the India-Oman FTA?

A Free Trade Agreement (FTA) between India and Oman would eliminate or reduce tariffs on various goods and services. Talks are being held under the Comprehensive Economic Partnership Agreement (CEPA) framework, similar to India’s agreements with the UAE and Australia.

According to government sources cited in CNBC-TV18 and The Economic Times, negotiations have been largely successful, with the apparel, pharmaceuticals, engineering goods, and chemicals sectors expected to benefit significantly.

The ‘Omanisation’ Roadblock

Despite strong progress, one issue remains contentious: Oman’s “Omanisation” policy, which mandates companies operating in Oman to reserve a particular share of jobs for Omani nationals. India, with its large expatriate workforce in the Gulf (approximately 6.5 million Indians work in the region, as per MEA data), is seeking greater flexibility in labor mobility and employment quotas for Indians.

As per Financial Express, India is pushing to allow a wider job window for Indian workers, particularly in sectors like construction, healthcare, and hospitality.

Economic Gains: What’s at Stake?

1. Boost to Indian Exports

India’s apparel exports to Oman could rise sharply. A report from Fibre2Fashion suggests the FTA could tilt apparel trade in India’s favour, as reduced tariffs would help Indian textile manufacturers compete with China and Turkey, which currently dominate the Omani market. 

Statista said India’s textile exports stood at $44.4 billion in FY23. A successful FTA with Oman could open access to Oman’s $80 billion economy and its trade partners across the Gulf. 

2. Investment and Infrastructure

Oman’s investment in Indian strategic infrastructure has been rising. The Duqm Port, where India has access under a bilateral MoU, is a key example. An FTA will likely facilitate more Gulf capital into Indian infrastructure and manufacturing sectors, aligning with India’s Make-in-India and PLI initiatives.

3. Energy Security

India imports significant quantities of oil and LNG from Oman. A preferential trade framework could reduce energy costs, a major boon given India’s dependency on Gulf oil. Lower tariffs on LNG and petrochemical products will benefit Indian refiners and downstream users.

Challenges Ahead

1. Omanisation and Labour Rights

India’s concern about Oman’s workforce policy is valid. Oman wants to safeguard local employment amid rising unemployment rates among its youth, which stood at approximately 18% in 2023 (World Bank). India will have to negotiate exceptions or phased implementation for sectors heavily reliant on Indian workers.

2. Trade Balance Risks

While Indian exports may rise, the trade deficit could persist unless India’s non-oil exports grow faster. India must ensure that tariff lines for high-value sectors like electronics and precision instruments are favorably negotiated.

3. Gulf Competition

India already has a CEPA with the UAE and is negotiating similar deals with Saudi Arabia and the Gulf Cooperation Council (GCC). Any delay in the Oman deal could see India lose market share in Oman to regional rivals.

Strategic Significance

This agreement isn’t just about economics. Oman holds a strategic location at the mouth of the Persian Gulf, near the Strait of Hormuz, through which over 20% of global oil trade passes. A deeper trade and investment pact enhances India’s maritime and regional security posture.

Moreover, as Oman modernizes its economy under Vision 2040, the FTA aligns well with both countries’ future growth ambitions.

The Way Forward

With just the Omanisation policy remaining as the final sticking point, both sides are expected to arrive at a mutually beneficial labor mobility clause—possibly a quota-based system or sector-specific carve-outs for Indian workers.

India must also ensure that non-tariff barriers (NTBs), standards, and certification systems are harmonized to ease the flow of goods.

A successful FTA will enhance India’s standing in the Gulf, support domestic manufacturing, and strengthen geopolitical alliances in the Indo-Pacific region.

The India-Oman Free Trade Agreement is more than a bilateral deal, its a strategic and economic milestone. With the Gulf increasingly becoming a pivot in India’s foreign policy, this FTA could help consolidate India’s regional influence while driving trade, jobs, and energy cooperation. The final step is delicate, but the gains on the other side make it worth the effort.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Introduction

After years of economic brinkmanship, the US and China have agreed to a 90-day suspension of additional tariffs, signaling the first serious step toward de-escalating a trade war that has distorted global markets and eroded trust in the rules-based trading order. 

While this is not a final resolution, it’s a critical economic breather for two superpowers under increasing pressure from their slowing economies. But what lies ahead for global markets, and more importantly, how does India position itself in a world where giants pause rather than pull out?

Key Deal Terms at a Glance

• Tariffs on ~$360 billion of goods will be suspended for 90 days.
• Talks to resume on contentious issues like IP theft, tech transfers, and state subsidies.
• Reciprocal tariff negotiations will begin under mutual audit mechanisms.

“We’re committed to creating a level playing field, but not at the cost of domestic manufacturing,” said US Treasury Secretary Scott Bessent during the announcement (Times of India, May 12, 2025).

Tariff History: A Recap

Year	Total US Tariffs on China	Chinese Tariffs on US Goods
2018	$50 billion	$34 billion
2019	$360 billion	$110 billion
2023	$280 billion	$120 billion
2025	Tariffs paused	Tariffs paused

What Prompted the US-China Tariff Truce?

The temporary ceasefire is driven not by diplomacy but by necessity. Both economies are grappling with internal slowdowns that retaliatory tariffs have amplified.

In China, falling exports (down 5.3% YoY in April 2025) and a declining manufacturing PMI (49.2) suggest that factories run below capacity. The US, meanwhile, is facing sticky inflation (Core PCE at 2.8%) and flatlining industrial output, with a Q1 GDP growth of just 1.6%. Continued tariffs threatened to accelerate this deceleration.

The Geneva meeting, hosted under WTO oversight, was a rare admission by both sides that the current trajectory could lead to mutual economic damage, perhaps even recession.  The pressure was also geopolitical for Beijing, with supply chains increasingly rerouting through Southeast Asia. With an election year ahead, containing cost-of-living issues became a political imperative for Washington.

What the Deal Means for the US Economy

For the US, this 90-day truce is a calculated economic pivot. The trade war may have reduced the trade deficit with China (from $418 billion in 2018 to $279 billion in 2023), but it has also inflated costs for American businesses and consumers. An estimate by the Federal Reserve suggests that tariffs raised consumer prices by an average of 0.5 percentage points between 2019 and 2023.

Pausing tariffs now helps ease price pressures on imports like machinery, electronics, and furniture, categories where China still dominates US sourcing. It also gives breathing room to small businesses that rely on Chinese components but have struggled to find alternative suppliers.

The US wants to reassert its tech dominance in terms of investment, especially in semiconductors and clean energy. A prolonged tariff war risked triggering capital flight or foreign backlash just as the US tries to onshore key manufacturing industries. Hence, the truce also buys time for domestic capacity-building under the CHIPS and IRA Acts.

What the Deal Means for China 

For China, the deal is both a lifeline and a warning. The export engine that powered three decades of double-digit growth is sputtering. Exports to the US dropped nearly 14% in 2024, with global firms shifting assembly to Vietnam, Mexico, and India. The real risk for Beijing is tariffs and the erosion of trust in Chinese supply reliability.

The truce enables China to restore momentum in industrial production and protect jobs in export-heavy provinces like Guangdong and Zhejiang. It also offers the Communist Party breathing space ahead of the July 2025 Party Congress, where economic performance will heavily influence leadership credibility.

Yet, this is not a return to normal. The US insists on talks over IP theft, forced tech transfers, and state subsidies—pillars of China’s industrial policy. Accepting structural changes would hurt state-run enterprises; rejecting them could reignite the trade war. For China, the truce signals vulnerability and the need to rethink its growth model.

Implications for Global Markets

Short-Term Stabilization, Long-Term Uncertainty

Markets rallied on news of the truce—Hang Seng surged 3.8%, the S&P 500 gained 2.3%, and the MSCI World Index turned positive after weeks of flatlining. The optimism, however, is tactical, not structural. While global logistics costs (Baltic Dry Index +4.4%) and commodity prices may normalize, investors remain wary of the deal unraveling.

WTO projects global trade growth at just 1.7% in 2025, signaling that any recovery will likely be fragile. The uncertainty will keep supply chain diversification alive as companies seek “China-plus-one” sourcing strategies regardless of tariff status.

Implications for India

1. India’s Export Dreams on Hold?

India had hoped the US-China decoupling would redirect supply chains toward its shores. While it did see gains in chemicals, electronics, and engineering goods, they have not matched Vietnam or Mexico in scale. India’s exports to the US grew by 8.7% in 2024, but Vietnam’s rose by over 24%.

With tariffs paused, global firms may hesitate to move further out of China. The biggest risk is that India may compete with a resurgent China for the same export pie.

2. Investment Outlook: Still Tepid

FDI inflows to India fell to $49 billion in FY24, down from $59 billion in FY23. Tariff-related uncertainty had sparked optimism for India’s role as an alternate hub, but the truce may cool that momentum. Moreover, India remains only a partial substitute for China’s scale and efficiency without labor law reform and logistics upgrades. 

Sectoral Gainers & Losers in India

India needs more than proximity and scale to convert global trade flux into a long-term advantage. It needs predictability. That means: 

1. Trade Diversification Impact

India hoped to benefit from US-China decoupling, but the truce may slow relocation.

• In 2023-24, Vietnam’s exports to the US rose by 24%, while India’s rose just 8.7% (UN Comtrade).
• FDI inflows into India fell to $49 billion in FY24, down from $59 billion in FY23. 
• The US is India’s largest trading partner (bilateral trade of $118.2 billion in FY24), but no structured trade pact like RCEP or the Indo-Pacific Economic Framework exists.

2. Sectoral Winners and Losers 

Sector	Outlook	Reason
Electronics	Negative	Delay in relocation from China may hurt PLI program goals
Textiles	Negative	Orders may return to China, hitting the Tiruppur & Surat clusters
IT Services	Positive	As trade shifts to digital, Indian firms gain from stable US demand
Pharma	Neutral	India still depends on Chinese APIs; the tariff pause doesn’t change that
Renewables	Slightly Positive	Diversification from Chinese solar panels may continue, albeit more slowly

3. Export & Import Sensitivity

India’s exports to China and the US represent about 25% of total outbound trade.

• India’s top exports to the US are gems, textiles, and pharma.
• India’s top exports to China: Iron ore, chemicals, and electronics. 

Any reset in US-China trade flows will inevitably squeeze margins and shift priorities of global buyers.

India’s Strategic Way Forward

1. Accelerate FTA Negotiations

India’s ongoing talks with the UK and EU must be fast-tracked. Without tariff leverage, India risks being boxed out of supply chain shifts.

2. Revive Manufacturing Push

PLI schemes in electronics and auto components must focus on value addition and not just assembly.

3. Ease of Doing Business

India ranks 63rd in the World Bank’s Doing Business Index. For India to win global trust, red tape must be minimized, and infrastructure (especially ports and logistics) must be scaled.

4. Push for Trade Tech

AI, blockchain-led trade logistics, and digital clearance can give India a competitive edge in compliance and delivery reliability. 

India must act urgently. The 90-day window isn’t just for the US and China—it’s India’s chance to recalibrate before the trade tables are redrawn again.

Conclusion

The US-China trade deal isn’t a resolution—it’s a timeout. But for the rest of the world, it signals that economic superpowers can’t decouple without damage. For India, this is a reminder that opportunities in global trade are rarely handed over. They must be earned through reforms, speed, and strategic clarity.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

India’s services sector showed resilience in April 2025, with the S&P Global Services Purchasing Managers’ Index (PMI) climbing to 60.8, up from 61.2 in March. While the figure remains comfortably above the 50-mark that separates growth from contraction, the real surprise came from another corner: business confidence slumped to its lowest level in two years.

This divergence between output strength and sentiment reveals deeper undercurrents in India’s services economy. Growth persists, driven by robust demand and healthy new orders. However, firms are growing cautious about the road ahead. Here’s what the data tells us—and why it matters.

April 2025 Services PMI Snapshot 

Indicator	April 2025	March 2025
Services PMI (S&P Global)	60.8	61.2
New Business Orders	↑ (Strong)	↑ (Strong)
Input Cost Inflation	↑ (High)	↑ (High)
Employment Creation	↑ (Modest)	↑ (Modest)
Business Confidence	↓ (2-yr low)	↓

What’s Driving Growth in the Services Industry?

1. Robust Domestic Demand

The increase in new business orders—particularly from domestic clients—played a key role. Indian consumers spend on sectors like finance, real estate, IT services, and hospitality, even as global demand remains tepid. According to S&P Global, service providers saw the fastest intake of new work in three months.

2. Resilient Hiring Trends

April saw a modest but sustained uptick in employment. This suggests service firms are preparing for continued demand, despite their reservations about long-term prospects.

3. Strong Input Activity

Companies reported increased input costs due to higher labor, fuel, and material expenses. Yet, they were able to pass some of these costs onto clients, indicating decent pricing power.

Why the Confidence Dip?

Despite rising output and orders, business sentiment fell to its lowest since March 2022. This seems paradoxical, but several reasons explain the drop:

1. Inflationary Concerns

Persistent input cost inflation is biting into margins. Any further surge in energy, logistics, or wage costs could hurt profitability for firms already operating on tight spreads.

2. Global Economic Uncertainty

Firms remain wary of potential global slowdowns. With geopolitical tensions (such as the US-China tech standoff and Mideast instability) weighing on trade, Indian service exporters—especially in IT and business process outsourcing—face uncertain prospects.

3. Political Caution

With general elections underway, firms may delay investments and capex decisions, awaiting clarity on future policy direction. This is especially relevant for infrastructure-dependent sectors like logistics and telecom.

Economic Interpretation: Short-Term Momentum, Medium-Term Caution

From an economist’s lens, the current PMI print offers a nuanced picture:

• Short-Term: The services economy remains a pillar of India’s near-term growth. High-frequency indicators like GST collections, air travel, and e-commerce volumes have increased well into April.
  
• Medium-Term: The drop in confidence could act as a self-fulfilling prophecy. If firms expect slower growth, they may reduce hiring, cut back on expansion, and avoid risk—all of which may temper the broader recovery.
  

Contribution to GDP

Services account for roughly 53% of India’s GDP (Statista, 2024). With manufacturing showing mixed trends and agriculture under pressure from El Niño, services are the economy’s anchor in FY25. Any loss of momentum here will have outsized implications.

Advantages 

1. Digital Services Boom

India’s digital services exports crossed $250 billion in FY24 (Source: RBI), led by SaaS, fintech, and cloud services. Continued digitization and AI adoption could sustain this growth.

2. Urban Consumption Recovery

Rising urban employment and disposable incomes are supporting domestic consumption. This helps sectors like travel, hospitality, and entertainment, even if rural demand lags.

3. Policy Support

The government’s Production Linked Incentive (PLI) schemes for telecom and IT hardware could indirectly benefit services through ancillary demand.

Key Challenges Ahead

1. Cost Pressures

With input cost inflation staying elevated, services firms may face margin compression. Wage costs are a significant concern for sectors like IT and consulting.

2. Export Headwinds

Slow recovery in the EU and potential stagflation in the US may hurt India’s IT and BPO exports. Visa restrictions and rising protectionism could also impact the talent flow.

3. Hiring Plateau

While hiring rose modestly in April, the momentum is not broad-based. A slowdown in tech hiring, especially by large IT firms, could dampen employment-driven consumption.

The Way Forward

Despite the continued momentum in services output, the dip in business confidence presents a strategic dilemma for policymakers, investors, and corporate leaders. To sustain growth while reviving sentiment, the following factors will shape the road ahead:

1. Addressing Cost Inflation Pressures

One of the primary concerns driving pessimism is rising input costs, particularly in sectors like transport & logistics, IT services, and finance. The RBI’s monetary tightening pause gives breathing space, but:

• Policy support like input tax credits, targeted MSME relief, and supply-side logistics reforms can help.
  
• Services firms must optimize pricing strategies to pass on costs without affecting demand, primarily in price-sensitive segments like travel, retail, and customer service.
  

2. Strengthening Job Creation in High-Value Services

April’s employment uptick in services is positive, but job quality and sectoral disparity remain issues. IT and financial services continue to hire cautiously, while hospitality and tourism are rebounding:

• The government could incentivize digital upskilling and investments in AI-driven platforms, especially for rural service jobs.
  
• Focusing on formalizing the gig economy, which is currently powering last-mile services, will improve sentiment and productivity.
  

3. Monetary and Fiscal Coordination

If confidence continues to erode, it could impact private sector investments and consumer spending. The RBI, while maintaining a cautious tone, must consider:

• Forward guidance clarity to reduce uncertainty in borrowing and investment decisions.
  
• Coordination with fiscal authorities to frontload infrastructure spending, particularly on service enablers like ports, highways, and digital connectivity.
  

4. Boosting Global Competitiveness

India’s net services exports are robust, but global demand volatility (especially in IT and consultancy services) could weigh down future optimism.

• Diversifying export markets beyond the US and Europe will be key.
• Encouraging cross-border collaboration in healthcare, fintech, and ed-tech could open new channels for service growth.

5. Rebuilding Business Confidence through Policy Stability

Policy flip-flops—especially around e-commerce, data privacy, and gig worker regulations—have introduced unpredictability for services enterprises.

• A stable, long-term policy framework with clear digital regulations, tax norms, and labor policies will revive sentiment.
• Streamlining compliance and incentivizing capital formation in service clusters (e.g., GIFT City for financial services, or animation hubs for media) could help anchor investments.

Strategic Takeaway

India’s services sector is expanding, but this growth is walking a tightrope. The momentum could falter unless business confidence is restored through thoughtful fiscal and regulatory support. This is a time for investors to watch topline growth numbers and sentiment indicators like future output expectations, capex intentions, and PMI new business sub-indices.

Conclusion

India’s services sector is still growing, but confidence is faltering. April’s PMI print captures this dissonance. Policymakers, business leaders, and investors should not ignore sentiment indicators, as they often precede real economic inflection points.

While April was a month of strong output, the coming quarters will test the resilience of India’s service-based growth model in a shifting global and domestic environment.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.