Middle-Income Trap: Can IGP Be India's Way Out?

The World Development Report 2024 highlights a critical issue: emerging economies like India risk being caught in the 'middle-income trap,' where stagnant productivity and weak innovation hinder their transition to high-income status.

- V. SHUNMUGAM, PRADIPTARATHI PANDA & RASMEET KOHLI

Despite a thriving ecosystem of new-age technology companies (NATCs) in technology, renewable energy, and artificial intelligence, many struggle to access domestic capital markets, limiting their ability to scale and compete globally.

Reflecting on the report's findings, Sebi's 2019 redesign of the institutional trading platform into the Innovators Growth Platform (IGP) comes to mind.

IGP supports new-age companies across high-growth sectors by relaxing compliance norms, streamlining listing requirements and allowing easier public capital access. This aligns with WDR's advocacy to foster innovation and reduce barriers to capital.

To support high-growth sector firms, IGP's eligibility criteria mandated that qualified institutional buyers hold at least 25% of pre-IPO equity shares. This was aimed at lending credibility to IGP-listed firms that are open to investment by individuals earning at least ₹50 lakh annually, or with ₹25 crore net worth, as well as body corporates and family trusts with the same net worth.