India should prepare to shine in future arenas of business growth

The country's talent base and growing market could spell success in 18 new fields of competition

- RAJAT DHAWAN & CHRIS BRADLEY

Predicting the future is perilous, but so is not trying to do so at all. Business leaders always ask themselves what trends are likely to endure and where the next disruption might come from. In most instances, the recent past can offer guidance for the future. In this context, the signals for India are decidedly mixed.

Looking at 2005-20, the McKinsey Global Institute (MGI) evaluated 12 high-growth, dynamic industries that did the most to reshape the global economy in these years. MGI then looked at future 'arenas of competition' that are most likely to drive outsized growth for companies over the next two decades: e-commerce, cloud services, artificial intelligence (AI), semiconductors, cybersecurity, electric vehicles (EVs), shared autonomous vehicles, batteries, streaming video, video games, digital advertisements, non-medical biotech, obesity drugs, robotics, modular construction, nuclear fission, future air mobility and space. Together, these 18 arenas could account for up to $48 trillion in revenues and $6 trillion in profits by 2040.

In the arenas that defined 2005-20, India had few global players, and in 2020, they accounted for less than 1% of the global market capitalization of companies in those arenas. Some of these industries may still present opportunities for India-such as the growth of payments and consumer electronics. However, there is considerably greater potential for Indian firms in arenas of the future.