Chief Economic Adviser (CEA) V. Anantha Nageswaran on Thursday, 24 September 2026 said India must urgently strengthen its manufacturing base, attract greater foreign direct investment, and future-proof its workforce for an AI-driven economy if the country is to realise its goal of becoming a developed nation by 2047. He was addressing the 13th SBI Banking & Economics Conclave 2026 in Mumbai.

Key Challenges on the Road to Viksit Bharat

Nageswaran outlined a demanding external environment facing India's development ambitions. He cited rising geopolitical tensions, the weaponisation of global supply chains, climate-related uncertainties, and intensifying competition from China's manufacturing sector as the principal headwinds. He stressed that both the public and private sectors must fundamentally rethink existing approaches and adapt to a rapidly shifting global economic order.

According to the CEA, building resilience while sustaining high economic growth will be the central challenge for India's long-term development strategy. Notably, this comes at a moment when India is widely regarded as one of the world's fastest-growing major economies, yet its structural transformation from a services-dominated to a more balanced economy remains incomplete.

Manufacturing and Services Must Grow Together

Nageswaran was emphatic that India cannot afford to treat manufacturing and services as competing priorities. He argued that both sectors must expand simultaneously to underpin sustainable, broad-based growth. Manufacturing, he said, will play a decisive role in diversifying India's growth drivers and enhancing economic security.

Pointing to a specific structural concern, the CEA noted that India's goods trade deficit — excluding oil and gold — remains at around 3.5–4 per cent of GDP, signalling the urgent need to deepen domestic manufacturing capabilities. Crucially, he warned that indigenisation efforts must go beyond mere import substitution and must be paired with a sharper focus on export competitiveness.

Attracting Investment: What India Must Do

On foreign investment, Nageswaran acknowledged that India faces stiff competition from advanced economies in the race for global capital. He called for stronger policy frameworks at both the national and state levels, flagging four specific priorities: greater tax certainty, a simpler regulatory environment, stronger investor protection, and reliable access to skilled talent. He added that these measures are not optional add-ons but prerequisites for sustained FDI inflows.

Supply Chain Resilience and Strategic Buffers

Beyond large-scale industrial capacity, the CEA advocated the creation of strategic buffers in critical commodities and the development of domestic capabilities in smaller but essential components that could become supply-chain bottlenecks during global disruptions. He cautioned that resilience cannot be built through big-ticket capacity alone — policymakers and businesses must systematically map vulnerabilities across supply chains and prepare contingency plans for potential shocks.

The AI and Workforce Dimension

Nageswaran also underscored the need to prepare India's large and young workforce for an artificial intelligence-driven future. While he did not detail specific skilling programmes, his remarks echo a growing consensus among economists that India's demographic dividend will only translate into sustained growth if the workforce can participate meaningfully in technology-intensive sectors. The clock is ticking: by 2047, India aims not merely to be a large economy but a developed one — a target that requires compounded structural gains across manufacturing, services, investment climate, and human capital.