The International Monetary Fund (IMF) on 9 July confirmed that global supply chain diversification is delivering measurable benefits to India, with gains most visible in electronics manufacturing — even as the Fund urged New Delhi to sustain structural reforms to keep the momentum going.

What the IMF Said

Julie Kozack, Director of the IMF's Communications Department, speaking at the Fund's regular press briefing in Washington, said the evidence is clear. 'We do see evidence of supply chain diversification benefiting India,' she said, adding that 'the gains so far have been concentrated in some specific sectors, most visibly in electronics.'

Kozack cited a striking headline figure: India's electronics exports 'rose by 24 per cent in fiscal year 2025-26', with smartphones now ranking among the country's largest export products. She also noted that much of the production surge has been driven by domestic players rather than foreign capital. 'Much of this increase in production for exports appears to be happening through domestic contract manufacturers rather than foreign direct investment,' she said.

India's Growth Outlook

Kozack reaffirmed the IMF's broader view that India remains among the world's top-performing major economies. 'India is one of the fastest growing economies in the world. It remains a key engine of growth for the world,' she said.

According to the IMF's latest World Economic Outlook update released on Wednesday, India's economy is projected to grow 6.4 per cent in fiscal year 2026-27, rising further to 6.7 per cent in 2027. The Fund also assessed that India's risk outlook is now more balanced than it was earlier in the year.

The Viksit Bharat Question

Asked whether India's current growth pace would be sufficient to achieve its goal of becoming a developed nation by 2047 — the Viksit Bharat vision — Kozack said the bar is high. 'Achieving developed nation status would require India to continue to have very high, sustained high growth levels over a long period of time,' she said, noting that outcomes would also depend on factors such as population growth and currency movements.

Reforms Needed to Hold the Gains

The IMF official acknowledged that India has already made 'significant progress in structural reforms in recent years', pointing to the implementation of a new labour code, new trade agreements and deregulation at the state level. However, she said continued effort is essential.

To sustain its trajectory, India would need to push ahead on strengthening workforce skills, increasing labour market flexibility, reducing business compliance costs and deepening trade integration. 'We encourage India to build on this progress,' Kozack said.

This comes amid a broader global realignment of supply chains, with companies reducing dependence on single-country manufacturing bases. Government initiatives including the Production Linked Incentive (PLI) schemes and sustained investment in manufacturing infrastructure have helped India capture a share of that shift across electronics, semiconductors and renewable energy equipment. How much more it can capture will depend on how quickly reform commitments translate into ground-level execution.