[Scenarios]
India: Facing New Challenges

How can France and Europe fully capitalize on the "Indian moment" that is shaping the 21st century? Both are key players in India's pursuit of a balanced global power dynamic, as India will remain committed to diversifying its partnerships.

Despite India's robust economic growth-6.3% in the last quarter of 2024-the economic relationship between Europe and India remains underwhelming. It is only the EU's ninth-largest trading partner, accounting for just 2.2% of European exports of goods.

The term "untapped potential" frequently describes our relationship with India. Yet European companies are well-positioned to meet some of its needs. The country, despite its macroeconomic successes, still faces classic development challenges. Christophe Jaffrelot and his co-authors delve into these issues in four insightful papers on food security, environmental concerns, industry, and regional disparities.

These papers provide forward-looking scenarios outlining concrete avenues for reflection and opportunities for French and European businesses in specific sectors, while paving the way for a revitalized France-India and Europe-India dialogue.

The coming years are a prime opportunity for Europe to enhance its economic ties with India and establish a robust agenda for collaboration in environmental and agri-food sectors. For both France and Europe, it will be a matter of overcoming points of tension and of taking advantage of the many steps forward in the Europe-India agenda in order to base the relationship on an encouraging and tangible dynamic.

These papers are part of a series of short and medium-term scenarios that outline potential trajectories for certain countries, with the aim of supporting decision-making.

India’s economic trajectory is unconventional, with services dominating GDP while industrialization lags. Manufacturing has declined from 17 percent of GDP in 2010 to 13 percent in 2023, limiting job creation and weakening strategic autonomy. As India seeks to position itself in global supply chains, a key question emerges-will it deepen ties with China or strengthen partnerships with the West?

Despite efforts like "Make in India," results have been mixed. Electronics and pharmaceuticals are growing but remain dependent on Chinese imports, while industries like textiles and automotive struggle to compete internationally. India's economic future could follow two paths: increasing reliance on China or a strategic shift toward diversified partnerships with the West, Japan, and Taiwan. In reality, it will likely strike a balance, maintaining its policy of non-alignment. For Europe, understanding these dynamics is key to forging a resilient and mutually beneficial partnership with India.

▸ Read the full paper [Scenarios] - India : The Challenge of "Make in India"

As Europe deepens its partnership with India-both to hedge against global uncertainties and reduce reliance on China-it must understand India’s internal development dynamics. A one-size-fits-all approach risks overlooking deep regional disparities. Instead, a regionally informed strategy will allow Europe to support India’s industrial transformation while advancing its own economic and geopolitical interests.

India is not a single, homogenous market but a mosaic of distinct economic models. This report examines Bihar, Gujarat, and Tamil Nadu to illustrate these variations. Bihar struggles with underdevelopment, poor infrastructure, and persistent poverty. Gujarat thrives on capital-intensive industrial growth but faces widening inequalities. Tamil Nadu prioritizes human capital investment, fostering inclusive, high-tech-driven growth. These regions reflect broader trends-the North’s economic lag, the West’s industrial dynamism, and the South’s social progress.

India’s regional inequalities are exacerbated by its federal structure, fueling tensions over resource distribution and political representation. For European investors, these differences highlight the need for a tailored engagement strategy. To become a key partner in India’s industrial rise, Europe must invest in the right regions, build long-term relationships, and adapt to India’s evolving political and economic landscape.

▸ Read the full paper [Scenarios] - India : The Challenge of Contrasted Regional Dynamics

Whatever the demographic scenario, India, now the world's most populated country, will see its population continue to grow for another quarter-century. Can it solve or at least alleviate the problem of mass undernutrition it faces today? This challenge persists despite the country's macroeconomic successes and a remarkable increase in agricultural production over the years.

This paper investigates the reasons for India's chronic undernutrition and questions its ability to attain long-term food security. While Indian authorities are working to address both issues, the public policy solutions put forward, despite some successes, tend to reproduce pitfalls without providing lasting remedies. This publication also showcases the trajectories that population and agricultural production curves are likely to follow in India up to 2050, through several scenarios guided by statistical projections.

The authors identify five key areas for action, which offer significant opportunities for collaboration with French and European partners.

▸ Read the full paper [Scenarios] - India 2050: The Challenge of Food Security

Water, air, and forest crises: India's environmental challenges are staggering.The country ranks thirteenth in water shortages, suffers from a surge in premature deaths due to air pollution, and has the second-highest rate of deforestation globally. In 2022, India has also become the third-largest carbon emitter globally, which amplifies the far-reaching implications of the challenges it is facing.

This paper delves into the magnitude of these challenges and reviews local initiatives that are emerging in India to tackle them.

France and Europe, as privileged partners, can play an essential role in supporting India's search for innovative solutions, with a focus on better natural resource management and more effective public policies. The avenues for reflection put forward by the authors highlight potential opportunities for French and European companies.

▸ Read the full paper [Scenarios] - India 2050: The Environmental Challenge

Content updated in February 2025