New Delhi, March 18 (IANS) India is rapidly climbing the global economic ladder and will likely overtake Germany to become the world’s third‑largest economy by the end of the decade but sustaining that rise will require a sharper focus on manufacturing, job creation and artificial intelligence, a new report has said.

The Boston Consulting Group said in the report that India will soon overtake Japan in nominal gross domestic product to become the world’s fourth‑largest economy, adding that the country must solve some structural challenges to sustain growth.

The consultancy highlighted the decline of manufacturing as a key concern, noting the sector’s share in GDP fell from 17 percent to 13 percent over the past decade. The firm pointed out that each new manufacturing job from a company generates more than two additional jobs across the economy, while service‑sector hiring has a much smaller multiplier effect of usually one additional job.

By targeting manufacturing growth in sectors that combine job potential and manageable automation risk such as precision equipment, specialty chemicals, pharma intermediates, electronics assembly and textiles, India can create expansion with less capital compared to peers, the report noted.

The report also highlighted distribution inefficiencies in the agriculture sector where farmers capture only 25 per cent of what consumers pay for their produce, limiting rural income growth despite India's overall economic expansion.

"Success will require partnership and a coordinated approach between companies and governments. Companies that embed AI into their operating models, and demonstrate returns, will define the next phase of competitive advantage," the report noted.

The report called for Indian companies to treat AI deployment beyond experimentation but as a strategic imperative, stressing that the country has the technical talent to drive the shift.

“India's goal to become a high-income economy requires making cities more liveable by investing in urban infrastructure, affordable housing, and mass transit that serves the entire population,” the report further said.

—IANS

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