India's Domestic Demand Sufficient to Drive Start-Up Ecosystem's Growth: CEA Nageswaran

Despite tariffs and geopolitical challenges, India's strong domestic consumption can sustain the growth of its start-ups, said Venkatramanan Anantha Nageswaran, Chief Economic Adviser to the Government of India, on April 3.

“First, India is expected to grow at around 6.5% per annum in real terms over the next several years, translating to a nominal GDP growth of approximately 11%. This strong growth outlook bodes well for corporates, businesses, and start-ups”, said CEA.

Geopolitical conditions are constantly evolving, but what matters most is how India navigates and maintains its stability amid these challenges.

Nageshwaran said, “First and foremost, in the current global scenario, we must count our blessings. India has a robust domestic consumption-driven economy, which provides a strong foundation for growth.”

“Additionally, our services exports are expanding at a faster pace and, in terms of volume, significantly exceed merchandise exports. Given the current focus in the U.S. on merchandise trade, India's services exports are well-positioned to continue performing strongly”, he added.

CEA also highlighted the role of FDI and ensured the necessary steps to facilitate its continued inflow.

“From a macroeconomic perspective, several levers can drive growth. The government can leverage infrastructure, manufacturing, and services as primary drivers. However, it is also essential to recognize that relying on the balance sheet indefinitely is not a sustainable approach”, he added.

Nageshwaran called pension and insurance funds a domestic pool of capital to push the Indian startup ecosystem to go to the next level.

“Our domestic pool of capital, particularly from pension and insurance funds, has the potential to bridge the existing gap. Therefore, the priority should be preparing these institutions to undertake such investments responsibly. This includes enhancing investment capabilities, strengthening the expertise of investment professionals, and improving their ability to assess risks and navigate cost-benefit trade-offs effectively”, added Nageshwaran.

CEA accepted that the approach of implementing technology for India is different from the rest of the world.

He said, “We must deploy technology in a way that complements labor rather than displaces it. Unlike many other countries, India faces unique challenges, but we also have the advantage of an extremely low labor cost base.”