For decades, India's appeal to foreign businesses was largely straightforward: access to a large and growing consumer market. That opportunity remains — but it is no longer the whole story.
Consider smartphones. In 2018, India was a major net importer of the consumer tech item, incurring a trade deficit of around $US20 billion. In less than a decade, the economy has become an important manufacturing and export hub, running an annual trade surplus in smartphones of close to $US10 billion.
Carl Kingston, ANZ Country Head India, said this highlights a broader shift in India's role in the global economy.
"The way companies think about India is changing. Historically, the conversation centred on India's consumer market," he said.
"Increasingly, we're seeing India discussed as part of broader decisions around production, technology capability, sourcing, talent and supply-chain resilience. That's a fundamentally different role in the global economy."
Growing
The smartphone industry is the clearest example, but not the only one. For manufacturers, India's appeal increasingly extends beyond domestic demand.
For both production and exports, India’s attractiveness as an investment destination is improving as companies diversify production networks and reduce supply concentration risks.
This is a shift likely to persist, according to ANZ Economist Dhiraj Nim.
"There is a clear focus to secure supply of critical industrial inputs for a large domestic market, but India is increasingly eyeing global demand,” Nim said.
"Growth in export segments like electronics, pharmaceuticals and a multitude of business services testify to these shifts. As global firms look to build more resilient and diversified supply chains, India is increasingly being viewed as part of the solution."
Part of the story
A similar shift is unfolding in services and technology.
According to a Zinnov-nasscom report, India now hosts more than 2,100 global capability centres (GCCs) employing around 2.4 million people, reflecting its growing role in global business operations. RBI data show services exports are approaching $US450 billion a year, and rapidly diversifying beyond India’s traditional forte of information technology services.
India hosts nearly half of the world's GCCs, according to an EY report, and their role is evolving. Many now lead product development, engineering, AI, analytics and innovation rather than back-office functions. The EY report says 92 per cent of GCC leaders believe their centres now drive enterprise-wide transformation beyond cost arbitrage.
For multinational companies, the benefits extend well beyond India. GCCs help organisations access specialised talent, scale innovation and improve productivity across their global operations.
Nim said this trend is likely to accelerate.
"We expect GCCs in India to continue moving up the value chain, taking on more strategic responsibilities in areas such as artificial intelligence, product development, engineering and enterprise innovation," he said.
"As that trend continues, GCCs are likely to play an increasingly important role in India's services exports, productivity growth and integration into the global knowledge economy."
The next phase of GCC growth is likely to be shaped increasingly by artificial intelligence.
According to EY, many GCCs are evolving into 'intelligent GCCs' that are AI-native, data-driven and designed to play a larger role in enterprise decision-making and value creation. More than 80 per cent of GCCs are already scaling generative AI initiatives, while 58 per cent are investing in agentic AI capabilities.
That shift is reflected in India's broader technology ambitions. A recent NITI Aayog roadmap suggests India's technology services sector could triple in size from $US265 billion today to as much as $US850 billion by 2035, driven by AI, innovation-led engineering, digital infrastructure and a greater focus on intellectual property and platform-based business models.
This points to a growing role for India in the development of products, platforms and intellectual property, rather than simply the delivery of technology services.
"While the AI boom presents a significant opportunity to boost productivity and growth it will also need to be managed carefully," Nim said. “Ensuring people have the skills and support to adapt will be key to capturing its full economic potential.”
Scale & strategy
India's size often dominates discussions about the market. But scale alone does not determine outcomes.
India comprises 28 highly diverse states, each with very different industry strengths, supply chains, infrastructure and talent pools.
For example, the Uttar Pradesh region now accounts for around 65 per cent of India's mobile phone production and 55 per cent of electronics component manufacturing, while Gujarat has emerged as India's leading semiconductor investment hub.
For many companies, choosing the right location can be more important than the initial decision to enter India.
Kingston said companies that succeed often focus on a specific geography, industry cluster or customer segment before expanding more broadly, rather than attempting a nationwide approach from day one.
"One of the most common mistakes companies make is treating India as a monolith," he said.
"Success often comes from understanding India's industrial geography. Different states increasingly compete on infrastructure, talent and policy support, so choosing the right ecosystem can be just as important as choosing India itself."
What it means
What this means is the India opportunity is broadening for Australian and New Zealand businesses.
Exports remain important, but opportunities increasingly extend into advanced manufacturing, technology, energy transition, critical minerals and supply chain partnerships.
The Australia-India Economic Cooperation and Trade Agreement (ECTA) has helped support those connections.
Since its introduction in 2022, the agreement has been widely adopted by Indian exporters, with around 86 per cent of eligible exports to Australia benefiting from preferential tariff treatment, underscoring a strong commercial uptake.
Priority sectors across the Australia-India corridor include clean energy, agribusiness, education and tourism, while collaboration is also expanding into critical minerals, advanced manufacturing, semiconductors, digital technologies and supply-chain resilience.
For Kingston, this highlights the importance of businesses approaching India with clearly defined objectives.
"The businesses achieving the greatest success in India tend to be very clear about the role it plays in their strategy," he said.
"A decade ago, many India strategies were primarily focused on revenue growth. Today, it is also a strategic capability hub."
Kingston said the practical question for businesses is no longer whether India is relevant to their business, but how is it relevant.
"Increasingly, the conversation is about where India sits in a company's production network, supply chain or capability strategy,” he said. “That's a very different discussion than we had ten years ago."
Joy Kam is a contributor at ANZ Institutional Insights
