Economic Trends and Data Analysis

India’s changing economic profile

Since 1990, India has developed a much larger economy, higher average incomes and stronger international trade and investment links. Its economic structure has also changed: services now contribute a greater share of output, while agriculture contributes a smaller share.

Different measures reveal different parts of this change. GDP measures the size of the economy; GNI per capita helps indicate average income; sector shares show what activities generate output. Trade and foreign investment show how the economy connects with other countries.

A larger economy and higher average income

Gross domestic product (GDP) is the total value of goods and services produced within a country in a year. India’s GDP increased from approximately US$320 billion in 1990 to US$3.55 trillion in 2023. A trillion is 1,000 billion, so the later figure is US$3,550 billion: roughly eleven times the 1990 value.

Gross national income (GNI) per capita measures average income per person. GNI includes net income received from abroad, and dividing it by population produces the per-capita figure. India’s GNI per capita rose from about US$380 in 1990 to US$2,540 in 2023—roughly 6.7 times its earlier value.

Together, these figures show both a larger economy and increased average income. However, an average does not reveal how income is distributed: some people earn much more and others much less. These dollar-value comparisons also do not mean that production or purchasing power increased by exactly the same multiples, because prices and exchange rates can change.

From agriculture towards services

Economic activities are commonly grouped into three sectors. The primary sector obtains raw materials, including through farming and mining. The secondary sector manufactures goods and carries out construction. The tertiary sector provides services, including transport, retail, banking and telecommunications.

India’s output figures are reported as agriculture, industry and services. These are useful broad groupings, although they are not identical to the three-sector classification: for example, mining is a primary activity but is often included within industry in economic statistics.

The largest structural change was towards services. Their contribution rose by about 11.9 percentage points, while agriculture’s fell by about 11.9 percentage points. Industry’s share remained broadly stable. By 2023, services generated more than half of India’s GDP.

A sector’s share describes its importance relative to the whole economy, not the absolute amount it produces. Agriculture could produce more than before but still have a smaller share if services grew faster. Similarly, a stable industrial share in a much larger economy does not mean that industrial output stood still.

Output and employment are also different measures. Agriculture accounted for about 43% of employment in 2019, so it remained a major employer even as its share of GDP declined. Economic change therefore does not mean that farming has become unimportant to people’s livelihoods.

Expanding imports and exports

Exports are sold abroad; imports are bought from abroad. India’s trade expanded substantially between 1990 and 2020.

Exports became roughly sixteen times larger, while imports also became roughly sixteen times larger. Imports exceeded exports in both years. In 2020, the difference was US$90 billion, indicating a deficit in the trade represented by these figures. Expanding trade does not necessarily mean that exports exceed imports.

India’s major exports include petroleum products, gems and jewellery, pharmaceuticals and transport equipment. Major imports include crude oil, gold, electronic goods and machinery. Importing crude oil while exporting petroleum products illustrates how processing can add value before a product is sold abroad.

Important export destinations include the USA, UAE, China, Hong Kong and Singapore. Important sources of imports include China, the USA, UAE, Saudi Arabia and Iraq. Some countries appear in both lists because trade moves in both directions, often involving different products.

Growing foreign direct investment

Foreign direct investment (FDI) involves a business investing in operations in another country, for example by acquiring a company or establishing a factory. It differs from trade: purchasing imported machinery is not, by itself, foreign ownership of an Indian business.

Inward FDI enters India from overseas. Annual inflows increased from approximately US$0.2 billion in 1990 to US$28.07 billion in 2020. Investment has gone into services, computer software and hardware, telecommunications and trading, as well as manufacturing activities such as automobiles, electrical machinery and textiles.

Major countries of origin include Singapore, the USA, Mauritius and the Netherlands. A concrete example is Google’s announcement in 2022 of a US$1 billion investment in Bharti Airtel, an Indian telecommunications company. This shows both the origin and the type of investment.

Investment also moves outwards as Indian businesses expand abroad. Outward FDI rose from about US$0.6 billion in 1990 to US$13.88 billion in 2023. India has therefore become both a destination for overseas investment and a source of investment elsewhere.

Showing trade with proportional flow-line maps

A proportional flow-line map combines where trade goes with how much trade moves. The arrowhead points towards the destination, while the width represents the value or quantity traded. A wider arrow means a larger flow—not a longer journey.

The demonstration below uses fictional countries and invented export values to show the method. It is not a map of India or a record of observed trade.

Suppose fictional Country A exports goods worth US$10 billion to B, US$20 billion to C and US$40 billion to D in one year. With a width scale of 1 mm for every US$10 billion, the arrows are 1 mm, 2 mm and 4 mm wide. All point away from A because these are its exports.

Country D receives the largest export flow: four times the value sent to B and twice the value sent to C. The arrows reveal this relationship immediately, even though their lengths differ. A connecting line represents a trade link; it need not show the actual shipping route.

To apply this method to India, locate India and its trading partners on a simple base map, use partner-specific trade values for the same year, and choose one consistent width scale. Include a title, year, units and a width key. Export arrows point away from India; import arrows point towards it. If both are shown, use clearly distinguished colours and a key.

India’s total imports and exports, or a list of its main partners, cannot determine the widths of individual partner flows. Those require values for each connection. Keep the map uncluttered and explain any omitted smaller flows. Such a map helps identify the largest links and their directions, but it does not by itself explain why those links developed.