Where the world economies are struggling with declining birth rates, tight labour markets and an ageing population, India is standing at the cusp of an unprecedented opportunity—all thanks to its demographic.

With the world's largest youth population¹ with the median age of 28.4 years², India is not only strengthening its competitive advantage but also setting trends in consumer and discretionary spending. According to EY, India will have 1.04 billion working age persons by 2030, highest of any large economy.³

So, what is a youth? As defined by the National Youth Policy, the population in the age group of 18-29 years is considered youth. India has over 371.4 million youth, as per 2021 census projections, making up for approximately 27% of the total population.⁴

Imagine a country where half of the population is in its prime working years. Here, innovation meets ambition as the youthful workforce is poised to redefine global growth. That's India for you.
 

What makes India an attractive destination for global investors?

India's large young population, commonly referred to as a "demographic dividend", is crucial in making it an attractive destination for global investors. It won't be wrong to say that today's young generations are tomorrow's innovators, creators, builders and leaders; and they can be a positive force of change and development if provided with skill development, knowledge and possibilities. That's where the opportunity lies for the global investors. Access to a vast pool of trained and trainable workers can create opportunities for future economic growth and increased purchasing power.

More than four in 10 people in India are under 25 years old⁵. For investors seeking expansion opportunities, this offers a substantial pool of potential workers across various industries, including technology, manufacturing and services.

India would continue to be the world's largest provider of human capital. Global consultancy EY pegs that 24.3% of the incremental global workforce over the next decade will come from India.⁶

As this younger generation further enters the workforce and earns disposable money, it will continue to support domestic spending in various businesses. A large youth population also frequently and predictably results in increased rates of entrepreneurship and innovation.
 

How do demographics play a crucial role in shaping India's investment potential?

A young population can help India's economic growth and innovation since it represents a larger workforce with the potential for improved productivity and increased consumer demand. India's demographics offer various advantages for investors, notably among which are:

1. A trained workforce boosts economic prosperity with the potential to boost economic output, innovation and productivity in the nation.
2. A rising young population increases demand for products and services, driving economic activity.
3. A young population that openly embraces technology breakthroughs and invests in digital infrastructure can help India overcome development challenges and become a global technological leader.
4. Investments in infrastructure, especially in metropolitan and rural areas, are crucial to tapping and promoting the potential for productivity and economic growth among the nation's youth.
    

How does the youthful population of India support the country's economic expansion?

India's "demographic dividend" rises from a decline in total fertility rates, resulting in fewer youth dependents and a larger workforce. This demographic dividend offers India a distinctive opportunity for economic development, with the young population ensuring sustained growth and prosperity.

India's booming IT and BPO services export story is a testament to its ability to capitalise on demographic advantages. It has the largest pool of English-speaking science, technology, engineering and mathematics (STEM) graduates of an estimated two million. Thereby providing a competitive edge over other regions.⁷ The nation will have nearly 18 million STEM graduates by 2027, a sign of India's growing influence in the science and tech sector.⁸

According to the All India Higher Education survey, women constituted 42.6% of total STEM graduates in 2021-22, which makes a compelling argument for inclusive development and gender equality.⁹ Although we have a substantial pool of female STEM graduates, it remains underutilised mainly because women either do not join the mainstream workforce or drop out early in this field. This presents an opportunity not only for the government and policymakers but also for investors to foster equitable growth.

India boasts more than 1,70,000 DPIIT-recognised startups, solidifying its position as the third-largest startup ecosystem globally.¹⁰ The government is committed to improving skilling and employment prospects nationwide, acknowledging the crucial role of youth in fostering economic growth and innovation. The Ministry of Skill Development and Entrepreneurship (MSDE)'s Annual Report for 2023-24¹¹ underscores the urgent need for reforms in the skilling and entrepreneurship landscape of the country. It also outlines policies and initiatives to enhance skill development and address the employment gap among India's burgeoning youth population.

India's expanding middle and upper-middle classes are driving a larger consumer market. Notably, India's youthful population, characterised by a low median age, represents a significant potential consumer base. Increasing urbanisation and the rise of digital literacy and e-commerce are also fuelling the demand for consumer products and services in urban areas. Projections estimate that consumer expenditure in India will reach $4.3 trillion by 2030, up from $2.4 trillion in 2024.¹²
 

How can global investors leverage India's demographics for long-term success?

Global investors can harness India's demographics for sustainable growth by concentrating on consumption-driven sectors, manufacturing, infrastructure and the expanding middle class. They should also focus on workforce development and collaborate with the government for policy support. Investors can take advantage of India's demographics by:

1. Leveraging consumption trends like e-commerce and fintech, the digital revolution, rising internet access and the youth's strong online engagement, there is immense potential for online shopping and financial services. The expanding middle class and urbanisation also contribute to an increasing demand for food delivery and home services.
2. Investing in infrastructure development, which is strongly supported by the government, through investments in roads, ports and logistics.
3. Review and invest in sectors with long-term potential, such as financial services and healthcare. As the youth enters the workforce, financial service industries like banking and insurance are anticipated to grow. The healthcare sector will also remain a significant investment opportunity as the young workforce assumes caregiving roles for the ageing population.
    

A combination of demographic advantages, intentional government initiatives and a committed focus on innovation and sustainability characterises the rise of India. India is capitalising on its youthful population and is well-positioned to navigate the complexities of the global economy, fostering a successful and inclusive future for its citizens, thereby cementing its role as a key player on the global stage.