India’s next phase of industrial growth could be driven by six emerging sectors -- space, semiconductors, data centres, electronics, solar manufacturing and aerospace, according to Jefferies. These six key growth engines could attract substantial investment over the rest of the decade, as policy support and a large domestic market draw greater private sector interest, the brokerage said in a recent note.
In its India Equity Strategy report titled India’s New Industrial Revolution, Jefferies said government's incentive schemes, localisation requirements, tax benefits and the opening of previously restricted sectors are helping create opportunities across these industries. Government measures such as opening the space sector to private companies, semiconductor incentives, localisation requirements, and support for solar and electronics manufacturing are driving greater private sector participation in emerging industries.
Among the biggest opportunities is data centres. India’s colocation data-centre capacity has expanded fivefold over the past five years to around 2 GW, and Jefferies expects another fivefold increase to about 10 GW over the next five years. The brokerage estimates the expansion could require around $45 billion in facility capital expenditure and create a roughly $9-billion revenue opportunity for data-centre operators. The investment could also benefit construction companies, real-estate developers, power-equipment suppliers, cooling-solution providers and network-infrastructure companies.
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Meanwhile, India’s space economy is targeted to expand about fivefold from 2023 levels to $40-45 billion by 2030. Jefferies said private companies are progressing from early-stage innovation towards commercial execution after the sector was opened to private participation in 2020. It highlighted players such as Skyroot Aerospace, Pixxel, Agnikul Cosmos and Digantara.