US-India Corridor: Driving further growth

US-India Corridor: Driving further growth 1

Contents
03 Foreward

04 Executive summary

08 Section 1:

The US-India Corridor is growing,

driven by strong mutual interest

15 Section 2:

How can Indian corporates

succeed in the US market?

24 Section 3:

How can US corporates make inroads

into the Indian market?

38 Conclusion

US-India Corridor: Driving further growth 2

Foreword
The United States-India trade and investment corridor is anticipated to grow at an Investing across borders requires a strategic financial partner as navigating
accelerated pace as the two countries’ trading relationship continues to evolve. international trade can be complex. With a global network and a deep understanding
Both countries, to date, have shared common interests in pursuing innovation and of both US and Indian markets, HSBC is well positioned to facilitate growth. Our
technological advancement and have furthered ties in collaborations and exchanges strength lies in providing tailored financial solutions to businesses of all sizes looking
across various sectors. Innovation and technological advancement will play a role in to expand their operations.
shaping the future of trade relations between both nations.
Our core team has extensive experience and a deep understanding of the complexities
Despite modest historical bilateral trade volumes, the US-India relationship is poised involved in cross-border trade. We offer a comprehensive suite of financial solutions
to move towards deeper and more impressive linkages in capital, talent and tech. The tailored to meet the unique needs of businesses operating in this corridor.
US emerged as India’s biggest trade partner last year. Accordingly, there are several
In this report, we investigate the current state of trade and investment as well as
opportunities waiting to be explored in the ever-evolving global marketplace. The US
the growth opportunities between the United States and India. While the new US
influence in India is a strong competitive advantage helping companies to efficiently
administration will be taking office in January 2025, with potential directional shifts,
develop best in class globally scalable products, combined with a surge in the number
we hope this report is a useful guide for corporate and investors considering the
of Global Capability Centres (GCCs), moving from the US to India
opportunities across this corridor.
For US corporates and investors, finding and securing growth and new opportunities
is becoming increasingly competitive as other economies accelerate and strengthen
their own capacities, capabilities and connections. As a result, we envisage a potential
surge in the number of global corporates from the US looking to take advantage of
India’s broad population and growing consumer market. This changing landscape
could prompt US private and public sector businesses and agencies to monitor new
avenues and partnerships in trade and investments around the world.

US-India Corridor: Driving further growth 3

Executive summary
Trade and investment between India and the United States has been strong under the This report also highlights the key Tier 1 and Tier 2 cities in India that US corporates
current US administration but there is room for growth and more scope for cooperation and investors could consider for growth opportunities in key sectors such as
between the two countries. In trade and investment, the US and India are close semiconductors and electronics, EVs & batteries, pharmaceuticals, and biotechnology.
partners on key metrics:
For Indian corporates and investors, ITC data shows an estimated $55 billion
Š The US is India’s third biggest investor. The US accounted for 9% of all foreign unrealised export opportunity to the US, with key sectors being chemicals, machinery
direct investment (FDI) equity inflows into India in 2023, making it the third largest and electricity, precious metals, plastics & rubber, optical products, as well as
foreign investor in the country with $4.99 billion.1 watches & medical instruments. Indian companies can also find opportunities to
collaborate, research and invest in sectors designated as high priority by the US
Š The US is India’s top overseas FDI destination. India invested $737 million in the US
government: Semiconductors & electronics, EVs & batteries, clean power, clean
in FY23.2
energy manufacturing & infrastructure, heavy industry, and biomanufacturing.
Š Since the early 2020s, both sides have increased trade and cooperation. In FY23,
bilateral trade between India and the US was $128.78 billion, up from $119.48 billion This report also breaks down these key sectors in the states where they are or would
in FY22.3 be most lucrative for investments. Despite various challenges in recent years, the US
economy has remained relatively resilient and the IMF forecasts the US economy
For US corporates and investors, India’s growth trajectory – the International
to grow by 2.6% in 2024 and 1.9% in 2025, which could encourage corporates and
Monetary Fund (IMF) revised India’s GDP forecast for 2024 upwards to 7% and
investors to continue doing business with the US.
it expects a growth of 6.5% in 2025 – continues to offer trade and investment
opportunities. In the longer term for US corporates and investors, India is on track to Overall, the statistics demonstrate potential for further cooperation between the US
grow from being the fifth largest economy today to the third largest by 2030 and its and India across important sectors such as energy transition, advanced technology,
GDP per capita is set to increase from $2,300 to $5,000 by then as well.4 healthcare, human talent and the digital economy. Whilst there is no free trade agreement
(FTA) in place, the US and India have previously signed several agreements to boost
Data from the International Trade Centre (ITC) shows a $30 billion unrealised export
cooperation in areas including defence technology innovation, climate and clean energy.
potential for US to India, with key sectors being jewellery & precious metal articles, motor
The two countries also share strong cultural ties that are flourishing and deepening
vehicles & parts, machinery and electricity, pharmaceutical components, and chemicals.
further, thanks to the influential Indian American community and Indian diaspora.

US-India Corridor: Driving further growth 4

Summary infographics
1. India’s GDP to 2029 is forecast to grow impressively 2. India’s digital economy is growing

India’s GDP Forecast: 2019–2029

12
10
8
Annual % change

6 Fintech: Healthcare:
4
34% CAGR 2022-2025 for 41% CAGR 2022-2025
2
0 digital payments
Š Opportunity size (GMV)
-8
Š Opportunity size (GMV) by 2025: $4B-$5B
-8
-8 by 2025: $46B-$50B
-8
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
4. Several key sector opportunities for US corporates to explore in India
Source: IMF WEO Database, April 2024

Key sector opportunities in India:

3. $55 billion unrealised export potential for Indian corporates into US

Š Digital economy Š Heavy industry

$55 billion
Š Semiconductors and electronics Š Biomanufacturing

Š EVs & batteries Š Clean energy manufacturing

& infrastructure
Source: ITC Export Potential Map (as of November 2024)5 Š Clean power

US-India Corridor: Driving further growth 5

 LADAKH

What are the main Tier 1

JAMMU
& Key Indian cities by GDP contribution
KASHMIR

HIMACHAL

and Tier 2 cities in India?

PRADESH

PUNJAB
UTTARAKHAND

HARYANA
ARUNACHAL
This report highlights eight Tier 1 cities, as well as examples of key Tier 2 cities in India. NEW DELHI PRADESH
$293.6 billion SIKKIM
Tier 1 cities are urban centres with sizeable populations (5 million+) that are key contributors RAJASTHAN UTTAR
PRADESH ASSAM
to India’s economy. The seven states where these Tier 1 cities are based contributed 53% of NAGALAND
BIHAR
India’s GDP in 2020–21.6 These states, with their Tier 1 cities in parentheses, are: MEGHALAYA
MANIPUR

States with their Tier 1 cities AHMEDABAD MADHYA

JHARKHAND TRIPURA
WEST MIZORAM
PRADESH
$310 billion BENGAL
Š New Delhi (Delhi) Š Tamil Nadu (Chennai) GUJARAT
CHHATTISGARH
Š Gujarat (Ahmedabad) Š Telangana (Hyderabad) ODISHA

Š Karnataka (Bangalore) Š West Bengal (Kolkata).

MAHARASHTRA
Š Maharashtra (contains both Mumbai and Pune) MUMBAI
$310 billion TELANGANA
There are eight Tier 1 cities in India currently according to India’s 7th Pay Commission’s classification.
HYDERABAD
Tier 2 cities also have considerable populations (0.5 million – 5 million) and contribute $75.2 billion
notably to India’s economy. This report covers some key examples of Tier 2 cities, such as ANDHRA
KARNATAKA PRADESH
Chandigarh, Coimbatore, Kochi, Jaipur, Nagpur, Mysuru, Trivandrum, and Visakhapatnam.
While they are possibly not as well-known as Tier 1 cities, Tier 2 cities are fast growing in BANGALORE
$110 billion
importance to the national economy.
CHENNAI
There are currently 79 Tier 2 cities in India according to India’s 7th Pay Commission’s classification. $78.6 billion
KERALA TAMIL
NADU
(Officially, Tier 1 and Tier 2 cities are referred to as X and Y cities by India’s 7th Pay Commission).

Source: City Monitor

US-India Corridor: Driving further growth 6

 What are the key states
Key US states by GDP contribution

economically for the US? WASHINTON

The United States of America (US) consists of 50 states, with Washington D.C. a separate MONTANA NORTH MAINE
DAKOTA
federal district under the authority of Congress. Additionally, Puerto Rico is a self- OREGON MINNESOTA
governing commonwealth of the US, and there are several US dependent areas IDAHO NEW YORK
SOUTH WISCONSIN
globally, such as American Samoa and Guam.7 DAKOTA MICHIGAN $2.15 trillion
WYOMING
LOWA
In 2023, the largest five states by GDP contribution accounted for 41% ($11.2 trillion) NEBRASKA
PENNSYLVANIA
NEVADA OHIO
of the US’ entire GDP: California ($3.86 trillion), Texas ($2.56 trillion), New York ($2.15 UTAH ILLINOIS WEST
trillion), Florida ($1.58 trillion) and Illinois ($1.08 trillion).8 HSBC has been in the US since CALIFORNIA COLORADO $1.08 trillion VIRGINIA
KANSAS VIRGINIA
1865, and is present in major American cities including New York, Los Angeles, Chicago, $3.86 trillion MISSOURI
Atlanta, Houston, Seattle, Miami, San Francisco, and Washington DC. NORTH
CAROLINA
OKLAHOMA
ARIZONA NEW MEXICO ARKANSAS SOUTH
CAROLINA
MISSISSIPPI GEORGIA
ALABAMA
TEXAS
$2.56 trillion LOUISINANA
ALASKA

FLORIDA
HAWAII $1.58 trillion

“In 2023, the largest five states by

GDP contribution accounted for 41%
($11.2 trillion) of the US’ entire GDP.” Source: World Investment Report 2024

US-India Corridor: Driving further growth 7

Section 1
The corridor is growing,
driven by strong mutual
interest

US-India Corridor: Driving further growth 8

Global macroeconomic GDP Growth Forecasts: India and US

context 12
India’s GDP Forecast: 2019–2029

10
8

Annual % change
6
Current outlook
4
The global economy is stabilising but remains in a ‘Sticky Spot’, according to the 2
0
International Monetary Fund’s (IMF) World Economic Outlook July 2024 edition9. The IMF
-2
cites factors including persistent inflation, escalated trade tension and policy uncertainty -4
holding the global economy at bay.10 Nevertheless, the IMF projects global economic -6
growth will remain stable in 2024 at 3.2% and 3.3% in 2025 in line with its previous -8
forecast in April 2024.11 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

International trade is recovering, and increased by 1% in the first quarter of 2024

compared to the three months before it. Within this growth picture, services trade
rose 1.5% compared to the fourth quarter of 2023, according to the latest UN Trade US’ GDP Forecast: 2019–2029
and Development’s (UNCTAD) Global Trade Update.12 UNCTAD said that the rebound
7
in global trade was largely thanks to increased exports from China, India and the US.13 6
Whilst trade expanded across several sectors, green energy and artificial intelligence 5

Annual % change
(AI)-related products recorded significant increases. Riding this momentum, UNCTAD 4
3
projects global trade to grow around 2% in the first half of 2024.14
2
1
India’s economy is set to perform well this year. In fact, the IMF revised its forecast
0
upwards to 7.0%, in 2024. The IMF said that the revision highlighted the better than -1
forecasted growth in 2023 and improved prospects for private consumption, particularly -2
in rural areas.15 It further expects the Indian economy to grow by 6.5% in 2025, -3
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
reinforcing a positive trajectory. Despite challenges of inflation and monetary policy,
the US is projected to grow 2.6% in 2024 and 1.9% in 2025.16
Source: IMF WEO Database, April 2024

US-India Corridor: Driving further growth 9

Global macroeconomic FDI Inflows: India and US

context (cont.) 70
FDI Inflows into India: 2013–2023

60

50
FDI inflows

$ billion
40
Whilst global economic activity rebounded to some extent, trade and foreign direct
30
investment (FDI) flows faced challenges. Global FDI inflows declined by 2% to $1.3
20
trillion in 2023, according to the World Investment Report 2024.17 A fall in mergers and
acquisitions (M&A) activity, tighter financing conditions as well as increased geopolitical 10

tensions and economic slowdown dampened investment activity and sentiment.18 0

The outlook for 2024 continues to be challenging, with weaker growth prospects and 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

ongoing trade and geopolitical tensions.19

The US was the largest FDI recipient in the world in 2023, receiving around $311 billion,
which is equivalent to almost a quarter of the global total.20 Four countries accounted FDI Inflows into the US: 2013–2023
for half of total FDI into the US in 2023:21 The Netherlands was the top investing nation
500
followed by Japan, Canada and the UK.22 FDI into the US was heavily concentrated 450
in the manufacturing sector, attracting around 41.2% of all inflows.23 There were also 400
sizable investments in finance and insurance, and wholesale trade.24 350

$ billion
300
Meanwhile, Indian FDI inflows reached $28.1 billion in 2023.25 Mauritius, Singapore, USA, 250
200
Netherlands and Japan were the top five countries for FDI equity inflows into India.26 The
150
top sectors receiving highest FDI inflows were services, testing and analysis, computer 100
software & hardware, trading, telecommunications and automobiles.27 50
0
Trade and investment between India and the US are strong – the US is India’s third 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
biggest investor with $4.99 billion in 2023-2024 (April-March) and India’s top overseas FDI
destination with $737 million between April and June 2024.28 This signals room for growth
Source: World Investment Report 2024
and more scope for cooperation, trade and investment between the two countries.29

US-India Corridor: Driving further growth 10

Strong cultural ties
between the US and
India are deepening
further, boosted by
strong mutual interests
Indian Americans play an important role in US society
Despite its modest size, the Indian American community is well established and
emerging as a significant contributor to cultural, social and economic activities in the
US. Between the period of 2010 and 2020, the Indian American population became
the US’ largest Asian population group, increasing over 50% to 4.4 million people.30
According to a study by Boston Consulting Group (BCG) and Indiaspora, a US-based
non-profit platform, 16 Fortune 500 companies including Microsoft and Alphabet are
led by Indian Americans.31 The study also highlighted that Indian Americans are major
tax contributors, paying 6% of all US taxes.32

In addition to large businesses, around 8% of high-technology US firms and 15% of

Silicon Valley start-ups have Indian American founders. 11% of founders of Top 50
AI start-ups in the US are first generation immigrants from India.33 To highlight their
importance in tech innovation, between 1975 and 2019, the share of US patents with
Indian origin innovators jumped from around 2% to 10%.34 Furthermore, Indian Americans
are also entrepreneurial and are business owners of small and medium enterprises. In the
tourism and hospitality sector, it is estimated that they own around 60% of all US hotels.35
Furthermore, the fields of education, research and knowledge are areas dominated by
the Indian American community. 40% of Indians in the US hold a master’s/doctorate/
professional degree – five times above the national average.36 Around 22,000 faculty
members at US colleges and universities are of Indian origin.37

US-India Corridor: Driving further growth 11

Strong cultural ties between the US and India (cont.)
At the same time, the US is also important for India — it is India’s largest We are witnessing a deepening relationship and evolution in US-India linkages: Since
trading partner and third largest source of FDI for India the early 2020s, both sides have increased trade and cooperation. In FY23, India had
a trade surplus of $28.30 billion with the US.45 In FY23, Indian exports to the US stood
Historically, India has not been a significant target market for US companies and
at $78.54 billion, while American exports to India stood at $50.24 billion.
investors but the US has recently become an important player in India’s economy,
with increasing trade flows. The US accounted for 9% of all FDI equity inflows into Despite modest historical bilateral trade volumes, the US-India relationship is poised to
India in 2023, making it the third largest foreign investor in the country.38 Moving move towards deeper and more impressive linkages in capital, talent and tech. Closer
forward, the South Asian nation has distinct characteristics that could change things. tech linkages include Google’s investments in India, that have established data centres
and made equity investments into Indian tech companies. Another US tech company
Firstly, since 2021 the US surpassed China to become India’s largest trading partner.39
in India is Microsoft, which is focusing on areas including cloud computing, AI and
Secondly, in April 2023 India overtook China as the most populous nation in the
cybersecurity.
world.40 This has significant implications: India has a youthful population with a
median age of 28.4 years and people of work age will reach 68.9% of the total
population by 2030, making it the world’s largest labour force.41 Thirdly, India is set
to become the world’s third largest economy by FY2842 and its stock market is set
to reach a market cap of $10 trillion by 2030 from $4.6 trillion in January 2024.43 This
offers significant trade and investment opportunities for American companies in areas
like consumer goods, automobiles as well as e-commerce and finance.

Additionally, the US and India are cooperating in several areas including investment,
defence and security, education, science and technology, pharmaceuticals and
biotechnology, civil nuclear energy, environment, clean energy, space technology
and applications, health, and research & development. For example, in June 2023,
both countries established the Indo-U.S. Quantum Coordination Mechanism.44
The mechanism seeks to facilitate collaboration in several areas including industry,
academia and government, and progress toward a comprehensive Quantum
Information Science and Technology agreement.

US-India Corridor: Driving further growth 12

Outlook
Trade linkages have been
increasing between the US
and India, despite the lack of
an overall free trade agreement
between them; now is the
time for US and Indian
corporates to make inroads
The US became India’s largest trading partner in 2021, exporting around $50.24 billion46
in FY23. Major imports from the US include petroleum, pearls, precious and semi-precious
stones, coal and coke.

Conversely, India is the US’ ninth largest trading partner with exports totalling $78.54 billion
in FY23.47 As a result, India recorded a trade surplus with the US of $28.3 billion in FY23.
India’s main exports to the US include gems and jewellery, pharmaceutical products, light
crude oil and petroleum, electrical as well as electronics goods, and engineering products.48

US-India Corridor: Driving further growth 13

Outlook (cont.)
Trade agreements Long-term outlook
The US and India do not have a formal free trade agreement (FTA), and unpredictable/ Under the current US administration, both sides have been seeking to boost trade and
non-transparent regulations and tariffs can post key challenges for US exporters in cooperation in key areas like education and defence, with cultural, social and economic
India. Despite this, however, there have been some improvements to the bilateral relations flourishing. Despite the upcoming change in administration, the growing
trading environment in recent years, with the current administration. economic importance of both countries would seem unlikely to undergo significant
change and anticipated growth in bilateral trade and effort to increase India’s trade
Following Prime Minister Narendra Modi’s visit to the US In June 2023, both India and
conduciveness, could indicate a positive long-term outlook for the US-India Corridor:
the US agreed to settle longstanding trade disputes at the World Trade Organisation
(WTO), as well as improve market access, related to products.49 In September 2023, Š Growing economic importance of both countries: The US is forecast to remain
both sides resolved the last dispute regarding US agricultural exports to India. As as one of the world’s largest economies by 2030. It also has a strong business and
part of the resolution, India agreed to reduce tariffs on specific American products, robust legal environment. All of these make the US an attractive destination for Indian
including frozen turkey, frozen duck, as well as fresh blueberries and cranberries in a companies to do business. Similarly, India is set to become the world’s third largest
variety of formats.50 economy by 2030 – home to the world’s largest population (with a growing middle
class) and labour force.
Despite having no FTA in place, both sides are keen to strengthen their partnership
in several areas including in defence and technology cooperation. For example, both Š Anticipated growth in bilateral trade: Through cooperation and agreements in
sides are advancing the creation of investment platforms to lower the cost of capital sectors like technology and education, US-India bilateral trade is anticipated to grow in
and speed up deployment of greenfield renewable energy, battery storage and the coming years. Under the current administration, both sides have pledged to increase
emerging green technology projects in India.51 bilateral trade with each other to $500 billion by 2030, up from the current $128 billion in
2022–23. India is also working to improve its business environment as well as its trade
In January 2024, the US and India agreed to strengthen trade ties and work to conduciveness: for instance, India launched a National Logistics Policy (NLP) in 2022
deepen cooperation in areas such as critical minerals, supply chains, and trade in and a Foreign Trade Policy (FTP) in 2023 to enhance its export volumes.54
high-tech products under the India-US Trade Policy Forum.52 53 Under the current US
administration, both side reiterated their commitment to address bilateral trade concerns
including agricultural and non-agricultural goods, intellectual property and services.

US-India Corridor: Driving further growth 14

Section 2
How can Indian
corporates succeed
in the US market?

US-India Corridor: Driving further growth 15

Overview and trends
Building on the sector
opportunities presented
by the US as a major global
economy and India’s
key trading partner, as
well as Indian American
community’s strengths
The US is a major player in the global economy with several attractive
features for foreign investors
The US has several characteristics that make it an attractive destination, including its
position as the largest advanced economy consumer market in the world, the ease of
doing business in the country, a wide talent pool and diverse workforce, a range of
natural resources as well as the availability of a wide range of funding sources.55

US-India Corridor: Driving further growth 16

Overview and trends (cont.)
The US economy is forecast to be worth $28 trillion in 2030, making it the world’s Within the US, HSBC offers Innovation Banking, a specialised division providing
second largest economy.56 At the same time, India is forecast to be the world’s third financial services to high-growth technology companies. The division offers products
largest economy by 2030. Both sides are looking to increase bilateral trade to $500 billon.57 and services to start-ups and scale including debt and equity financing, working
Factors including a large consumer market, a stable business environment and access capital solutions and advisory services.
to financial resources make the US a key market of interest for Indian and other
Š Natural resources: As the third largest country by geographic region, the US is
foreign investors:
resource-rich with minerals including coal, copper, lead, molybdenum, phosphates,
Š Large consumer market: The US population was estimated at around 330 million rare earth elements, uranium, bauxite, gold, iron, mercury, nickel, potash, silver,
in 2023. The population is expected to increase by 79 million people by 2060, tungsten, zinc, petroleum, natural gas, timber, arable land.62 The US hosts the
crossing the 400-million threshold in 2058.58 This long-term continued population world’s largest coal reserves with 491 billion short tons accounting for 27% of the
growth makes the US different to other G7 members or developed countries whose world’s total.63 It also has diverse climates and landscapes offering opportunities to
populations are expected to increase only marginally or contract in the coming international companies in the renewable energy sector, from wind to biodiesel.64
decades. The US also remains an affluent country with GDP per capita at $81,69559, Š Financial resources: The US has the largest, most developed, liquid, flexible and
maintaining its status as a key consumer market for Indian goods and services. efficient financial market in the world.65 It is home to global financial institutions
Š Business environment: The US remains an attractive place for business, trade including major banks, asset managers, insurance firms, venture capital and
and investment for Indian corporates. It retains a robust legal and regulatory private equity funds. The vast availability of lenders, intermediaries and investors
environment that makes it easy to open and operate a business. The US also has a makes the US an attractive destination for Indian companies looking for financing,
transparent and predictable legal system, for example, in recent years, it has sought investment or listing via initial public offering (IPO). In the US, HSBC offers products
to enhance the safeguarding of intellectual property rights. and solutions including wealth and personal banking, commercial banking,
private banking, global banking and securities services. For example, HSBC Asset
Š Talent: The country has a diverse, highly skilled and educated workforce
Management offers US-focused funds including the HSBC Radiant U.S. Smaller
that provides top talent for companies in several industries including tech,
Companies Fund, HSBC U.S. Government Money Market Fund and the HSBC U.S.
pharmaceuticals and engineering. It has a developed education ecosystem with
Treasury Money Market Fund.66
world-class universities and educational institutions. Seven US universities hold
positions in the top ten World University Rankings 2024.60 This infrastructure provides Š Leveraging continued positive influence: The continued growth and influence
Indian multinational firms access to talent and facilities to conduct and invest in of the Indian American community is important in encouraging further trade and
research in emerging sectors and technologies. Indian companies invested nearly $1 investment opportunities. They can continue to act as a conduit for enhancing
billion in US innovation initiatives, according to the Confederation of Indian Industry US-India trade linkages via improved ties and exchanges in capital, education,
report released in May 2023.61 talent development and tech.

US-India Corridor: Driving further growth 17

Overview and trends (cont.)
“India’s tech-focused sectors
Š Education and training: In 2023, India surpassed China to become the largest
source of international graduate students in the US for the first time since 2009/10.67

– “new India” – could push up

Both sides can leverage their relations in the education space by increasing
training and research. The US is a favoured destination for higher education
among Indian students, particularly at the master’s level. Indian students constitute
more than 25% of the over one million foreign students studying in the US.68
Indian universities and colleges can continue to collaborate with US educational growth to 6.5% per year and
more than double the economy’s
institutions in further research and deepen knowledge to prompt more trade and
investment. For example, the University of Buffalo signed a five-year partnership
with six Indian Institutes of Technology (IITs) in May 2022.69 Under their agreement,
both sides are cooperating in areas including nanomaterials and nanotechnology,
biotechnology, advanced sensors, photonics and cyber-physical systems including
artificial intelligence.70
size over the coming decade. ”
75
HSBC Global Research
Š Indian American business community: The Indian diaspora is also a major driving
force in the US business scene. 16 CEOs, or approximately 3%, of Fortune 500
companies are of Indian origin.71 These Indian-led companies generate around 5%
(or $978 million) of total Fortune 500 revenue.72 Similarly, in the start-up space,
Indian-origin Americans co-founded 72 out of 648 US unicorns operating in 2024.73
Therefore, the Indian American community can leverage cultural ties for and facilitate
opportunities for Indian entrepreneurs as well as encourage a new generation of
entrepreneurs to enter the workforce or create new start-ups in the US.
Š Tech: The US tech ecosystem remains the largest and most developed in the world.
Indian tech firms like Tata Consulting Service, Infosys and Wipro have established
themselves to become major tech players in the US. They employ hundreds of thousands
of people and contribute strongly to the US economy. As India’s own tech ecosystem
continues to develop, it is estimated to rank third globally (after the US and UK) in
terms of number of leading tech start-ups in 2023.74

US-India Corridor: Driving further growth 18

Overview and trends (cont.)
There are some challenges Indian corporates should consider when looking Š Talent: Retaining talent, especially in specialised or higher-level positions can be
at the US market challenging for foreign firms in the US. The flexibility and changes (like remote-working)
in the labour market or higher salaries at US firms, can make it difficult for Indian firms
Despite growing trade and significant opportunities, there are some challenges for
to attract skilled talent. This can also lead to a shortage of skilled labour in sectors like
Indian corporates to consider.
tech. The US Bureau of Labour Statistics notes that overall employment of software
Š Regulatory environment: The US’ regulatory environment can be complex for Indian developers, quality assurance analysts, and testers is projected to grow 17% from 2023
(and other foreign firms) to navigate. Rules and regulations in areas like tax, product to 2033, faster than the average for all occupations.82 The Bureau notes that many of
safety and environmental standards can vary at local, state and federal level. In 2023, the job openings are expected to result from the need to replace workers who transfer
the US ranked 21 out of 38 countries for tax competitiveness. The US has over 13,000 to different occupations or exit the labour force, such as to retire.83
tax jurisdictions and rates can vary.76 Some states adopt the Streamlined Sales and
Overall potential for further cooperation across various sectors is encouraging
Use Tax Agreement, a cooperative effort to simplify and uniform state and local tax,
whereas other states have a different tax regime.77 Depending on the industry, states The US and India could cooperate in several important fields including energy
can have their own specific regulations. For example, imported plant and animal transition, defence cooperation, advanced technology, healthcare, human talent and
products are subject to federal regulations and states like Florida, California and Arizona the digital economy.
regulate the movement of specific agricultural products across state lines to limit the
The US and India have signed several agreements to boost cooperation in areas that
introduction or spread of pests and plant diseases.78
benefit each other. For example, in June 2023, the US and India established the US-
Š Cost: The cost of doing business in the US can be expensive when compared to India Defence Acceleration Ecosystem (INDUS-X) to facilitate joint defence technology
other developed markets. Costs including taxes, operational, and transportation costs innovation, and co-production of advanced defence technology.84 This involved
can be high. A Manufacturing Institute and KPMG study found that manufacturers several stakeholders including a network of universities, incubators, corporates, think
in the US face higher primary costs relative to other countries, particularly in labour tanks and private investment stakeholders.85
costs.79 In addition, individual, corporate tax and other taxes (including indirect taxes),
Similarly, both sides signed a bilateral space situational awareness arrangement to
foreign-owned companies can face tax either operating as a branch or subsidiary.80
support greater information sharing and cooperation in space in 2022.86 Both countries
Depending on the business structure, this can either lead to increased legal costs, or
also launched the US-India Climate and Clean Energy Agenda 2030 Partnership,
become more prone to lawsuits and claims in the US.81
a high-level partnership that seeks cooperation on strong actions in the current
decade to meet the goals of the 2015 Paris Agreement.87

US-India Corridor: Driving further growth 19

Overview and trends (cont.)
Recent examples of Indian investments in the US

Top ODI destination

The US was India’s top overseas direct investment (ODI) destination with $737 million for FY25 (April–June 2024), according to India’s Department of Economic Affairs.88

$40 billion in investments

Over 160 Indian companies operating in all 50 states (including Puerto Rico and the District of Columbia) generated $40 billion in investments and created or saved around 425,000 jobs in the US in
2023, according to a May 2023 report by the Confederation of Indian Industry (CII).89 Furthermore, in an encouraging sign, 85% of companies surveyed by the CII plan to hire additional local employees
in the next five years, with 83% planning future US investments.90

Top 10 US states for Indian FDI

The top US states that received the most FDI from Indian companies were Texas ($9.8 billion), Georgia ($7.5 billion), New Jersey ($4.2 billion), New York ($2.1 billion), Massachusetts ($1.4 billion),
Kentucky ($908 million), California ($776 million), Maryland ($720 million), Florida ($711 million) and Indiana ($582 million).91

Digital economy
The digital economy accounted for 10% of US GDP, or $2.6 trillion, in 2022.92 The sector created 8.9 million jobs in 2022.93 Tata Consultancy Services, India’s largest IT company, has been active for the
past 40 years in the US and has partnered with more than a third of Fortune 500 companies.94 Wipro, a leading Indian IT company, has over 40 facilities across 23 US states. This includes Wipro’s four
large-scale delivery centres in Dallas, Tampa, Indianapolis and Atlanta, along with an innovation centre in Silicon Valley.95

Pharmaceutical
Outside of the US, India has the highest number of pharmaceutical manufacturing facilities that comply with the US Food and Drug Administration (USFDA).96 India also has 500 Active Pharmaceutical
Ingredient (API) producers that make for around 8% of the worldwide API market.97 Indian pharma firms provided 47% of generic prescriptions and 15% of all biosimilar prescriptions in the US in 2022.98
Medicines from Indian firms saved the US health system around $219 billion in 2022 and $1.3 trillion between 2013 and 2022.99 Indian pharmaceutical companies active in the US include Jubilant Life
Sciences, which has a presence in more than 100 countries and is involved in sales and distribution of advance intermediates, fine chemicals and APIs in the US.100

Automotive
The US automotive ecosystem contributes around $1 trillion into the economy and accounts for nearly 5% of GDP.101 The sector employs 9.7 million people, or around 5% of private sector
employment.102 This provides ample opportunities for Indian auto-manufacturers and other companies to tap the US market. Mahindra & Mahindra, an Indian car manufacturing company, entered the
US market in 1994, offering a sales and service network throughout the US.103

US-India Corridor: Driving further growth 20

Overall opportunity and
key sector opportunities
$55 billion unrealised
export potential for Indian
corporates into the US Key sector opportunities, by export gaps

Into the US

ITC data suggest that the US shows the largest absolute difference between Top sub-sectors: Export gap ($ billion):
potential and actual exports in value terms, leaving room to realise additional
exports worth $55 billion.104 Although the US is India’s largest trade partner, there Jewellery & precious metal articles 8.5
is scope for further opportunities for Indian corporates to export to the US market.
Key export sectors include chemicals, machinery and electricity, precious metals, From
Motor vehicles & parts 4.5
India
plastics & rubber, and optical products, watches, and medical instruments.
Machinery, electricity 4.3

$55 billion
Pharmaceutical components 3.4

Chemicals 3.2

Unrealised export potential of India to US

Source: ITC Export Potential Map (as of November 2024)106
Source: ITC Export Potential Map (as of November 2024)105

US-India Corridor: Driving further growth 21

Other key sector opportunities US economy
High-priority sectors in US economy
Beyond key sectors like pharmaceuticals and IT where India dominates, the US will look to attract private investments in several high-priority sectors in the coming years and decades. As of July 2024, the
current US administration has announced $877 billion in private sector investments in designated high-priority sectors by the US government. Indian companies can find opportunities to collaborate, research
and invest. HSBC offers a wide range of products and solutions to assist Indian corporates and investors realise these opportunities in the American economy.

Semiconductors and electronics EVs and batteries Clean power

The value of the US semiconductor industry is estimated The current US government has pledged that 50% of The US’ current clean power strategy encompasses
to range from $223 billion to over $260 billion by 2030.107 all new vehicle sales must be electric by 2030.111 84% areas including renewable energy, clean energy
India and the US are cooperating in the semiconductor of announced investments in the EV & batteries sector development, grid-scale energy development and
sector via research and expertise. In May 2023, both are concentrated in 10 states.112 electric vehicle sales. Specific reforms like the Inflation
sides signed a Memorandum of Understanding Reduction Act (IRA) aims to direct $400billion of
(MoU) to establish a semiconductor supply chain as Georgia leads the way in both EV investments ($31.2 billion)
federal funds to clean energy projects, and prompt
well as promote innovation, and explore investment and jobs (38,700), followed by Michigan, North Carolina
more investments.116
opportunities in the semiconductor ecosystem.108 and Illinois.113
California is leading the way in renewable energy
US states like California, Texas, Oregon and Arizona The US could leverage India battery manufacturers and
adoption as well as investments in solar, wind and
are leading the way in semiconductor projects.109 Texas other companies in the supply chain to enter the US EV
other clean energy technologies. Other states offering
and Arizona account for more than half of all dollars in market, which creates opportunities for local suppliers
significant opportunities in the clean power space
projects announced and 35% of expected jobs to be and communities.
include Texas, New York and Vermont.
created because of ease of doing business and availably
For example, in October 2023, Epsilon Advanced
of land.110 Furthermore, Indian companies can offer their
Materials (EAM), an India-based battery materials
technical expertise, talent as well as investment into
company, announced plans to build a $650 million
R&D in semiconductors and electronics.
graphite anode manufacturing facility in North
Carolina.114 The 1.5 million square-foot facility is expected
to create approximately 500 new jobs and begin
manufacturing in 2026, reaching full capacity by 2031.115

US-India Corridor: Driving further growth 22

Other key sector opportunities (cont.)

Clean energy manufacturing and infrastructure Heavy industry Biomanufacturing

Similar to clean technology, key reforms like the Although manufacturing only represents around 10% India and the US are cooperating closely in critical
Bipartisan Infrastructure Law (BIL) directs federal of GDP, it employs more than 13 million people and and emerging technology, including biomanufacturing
funding to clean energy manufacturing and makes up 53% of all private sector R&D in the US.118 under the U.S.-India initiative on Critical and Emerging
infrastructure projects.117 Technology (iCET).119
Key states leading the way in heavy industry are
US states leading the way in clean energy include Texas, Michigan, Ohio and Pennsylvania. The US has been working to make its biomanufacturing
California and Ohio. These states offer incentives to sector more attractive for Indian and other foreign firms.
investors to invest in clean energy manufacturing and In addition to investment and trade, Indian companies
For example, BioMade is a public-private partnership
infrastructure assets. can offer skilled Indian workers needed in heavy
initiative to focus on technological innovation, supply
industries as well as training of existing and incoming
chain and development of the workforce.120
American workers.
Key US biomanufacturing hubs include Boston, San
Francisco and North Carolina.

US-India Corridor: Driving further growth 23

Section 3
How can US corporates
make inroads into
the Indian market?

US-India Corridor: Driving further growth 24

Overview and trends
Rise of India is creating
opportunities, though
some challenges remain
India’s rise is creating opportunities
India’s economy is on track to grow from being the fifth largest economy today to the
third largest in the world by 2030, and also poised to become a middle-income country as
its per capita income is forecast to increase from $2,300 to $5,000.121 By consumer market
size, India is projected be the third largest consumer market globally behind the US and
China by 2027.122 According to HSBC Global Private Banking and Wealth, it is estimated
that the number of High Net Worth Individuals (HNWIs) in India is set to increase from
around 800,000 in 2022 to over 1.66 million people by 2027.123 HSBC India is able to offer
products and solutions including transaction banking, debt syndication & securitisation,
custodial services, equity & capital markets and foreign exchange & treasury solutions.

India’s financial sector is also on the rise. The country’s stock market is set to reach
a market cap of $10 trillion by 2030 from $4.6 trillion in January 2024. In September
2023, Indian government bonds were included in major emerging market indices
including the EMBI and GBI-EM and CEMBI series.124 This is expected to bring inflows
of around $20-22 billion.125 HSBC Asset Management in India manages over $11 billion
across Indian asset classes. In terms of strategies, it operates the HSBC GIF Indian
Equity Fund and HSBC GIF India Fixed Income Fund.

US-India Corridor: Driving further growth 25

Overview and trends (cont.)
As well as being the world’s most populous nation, around 60% of India’s GDP India’s big leap in services
comes from domestic consumption.126 Accordingly, there are several opportunities for
Given the benefits of scale, skills and cost competitiveness, India’s services exports will
American companies in sectors like consumer discretionary and durable products.127
likely only grow from here, particularly when global growth bottoms out, and structural
As Indians become more affluent, they will require more access to credit and finance.
tailwinds overpower cyclical headwinds. And this is not where it ends. We have found
This is set to present opportunities for international banks like HSBC and other finance
interesting evidence of MNCs increasing their footprint in India. Those which started off
companies to offer more sophisticated financial products. HSBC has 170 years of
with producing services, are increasing the range of services produced. According to
experience in India, and operates 26 branches in 14 cities, with 18,300+ branch
HSBC Global Research, some are even crossing over into manufacturing, e.g. Novartis,
locations including partner banks.
Diebold Nixdorf, Royal Philips, Boeing and Airbus.
Sizeable retail consumer population
India is now the most populous nation in the world, which presents significant consumer
market opportunities for US companies in sectors like F&B, electronics, automotives
as well as pharmaceutical and medical products to name a few. Furthermore, India’s
growing upper and middle classes also provide ample opportunities for American
financial institutions to offer banking products and investment services. India also has
a high internet penetration rate with over 954 million users (as of September 2023) and
this is set to reach 1 billion by 2025.128 Accordingly, this offers opportunities for American
e-commerce platforms as well as for other associated firms like payment providers and
advertising companies. India’s e-commerce industry is estimated to reach $350 billion by
2030, growing from $74.8 billion in 2022.129 Within the e-commerce segment, areas like
online grocery market is set to reach $26.93 billion in 2027.130

US-India Corridor: Driving further growth 26

Overview and trends (cont.)
Skilled talent pool Innovation and entrepreneurship
India has a young working population with a median age of 28.4 years.131 Around India’s venture capital ecosystem has experienced significant growth and
67% of the total population is aged 15-64 which it makes younger than developed development over the past decade. Thanks to factors like improved internet
regions like the US or Europe. The country’s share of its working age population to connectivity, government initiatives (such as Startup India and Atal Innovation
total population will reach 68.9% by 2030 and its dependency ratio is projected to Mission) as well as the establishment of hubs and accelerators, the number of start-
reach 31.2%.132 Tied to this, India has a large graduate pool in science, technology, ups in India has proliferated to 1,12,718 DPIIT-recognized start-ups across 763 districts
engineering and mathematics (STEM) background who are English-speaking. This of the country (as of 03rd October 2023).138 From 2015-2022 the Indian ecosystem
gives the country a distinct advantage over other countries.133 As a result, India witnessed 15x increase in total funding of start-ups, 9x increase in the number of
workers excel in key sectors like IT and business processing outsourcing (BPO).134 investors and 7x increase in the number of incubators. There are several start-ups in
India can also offer workers in labour intensive industries as well as in services like sectors like retail, fintech, logistics, food, agritech health-tech and edtech. There are
trade, transport, tourism and e-commerce. 114 unicorn start-ups in India with a total valuation of more than $350 billion, as of
March 2024.139
Cost effective operations
Some challenges that US corporates need to consider
India can offer cost advantages for multinational companies. The availability of
skilled workers and connectivity linkages in Tier 2 and Tier 3 Indian cities to larger Indeed, India offers significant trade and investment opportunities, but US companies
metropolitan cities enable firms in services and manufacturing industries to base and investors should consider several factors before entering the country.
themselves in cost-effective destinations.135 Indian authorities have improved
India’s regulatory environment can be challenging to navigate with varying
and eased cost of business. Among these measures include digitising business
interpretations across different states. Some of the legal challenges facing US firms
incorporation procedure, dealing with permits, insolvency resolution and trade
include the Foreign Exchange Management Act (FEMA) and guidelines issued by the
infrastructure.136 India has also signed Double Tax Avoidance Agreements (DTAAs)
Reserve Bank of India (RBI).140 These dictate the approval processes and restrictions
to eliminate double taxation for multinational firms. At present, India has 94
on the inflow and use of foreign capital. This can add extra cost with regards to
comprehensive DTAAs and eight limited DTAAs.137
compliance and more time may have to be expended for the required documentation.

US-India Corridor: Driving further growth 27

Overview and trends (cont.)
India’s tax system can be complex, which can make it difficult for foreign companies.
Taxes are levied by the central government and different state authorities. The central
government levies direct taxes such as Corporate Income Tax and Capital Gains
Tax.141 At the state level, taxes can extend to areas like profession and real estate
taxes.142 Whilst the Indian government has introduced measures like Double Taxation
Avoidance Agreements with nations (including the US) to mitigate the challenges, US
companies would still require legal expertise, which adds more cost and time.143

Aside from legal and tax considerations, power supply infrastructure (such as in rural
areas), transportation networks and the quality of seaport and airport facilities can
vary from state to state. This can increase distribution and delivery costs for the
end customer.144

The Indian government’s preferential economic policies in specific sectors can also
make it challenging for US companies to compete on a level footing. For example,
“Self-reliant India” is a policy that promotes Indian goods in the global supply chain
markets and enable India to achieve self-reliance in specific sectors.145 As part of
this policy, India restricts market access in the form of tariffs and taxes, localisation
requirements, price controls, and import restrictions.146

Nevertheless, given the size of India’s economy, growing wealth of its large consumer
market as well as specific sector opportunities and collaborations in R&D, US companies
can seek to enter and operate within India.

US-India Corridor: Driving further growth 28

Overview and trends (cont.)
India is also seeing a big increase in FDI investment intentions into futuristic and tech-
focused sectors. Indeed, this FDI is an important part of its growth story, as noted in a Recent examples of Indian investments in the US
recent HSBC Global Research article.147
Š Finance and banking: To cater to the financial needs of India’s growing
middle class and affluent segments as well as corporate financing needs, major
Recent examples of Indian investments in the US international and American banks are active in India.

Š The US accounted for 9% of all FDI equity inflows into India in FY23–24, making Š Pharmaceutical: India’s domestic pharmaceutical market is estimated to reach $130
it the third largest foreign investor after Mauritius and Singapore.148 For the last billion by the end of 2030.155 Several US pharmaceutical companies are active in India.
24 years, the US’ total FDI investments into India (from April 2000 to March For example, Johnson & Johnson entered India in 1947 and today employs 3,500
2024) was recorded at $65.19 billion.149 US direct investments in India were led by people and is involved in three business segments: Consumer Healthcare, Medical
professional, scientific, and technical services, manufacturing, and information Devices and Pharmaceuticals.156
services, according to most recent data in 2022 from the US government.150

Š Tech: Google has made significant investments in India’s technology ecosystem.

The company employs over 6,500 people and has a presence in Delhi, Hyderabad,
Mumbai and Bangalore.151 The company has invested in different areas of India’s
tech ecosystem including digital payments, IT infrastructure as well as AI and
machine learning and start-ups. It has also invested in Indian IT companies. For
example, in 2020, it bought a 7.73% stake in Jio Platforms, a subsidiary of Reliance
Industries, to expand internet connectivity and digital services in India.152 Other
prominent US tech companies investing in India include Microsoft. Microsoft
entered India in 1990 and employs over 20,000 people.153 It is engaged in sales
and marketing, research and development and customer services and support
services across 10 Indian cities – Ahmedabad, Bengaluru, Chennai, Gurugram,
New Delhi, Noida, Hyderabad, Kolkata, Mumbai and Pune.154

US-India Corridor: Driving further growth 29

Overall opportunity and
key sector opportunities
$30 billion unrealised
export potential for US
corporates into India Key sector opportunities, by export gaps

Into India

ITC data suggest that there is a difference of $30 billion between potential and Top sub-sectors: Export gap ($ billion):
actual US exports to India.157 Whilst India is the US’ ninth largest trading partner,
it has historically had a trade surplus with the US.158 Chemicals 4.1

As a result, US companies can export more to India to reduce their deficit. From
Machinery, electricity 3.4
Key sub-sectors to tap include jewellery & precious metals, motor vehicles & US
parts, machinery and electricity, pharmaceutical components, and chemicals.159
Precious metals 2.9

$30 billion
Plastics & rubber 2.5

Optical products, watches &

1.8
medical instruments

Unrealised export potential of US to India Source: ITC Export Potential Map (as of November 2024)161

Source: ITC Export Potential Map (as of November 2024)160

US-India Corridor: Driving further growth 30

Overall opportunity and key sector opportunities (cont.)
India VC scene India’s digital economy
Despite a global downturn in VC deal-making and flows, India maintained its status as India’s digital ecosystem offers opportunities for US technology companies and
the second largest destination for VC and growth funding in the Asia-Pacific region, investors including in the software as a service (SaaS), fintech (especially digital
according to a study by Bain & Company,162 Fundraising slowed to $4 billion in 2023 payments, lending, investments and insurtech), e-commerce (both B2B and B2C),
compared to a previous record-setting of $8 billion in 2022.163 Whilst 90% of early- edtech and health-tech.169 HSBC India can support the country’s tech ecosystem. For
stage funding in 2023 was conducted by domestic VC firms, major US VC firms with example, HSBC is a founding member and part of the board of National Payments
a presence in India are Sequoia Capital, Accel Partners, and Nexus Venture Partners. Corporation of India. It is also part of various regulatory committees in key market
Notwithstanding the current downturn and uncertainty, India’s start-up ecosystem has infrastructure like National Securities Depository Limited (NSDL), the Clearing
a positive outlook with strong macroeconomic fundamentals, solid growth prospects, Corporation of India Limited (CCIL) and TransUnion (CIBIL) which are responsible for
strong deal-flow as well as a supportive regulatory and legal regime in place. For driving innovative and digital changes in the payment and settlement landscape.
example, in 2024, Indian authorities removed its Angel Tax, (which previously levied
HSBC India also offers initiative solutions to service clients in the digital economy.
tax on start-up investors) in to boost the country’s VC ecosystem.164 At the same time,
HSBC was the first bank in India to offer Trade Credit Insurance (TCI) – a backed
the rise of thematic funds in areas like sustainability, gaming and SaaS are likely to see
Receivable Finance and First in India and the world to execute a fully digitised
growth in the coming years, according to Bain & Company.165
corporate to corporate trade transaction on the Blockchain.
India PE scene
The digital economy contributes around 11% of the country’s GDP, but Indian
Despite current subdued activity, there are significant PE opportunities in sectors authorities are hoping to increase this to more than 20% of GDP (or $1 trillion) by
like IT and IT enabled services, healthcare, consumer technology, as well as more 2026.170 Taking a closer look, a 2023 report from Bain & Company, along with Google
traditional industries like infrastructure, renewables and manufacturing, according to and Temasek, analysed some of the latest sector trends for India’s digital economy.171
a study by Bain & Company.166 Bain & Company note that global funds have played a
significant role in driving PE investments in India with their share increasing from 50%
in 2023 to 75% in 1H24.167 The top global PE funds invested $10 billion in India during
1H24, already surpassing $8 billion deployed in 2023, primarily driven by a renewed
interest in IT/IT enabled services (ITeS), according to Bain & Company.168

US-India Corridor: Driving further growth 31

Overall opportunity and key
sector opportunities (cont.)
India’s digital economy

Leading sectors Nascent sectors

B2C e-commerce: Big-ticket items, groceries Online food delivery

Fintech: Digital payments, lending, investments Edtech

Software as a service (Saas) Healthtech

Source: Bain & Company, Google, Temasek172

India’s digital economy’s growth – key figures for leading sectors India’s digital economy’s growth – key figures for leading sectors

B2C e-commerce: Fintech: Software as a service (SaaS): Online food delivery: Edtech: Healthcare:
26% CAGR 2022-2025 34% CAGR 2022-2025 for 25% CAGR 2022-2025 22% CAGR 2022-2025 26% CAGR 2022-2025 41% CAGR 2022-2025
digital payments
Š Opportunity size (GMV) Š Opportunity size (GMV) Š Opportunity size (GMV) Š Opportunity size (GMV) Š Opportunity size (GMV)
by 2025: $120B-$130B Š Opportunity size (GMV) by 2025: $25B-$30B by 2025: $14B-$17B by 2025: $7B-$8B by 2025: $4B-$5B
by 2025: $46B-$50B

US-India Corridor: Driving further growth 32

Other key sector opportunities
Indian economy

Semiconductors and electronics EVs and batteries

India’s semiconductor industry has an annual growth rate of India’s EV sector is nascent but it is set for rapid growth in the
8.68% and is estimated to reach $8.32 billion in 2024.173 coming years because of factors including the population’s
increasing affluence and government initiatives. India’s EV market
The South Asian nation has emerged as a key player in the
is set to grow from $3.21 billion in 2022 to $114 billion in 2029.181
global semiconductor supply chain as companies seek to
diversify away from China, South Korea and Taiwan.174 Indian EVs accounted for only 5% of all vehicle sales between October
authorities aim to increase the size of its semiconductor market 2022 and September 2023.182 This could reach 40% by 2030,
to $110 billion and account for 10% of the global semiconductor thanks to a strong adoption of two-wheeler and three-wheeler
industry by 2030.175 Initiatives to propel the industry, like the vehicles.183 The government is also pursuing incentives like the
National Electronics Policy or the $10 billion Production Linked Faster Adoption and Manufacturing of Electric (FAME) Vehicles,
Incentive (PLI) scheme for semiconductor manufacturing, which offers fiscal incentives to EV buyers.184
support the country’s ambitions of becoming a hub.176
On the production side, India’s EV battery market is forecast
The government’s 2024 Budget pledged more investment in to increase from $16.8 billion in 2023 to $27.7 billion in
the country’s semiconductor ecosystem. This includes the 2028. Several Indian automotive companies have pledged to
creation of a $12 billion innovation corpus to prompt R&D.177 increase their production and sales of EVs as well as develop
national infrastructure. Hyundai Motor India is expanding
Similarly, India’s electronics manufacturing industry is also
its EV charging network with 11 stations in cities across
a strategic sector. India’s electronic manufacturing industry
the country including in Mumbai, Pune, Ahmedabad and
is projected to reach $520 billion by 2025.178 India expects to
Hyderabad.185 Other examples include Maharashtra that is
increase its exports of electronic goods to $120 billion by 2025–
targeting 10% share of EVs in all new vehicle registrations by
26, from a base of $ 15 billion in 2021–22.179 The country is also
the end of 2025.186
a major consumer of electronics. It is on course to be the fifth
largest consumer of electronic products globally by 2025.180

US-India Corridor: Driving further growth 33

Other key sector opportunities (cont.)

Pharmaceuticals Biotechnology
India’s pharmaceutical industry is estimated to reach $65 billion Biotechnology (biopharmaceuticals, bioservices, bioagriculture,
in 2024, $130 billion by the end of 2030, and $450 billion by bioindustrial and bioIT) is becoming an important part of India’s
2047.187 India accounts for 20% of the global pharma supply economy. India’s biotechnology industry is estimated to be
chain and around 60% of worldwide demand for vaccines. worth $130 billion in 2024, and is ranked amongst the top 12
global biotech destinations and third in Asia.190
The country has more than 3,000 pharma companies with a
strong network of over 10,500 manufacturing facilities as well The National Biotechnology Development Strategy (2021–2025),
as a highly skilled domestic resource pool.188 seeks to address and identify opportunities in biomanufacturing,
capacity-building, clinical trials, drug discovery, regulation and
India has the highest number of pharmaceutical
policies creating global supply chains.191 Under the strategy, it
manufacturing facilities that comply with the US Food and
hopes to make India among the top five countries recognised
Drug Administration (USFDA) outside of the US. It also has
as a global bio-manufacturing hub by 2025.192
500 Active Pharmaceutical Ingredient (API) producers that
make up for around 8% of the worldwide API market.189 India is also home to burgeoning biotech start-ups developing
new innovations. In 2021, 1,128 new biotech start-ups were
registered, the highest since 2015.193 Indian biotech start-ups
are leading the way in identifying potential treatments for
diseases like cancer, arthritis and cardiovascular diseases.194

The nation is also developing relations with different players

to enhance its biotechnology industry. For example, in August
2023, India’s Department of Biotechnology (DBT) and the
United States-National Science Foundation (US-NSF) agreed
to develop bilateral cooperation.195

US-India Corridor: Driving further growth 34

India’s economic geography
Key Tier 1 cities and
states are driving India’s
growth but Tier 2 cities
could be considered as
well by US corporates
Tier 1 cities are key contributors to India’s economic activity and growth
India’s Tier 1 cities are key economic contributors and offer significant opportunities
for US and international companies.

The top 10 fastest-growing cities globally from 2019–2035 are expected to be Indian,
with year-on-year annual growth rates of between 8% and 9% over that period
for these 10 cities, according to Oxford Economics and highlighted by The World
Economic Forum.196

US-India Corridor: Driving further growth 35

India’s economic
geography (cont.)
There are eight Indian Tier 1 cities (5 million population or more), namely Ahmedabad,
Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai, and Pune.197 These cities
are key drivers of national: six of these eight cities contributed 28% of India’s GDP in
2022.198 These cities are highlighted below – Mumbai, New Delhi, Bangalore, Chennai,
Hyderabad and Ahmedabad:

GDP contribution
City Description Key sectors
to India ($ billion)
Financial services
Mumbai The financial capital 310
Entertainment

IT and professional services

New Delhi The political capital 293.6
Trade and commerce

Technology
Bangalore India’s tech hub 110
Education

India’s manufacturing Manufacturing and industry

Chennai 78.6
hub Growing IT and BPO sector

A pharmaceutical Pharmaceuticals
Hyderabad 75.2
and IT hub IT (Software development)
Textiles
Ahmedabad A commercial hub 68 Chemicals
Machinery manufacturing

Sources: City Monitor199

US-India Corridor: Driving further growth 36

India’s economic geography (cont.)
The rise and attractiveness of Tier 2 cities Tier 2 cities offer several advantages that make them attractive when compared to
Tier 1 cities. These advantages can include lower operational costs than Tier 1 cities,
These cities are increasingly becoming attractive to US companies, both in terms of
as well as clusters and niches for specific industrial activities (like IT) and access to a
activity, production and human talent. These can either be part of an alternative for new
growing talent pool.
companies looking to enter India or expand their existing operations across the country.
According to a KPMG report, although Tier 1 cities offer roles for specialist skillsets,
India’s 79 Tier 2 cities are also fast growing. Indian Tier 2 cities are understood to be
Tier 2 and other satellite cities are increasingly becoming centres for new talent.205
cities with populations of between 50,000 and 100,000.200 Examples of Tier 2 cities
It also highlighted that 54% of employees surveyed expressed their intention to hire
include Chandigarh, Coimbatore, Kochi, Trivandrum, Mysuru, Visakhapatnam, Nagpur
candidates from Tier 2 cities.206
and Jaipur.
Furthermore, universities in Tier 2 cities have ties with US universities and training
Although Tier 2 cities have been viewed as residential or industrial centres, thanks to
institutes. For example, Amrita School of Biotechnology at Amrita Vishwa Vidyapeetham,
the growth of micro, small and medium size enterprises (MSMEs), since 2020 these
in Coimbatore in Tamil Nadu, offers a dual degree programme with the University of
cities have been driven by an influx of local and foreign companies.201 Tier 2 cities
Arizona.207 This enables US companies and organisations to source cheaper and plentiful
are also becoming hubs of innovation. An Economic Survey 2023–24 commissioned
talent (as well as R&D) outside more expensive metropolitan Tier 1 cities.
by India’s Ministry of Finance found that more than 45% of recognised start-ups
originated from Tier 2/3 cities.202

Tier 2 cities like Jaipur have a diversified economy with tourism, textiles, food and
beverages, mining, automobiles and manufacturing.203 The city is home to Mahindra
World City, a multi-industry special economic zone (SEZ), which hosts 130 domestic
and global companies and offers a range of benefits like tax incentives and
simplified regulations.204

US-India Corridor: Driving further growth 37

Conclusion
The US-India Corridor presents a significant and wide range of opportunities for both
investors and corporates.

There are growth opportunities for both countries in established sectors, defence
cooperation, advanced technology, healthcare, human talent and the digital economy.

As Indian corporates and investors continue to develop their own technology,

manufacturing capabilities and capacities, there are other sectors in the US that
they can cooperate with, either through partnerships and collaborations as well
as direct investments. These include sectors that are designated as high priority
by the current US government: semiconductors & electronics, electric vehicles &
batteries, clean power, clean energy manufacturing & infrastructure, heavy industry,
and biomanufacturing. Indian corporates and investors would need to navigate the
different systems and requirements of each of the 50 states of the US in order to find
their own ‘sweet spots’ for trade and investment.

For US corporates and investors, understanding India’s expansive physical landscape

can help them narrow down their investment opportunities. As this report has shown,
there are competitive and diversified opportunities in India’s Tier 1 and Tier 2 cities
that contribute to a sizable proportion of its gross value added especially in services,
industry, and manufacturing.

For both nations, leveraging their strong cultural ties, as represented by the
influential Indian American business community, could help them clinch new growth
opportunities more quickly.

HSBC is well-positioned to support businesses aiming to capitalise on the evolving

opportunities across this corridor. We can help you to leverage our global connections,
local expertise, and comprehensive suite of financial products and solutions to enable
you to navigate the dynamic landscape and maximise growth potential.

US-India Corridor: Driving further growth 38

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US-India Corridor: Driving further growth 40

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US-India Corridor: Driving further growth 41

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