India is often heralded for demonstrating a new path to middle income by focusing on the development of its services sector rather than on significant industrialisation. It is true that India’s services sector has grown more rapidly than in most other countries at its level of income, and there are reasons to think that this is sustainable. However, India has only achieved rapid growth when industry has grown strongly too. As such, the development of a thriving manufacturing sector remains critical if India is to return to high rates of GDP growth.
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