Transcription
This is India. The world's fastest-growing major economy. Home to nearly 1.5 billion people. A country building thousands of kilometers of highways every year. New airports are opening at a breathtaking pace. Apple is rapidly expanding production. Global manufacturers are pouring billions of dollars into new factories. And many economists believe India could become the world's third-largest economy within the next decade.
By almost every conventional measure, India's rise looks unstoppable. Yet recently, India lost its position as the world's fifth-largest economy to its former colonial ruler, Britain. Not because Britain's economy suddenly surged ahead. But because India's currency, the rupee, weakened sharply against the US dollar. The GDP rankings do not matter beyond wounded pride. After all, India is still growing far faster than Britain and will likely reclaim the position soon enough.
But the weak rupee reflects something far more troubling. India is struggling to attract the foreign capital it needs to finance its growth, pay for critical imports, and support its ambitions of becoming a global economic superpower. And that's not the only warning sign. Private investment is weakening. Foreign capital is quietly leaving the country. A handful of giant conglomerates are becoming more powerful than ever. And millions of young Indians are still struggling to find secure, high-quality jobs.
Perhaps most surprisingly, Narendra Modi himself has repeatedly urged Indians to change their economic behavior. These are not the messages you would expect from the leader of the world's fastest-growing major economy. India's economic miracle may be resting on foundations far more fragile than most people realize.
So why is the world's fastest-growing major economy also one of the most vulnerable? Why are economists increasingly worried about the growing power of a handful of giant corporations? And what happens when a country grows fast, but forgets to grow strong?
Since the COVID pandemic, India has become the fastest-growing major economy in the world. It has consistently grown by more than 6% per year, even outpacing China. India is now the world's most populous country, with nearly 1.5 billion people. More importantly, it is still a young country. The median age in India is around 28 years old. Compare that to China, where the median age is approaching 40, or Japan, where it is nearly 50.
This expanding workforce acts as an engine for the economy: increasing production while simultaneously driving up consumer spending. Such domestic consumption is vital, representing about 56% of India's GDP and providing a resilient buffer even as international demand falters.
At the same time, India has quietly become one of the world's most important service economies. Its IT companies manage everything from software development and cloud infrastructure to customer support and business consulting for companies around the globe. Today, India's services exports generate hundreds of billions of dollars every year and have become one of the country's most important sources of foreign income.
India has also built one of the most advanced digital public infrastructures in the world. The country has seen a fivefold increase in internet users over the past decade and now boasts more than 900 million users. Platforms like Aadhaar and UPI have brought hundreds of millions of people into the formal financial system, while digital payments that once took days now happen in seconds.
India is also trying to become a manufacturing powerhouse. Major semiconductor companies such as Foxconn, Micron and AMD are investing billions of dollars into the country as global supply chains gradually diversify away from China.
On the surface, India looks like a country on an unstoppable path toward becoming an economic superpower. But that is exactly where the story becomes interesting. Because increasingly, the benefits of India's growth are becoming concentrated in the hands of a few powerful players.
Over the past decade, India's economy has become increasingly dominated by a small group of giant conglomerates: Reliance, Adani, Tata, Bharti and Aditya Birla are now everywhere. Together, they account for roughly a fifth of the profits earned by India's top 500 companies. That's a level of concentration far beyond what you'd find in the United States or Japan.
It wasn't always this way. After India opened up its economy in 1991, competition increased and incumbent monopolies actually fell. But starting around 2015, the share of total corporate assets held by the five biggest conglomerates rose from about 10% to nearly 18% in just a few years. And the firms paying the price weren't just small businesses. The next tier of large companies — the ones just below the giants — saw their share of the economy cut in half.
So why would a government allow this? Because in the short term, it works. Need an airport built in eighteen months? A single, cash-rich conglomerate can do it faster than a hundred competing mid-sized firms. This is the "national champions" strategy — and it has real precedent. South Korea did it with Samsung and Hyundai. Japan did it with Toyota and Sony.
But there's one critical difference. Korean and Japanese champions were forced to compete on the world stage. If Samsung couldn't beat Sony, it lost openly, in international markets, with no one to bail it out. That competitive pressure made them efficient. It made them world-class. India's champions haven't faced that same test. Most of their power comes from controlling the domestic market — protected by high tariffs, friendly regulators, and government contracts — not from winning against the world's best.
Take Gautam Adani. Between 2014 and 2020, his net worth grew by roughly 230%. In 2018, the government privatized six major airports — and relaxed the experience requirements just enough that Adani, a company with zero history of running an airport, won all six. By the time Adani's debt crossed $30 billion, capital was still flowing in freely. Then, in 2023, a single research report — alleging stock manipulation and accounting fraud — wiped out billions of dollars in market value overnight. The company has since recovered much of that value. But the episode revealed something uncomfortable: how much of India's market, and India's infrastructure pipeline, was quietly resting on the financial health of one man's companies.
Mukesh Ambani's Reliance tells a similar story, just on an even larger scale. Telecom. Retail. Energy. Media. All under one roof. Jio alone reshaped how an entire country uses the internet. Together, Adani and Ambani now make up such a large share of India's stock market that when their share prices move sharply, they can drag the entire market with them.
And the effects don't stop at the stock market. Economists studying these conglomerates have found something else: they don't just dominate — they charge more for it. Markets with concentrated ownership tend to show higher markups, higher prices, less pressure to compete on cost. That pricing power may be one quiet contributor to India's stubbornly high core inflation — the kind that doesn't fully go away even when global prices cool down.
In recent years, this corporate India has been sitting on record profits. Normally, that would be great news. Higher profits should lead to more factories. More factories should lead to more jobs. And more jobs should lead to faster economic growth. But that's not what's happening. Instead, many companies are choosing not to invest. Private corporate investment has fallen from around 17% of GDP in 2007 to barely 11% today.
Foreign investors are showing a similar pattern. Since the beginning of 2025, billions of dollars have flowed out of Indian stocks and bonds. Net foreign direct investment has also weakened dramatically. In some quarters, more foreign capital has left India than entered it. This is a surprising development. After all, India is supposed to be one of the world's most attractive investment destinations. It has a massive consumer market. A young population. And one of the fastest-growing economies on Earth.
So why are investors becoming more cautious? Part of the answer lies in India's business environment. Despite years of reforms, companies still face expensive logistics, regulatory complexity and a bureaucracy that can make investment projects painfully slow. Another problem is the type of capital India is attracting. Much of the recent foreign investment has come from financial investors rather than long-term manufacturers. These investors can enter quickly. But they can also leave quickly. And when they leave, the consequences become visible almost immediately.
The first place it shows up is usually the currency. Over the past few years, the Indian rupee has come under increasing pressure, falling sharply against the US dollar and reaching historically weak levels. For an economy that still relies heavily on imported energy, technology and industrial inputs, a weaker currency creates new vulnerabilities.
And this is where India's growth story becomes much more complicated. Because while India's economy has been growing rapidly, the benefits of that growth have not been distributed evenly. For one group of Indians, the economy has never looked better. Luxury home sales are booming. Premium car sales continue to hit record highs. International travel is surging. And India's billionaire class is growing faster than almost anywhere else in the world.
But for millions of other Indians, the experience looks very different. Real wages have struggled to keep pace with rising living costs. Youth unemployment remains stubbornly high. And 90% of workers continue to rely on informal jobs with little security and few benefits. This creates what economists sometimes call a K-shaped economy. One part of society moves sharply upward. The other struggles to keep up.
India's economy may be one of the fastest growing in the world, but it is also one of the most unequal. The richest 1% of Indians now control a larger share of national wealth than the bottom half of the population combined. At the same time, millions of young people enter the labor force every year looking for quality jobs. The problem is that those jobs aren't being created fast enough.
When economic growth fails to create enough opportunities for ordinary citizens, it creates something far more dangerous than slow growth. It creates frustration. Because for most people, an economy isn't measured by GDP. It's measured by whether they can find a good job, buy a home, and build a better life than their parents. And increasingly, that is becoming India's biggest challenge in this chaotic world.
Then there is the persistent issue of inflation, crony capitalism, and a lack of market competition. Because India imports most of its vital resources, it remains highly vulnerable to energy shocks, geopolitical disruptions, and currency weakness. A rapidly growing economy can absorb some of these pressures. But not indefinitely. If this is what worry looks like during relatively normal times, what happens when conditions stop being normal?