The World Bank has advised India to lower import tariffs, ease regulatory restrictions, and simplify trade processes to enhance its global trade competitiveness and attract foreign investment. In a report released on Friday titled the Economic Memorandum on India, the World Bank highlighted that high trade costs caused by import tariffs on intermediate and capital goods, as well as non-tariff barriers, are limiting India's participation in global value chains (GVCs).The report emphasized that India’s trade openness has declined over the past decade, making it harder for the country to fully integrate into the global economy. The World Bank believes that reducing import restrictions and improving trade efficiency will be essential for India to achieve high-income status by 2047.
 

India’s Path to High-Income Economy: Challenges and Recommendations

The World Bank's report underscores that India’s Gross National Income (GNI) per capita was $2,540 in 2023. To become a high-income economy by 2047, India's per capita income must increase nearly eightfold, requiring sustained and accelerated economic growth over the next two decades—an achievement that only a few nations have successfully accomplished.One of the key findings of the report is that India is less open to trade than it was in 2012. In 2023, the share of goods and services exports and imports in India's GDP stood at 46%, significantly lower than the 56% peak recorded in 2012. The World Bank noted that while India has excelled in services exports, particularly in IT and business process outsourcing (BPO), its overall trade contribution to GDP has weakened.
 

To help India enhance its trade integration and economic performance, the World Bank recommended several strategic reforms, including:

• Reducing import tariffs, particularly on intermediate and capital goods, to lower trade costs and boost competitiveness.
• Simplifying customs procedures to improve trade efficiency and reduce bureaucratic delays.
• Enhancing policy stability to create a predictable investment climate that fosters long-term business confidence.
• Easing regulatory barriers to improve India’s ranking in the Ease of Doing Business index and attract foreign investment.

The report compared India's trade policies to those of other countries that have successfully transitioned from lower-middle-income to upper-middle-income or from upper-middle-income to high-income status. It found that greater openness to trade played a key role in those countries’ economic transformations.The World Bank emphasized that unpredictable regulatory changes, complex approval processes, and excessive bureaucratic hurdles have discouraged foreign investors from entering the Indian market. By reducing these barriers, India could attract significant foreign direct investment (FDI) and better integrate into global markets.
 

India’s Trade Reforms Could Shape Future Growth Trajectory

The report highlights that expanding trade participation and streamlining investment policies are essential for India’s long-term economic success. While India continues to perform well in services exports, manufacturing and merchandise trade need to be strengthened for the country to achieve its ambitious economic goals.By following the World Bank’s recommendations, India could improve its global trade position, attract foreign investors, and achieve faster economic growth. The coming years will be crucial in determining whether India can implement necessary reforms to enhance its global competitiveness and become a high-income nation by 2047.