India Inc. Sees Dawn Of A New Wave Of Sunrise Industries

In the 2000s, the second phase, various other industries like retail, pharmaceuticals, petrochemicals, life sciences, and financial services emerged. 

Host Of New Industries

Today, we are seeing the dawn of yet another set of new sunrise sectors like renewable energy, electric vehicles, artificial intelligence, technology, green hydrogen, space, startups, e-commerce, semiconductors, biotechnology, mining, and healthcare. 

Besides, some older industries like sports, entertainment, travel and tourism, hospitality, and infrastructure are being reinvented to make them part of the emerging new economy. 

For instance, in sports, who would have thought that the Indian Premier League (IPL) would turn into a multi-billion-dollar affair with some of the best companies in the country involved? Or, that spiritual tourism would be a rising segment of travel and tourism? 

“The involvement of large business houses and the availability of private equity and alternatives are some of the key drivers for the rise of the current band of sunrise industries,” said Ajay Khanna, Co-founder of the Public Affairs Forum of India (PAFI).  

Secondly, technology-led developments globally and in India have had their impact on the country, giving rise to new industries like e-commerce and quick commerce, fintech, healthcare, and agritech. 

“Agriculture had remained one of the oldest yet most unorganised industries for ages. However, with the growing demand for sustainable and efficient agricultural practices, coupled with advances in technology, agritech has emerged as a new sunrise industry. Today, technology enables precision farming, data-driven decision-making, and improved productivity across the value chain,” said Ruchit Garg, Founder and CEO of Chandigarh-based Harvest Farming Network (HFN). 

Thirdly, one of the fundamental changes that is affecting the planet is climate change. India has also announced its intention to become net zero by 2070. This single vision has spawned myriad new industries again, among older sectors like energy, power, and oil and gas. 

Fourthly, the growth of Artificial Intelligence (AI) has given rise to an entire sunrise sector around AI.

Finally, India’s rapid rise of startups, where we are now the third largest startup and unicorn ecosystem in the world, has been made possible by new businesses like edtech, deeptech, quick commerce, and digital services. 

Opportunities For Scaling Up

Even as the number of sunrise industries in the current wave is much more than in the previous two rounds, the opportunities for the Indian industry are also larger.

A Bain and Company (India) and World Economic Forum report argues that green hydrogen is critical to help meet India’s energy security needs while reducing emissions in hard-to-abate sectors on the path to net zero. Recognising this, the Indian government launched the National Green Hydrogen Mission in early 2023. 

The aim is to spur green hydrogen production and consumption through roughly US$ 2.3 billion in incentive funding, which is to be distributed between 2022 and 2030. 

India Brand Equity Foundation (IBEF) estimates that India’s e-commerce market is expected to grow at a compound annual growth rate (CAGR) of 27 per cent to reach US$ 163 billion by 2026 and US$ 350 billion by 2030.

A McKinsey & Company India report says that there could be a revival in Indian agriculture through methods like agritech and that by 2030 agriculture could contribute around US$ 600 billion to India’s GDP—an increase of 50 per cent from its contribution in 2020.   

Challenges & The Road Ahead

Despite the many opportunities in sunrise industries, both in scale and numbers, the road ahead is not all hunky-dory. 

They face an absence of vital peripheral infrastructural linkages and supportive legislation besides cumbersome procedures that are not geared for the new wave of businesses. 

Sunrise sectors also face the same challenges that most of India Inc., faces, but possibly more acutely—mounting finance costs, lack of adequate numbers of trained and experienced manpower, inadequate quality control, and a high tax regime. 

Khanna of the PAFI says that corporates took some time to appreciate the real role of public affairs in impacting and making necessary reforms happen. He argues that we need to reimagine how advocacy and public policy work, and their capacity to tap the full potential of India’s sunrise industries. 

Garg of HFN said that in growing the agritech industry, one of the major challenges revolves around climate change, which significantly impacts small-scale farmers. 

Therefore, “moving forward, our focus will be to implement resilient agricultural practices, foster collaboration, and leverage technology to mitigate climate risks,” Garg added. 

Finally, the growth of the sunrise industries could also be affected by external geopolitical and geoeconomic factors like the Russia-Ukraine and the Israel-Hamas wars as well as internal Centre-State relations.

While most of the above could be short-term and medium challenges, the long-term potential of India’s sunrise industries appears to be bright.