India is set to redefine its role in global trade, with a projected compound annual growth rate (CAGR) of 6.4% over the next decade, aligning with its high GDP growth, according to a report released on Monday by Boston Consulting Group (BCG). This growth is anticipated to elevate India’s total trade to $1.8 trillion annually by 2033.
The ASEAN region, particularly India, stands to benefit significantly from production shifts driven by geopolitical factors, such as trade tensions between the US and China. As the world shifts towards resilient and diversified supply chains, India’s ‘China+1’ strategy—bolstered by its vast domestic market, skilled workforce, and forward-looking policies—positions it as a preferred global manufacturing hub.
Nishant Gupta, Managing Director Partner at BCG India, emphasized the importance of strengthening partnerships with the US, EU, and emerging regions like Africa and ASEAN to capitalize on this momentum. He stated that such collaborations will drive inclusive and sustainable growth in global trade.
India’s strategic positioning is further enhanced by its pursuit of favorable relations with major global economies. Key drivers of this growth include the country’s increasing popularity as a production base for companies looking to diversify supply chains concentrated in China, substantial government incentives for manufacturing, a large low-cost workforce, and rapidly improving infrastructure.
BCG’s Center for Geopolitics estimates that global trade will exceed $29 trillion by 2033, with significant shifts in trade routes. The Global South, which accounts for around 30% of global trade, is expected to undergo major changes over the next decade. Geopolitical rivalries, alliances, and aspirations are reshaping the global economy, accelerated by US-imposed tariffs on foreign imports.
The report highlights that, without a broad increase in tariffs, world trade in goods will grow at an average of 2.9% annually over the next eight years. However, trade routes will change significantly as North America reduces its dependence on China, and China strengthens its connections with the Global South, which is solidifying its influence on the global trade map.
“Trade lanes were already shifting from historical patterns, and looming US tariffs will accelerate this. Navigating these new dynamics will be critical for any global business,” said Aparna Bharadwaj, Managing Director and Partner at BCG, and Global Leader of the Global Advantage practice.
In terms of product categories imported by the US, the greatest impact of tariffs would be on auto parts and automotive vehicles, primarily affecting trade with Mexico, the EU, and Japan. Higher tariffs on Chinese goods would most affect consumer electronics, electrical machinery, and fashion goods.
The report estimates that a 60% tariff rate would add $61 billion to the cost of importing consumer electronics products from China into the US. These changes underline the importance of strategic navigation for global businesses amid evolving trade dynamics.
