Opportunities that have immense potential to support sustainable development on a wider scale and ensure modernisation of a country and its people are termed as sunrise opportunities. Sunrise industry is a term frequently used for a sector that is developing and poised for a rapid growth. Typically, such industries register high growth rates and have numerous start-ups and plenty of funding. Lately, the Ministry of Finance presented Union Budget 2022–23, with an aim to enhance productivity and investment, work towards energy transition and climate action, and prioritise the development of sunrise opportunities. The government recognises the potential of sunrise opportunities and aims to enhance domestic productivity by implementing compassionate policies, light-touch regulations, facilitative actions, and promote research and development.
Sectors Providing Sunrise Opportunities
While presenting Union Budget 2022–23, Finance Minister Ms. Nirmala Sitharaman stated that artificial intelligence (AI), geospatial systems and drones, semiconductor and its ecosystem, space economy, genomics and pharmaceuticals, green energy, and clean mobility systems have enormous potential to support sustainability development at scale and streamline the country. Sunrise opportunities will help in generating employment for the youth and make India efficient and competitive.
According to Mr. Amitabh Kant, CEO of National Institution for Transforming India (NITI Aayog), technology is a prominent sunrise area of growth and needs to be the key to development. He also stated that leveraging AI and machine learning is crucial to achieving growth.
Indian AI Market (US$ Billion)
Source: International Data Corporation
The importance of AI has been highlighted in the most recent report released by the International Data Corporation (IDC). According to the report, the Indian AI market is projected to expand to US$ 7.8 billion by 2025, registering a Compounded Annual Growth Rate (CAGR) of 20.2% between 2020 and 2025. Furthermore, the AI service market is expected to expand at a CAGR of 35.8% by 2025, driven by increased spending by the state and central governments on deploying computerised monitoring systems, AI solutions, etc. which would strengthen India’s dominance in AI in the near term.
Geospatial Systems and Drones
Indian Geospatial Market (US$ Billion)
Source: The Business Standard
According to India Geospatial Artha Report, the Indian geospatial market is expected to grow at 12.8% to Rs 63,100 crore (US$ 8.2 billion) from Rs 38,972 crore (US$ 5.2 billion) by 2025. Advancing technologies in the geospatial sector has brought significant changes whereby the country’s land can easily be mapped, providing robust support for land reforms. Advanced geospatial technologies have also helped in implementing the mass vaccination programme across India. The programme is an epitome of perfect integration between technology and logistics using geospatial systems.
Semiconductors have become an essential component for influencing businesses throughout the world. This was evident when there was severe pricing pressure created on consumer discretionary and non-discretionary sectors, due to the semiconductor shortage. The current demand for semiconductors in India stands at around US$ 24 billion and is estimated to reach US$ 100 billion by 2025.
Semiconductor Demand in India (US$ Billion)
Source: The Economic Times
Currently, India’s share in the space economy is close to 2%. Furthermore, despite the outbreak of the COVID-19 pandemic, 2020 turned out to be a landmark year for India’s space sector, supported by favourable government policies. The space economy holds great opportunities for the private sector. The reforms brought in by the government are expected to boost participation of the private sector in the space economy.
Genomics and Pharma
The Indian pharmaceutical industry is estimated to register a staggering growth of 13–15% in 2021, compared to 3% in 2020. The industry is largely price-driven; growth recorded in the last two months of 2021 was not just due to a surge in the medical supplies against COVID-19, but a normalisation of seasonal disease patterns could be witnessed as the demand for seasonal medicines increased. As per analysts in the pharma industry, the expected sharp revival in exports in 2022 and several product launches would drive domestic capabilities. The industry is estimated to record a double-digit growth of 10% in 2022. India’s pharmaceutical capabilities are expected to grow in the coming years.
India is rapidly transitioning to green energy. The country’s installed power capacity from non-fossil fuels is estimated to grow to 66% by 2030. The country’s green energy economy received nearly US$ 7.3 billion worth of Foreign Direct Investment (FDI) from 2014-15, of which US$ 797.2 million came during 2020-21. India has the 4th largest installed renewable capacity in the world. Also, India is among the top three countries globally in terms of renewable energy growth rate. Rise in urbanisation is expected to boost the demand for energy in the near term; therefore, the country must consider greener sources to meet energy requirements.
Clean Mobility Systems
Profitability in the auto industry is projected to increase in the next few years. Also, the electric vehicle market is expected to register considerable growth by 2030. Furthermore, the government aims to shift completely to electric vehicles by 2030. Indian companies have been working towards achieving the target by transitioning to a cleaner and greener source of mobility.
Government Policies and Regulations
For scaling domestic production capabilities, the government has been implementing a series of initiatives which would help India become highly competitive globally. The Production-Linked Incentive scheme (PLI), one such initiative, aims to bolster the manufacturing and export sector. PLI is one of the biggest schemes introduced by the government of India to support the private sector. Additionally, as per Union Budget 2022–23, an additional amount of Rs. 19,500 crore (US$ 2.6 billion) would be allocated to the PLI scheme for enhancing domestic manufacturing of high-efficiency modules, to meet the installed solar capacity target of 280 GW by 2030.
The budget also aims to strengthen the Research and Development (R&D) contribution in sunrise opportunities, in addition to the attempts of an industry-academia partnership. Furthermore, the government aims to unlock thematic funds for sunrise sectors such as climate, technology, and pharmaceuticals for promoting blended finance. According to the finance minister, the central government will limit its stake to 20% in such funds and these funds will be overseen by private fund managers. The corpus provided by the government would benefit entrepreneurs and fund managers and the move will likely boost capital inflow in sectors which are in dire need of capital.
In the budget session, the finance ministry urged investors and industries to invest in the new-age sectors as these sectors provide immense opportunities. The government aims to foster partnerships in such areas to drive growth in India. Furthermore, the government extended the lower corporate tax benefit provided to new manufacturing units, until 2024. India has proven its ability in early adoption of technology and the sunrise sectors should be able to benefit from this prowess and higher growth opportunities in the market.