Bloomberg report’s USD 170 bn India opportunity comes with a catch

India could unlock up to USD 170 billion in additional gross domestic product by 2035 through expanded trade agreements, while artificial intelligence (AI) and urbanisation offer further opportunities to accelerate growth. But these gains are not guaranteed. Domestic reforms, competition for global capital and the ability to translate productivity gains into jobs will determine whether India realises its economic potential, according to a new report by Bloomberg Economics.

Titled Silicon, Steel, and Statecraft: New Economic Thinking for the New Economy Forum, the report examines how shifting trade patterns, geopolitical tensions, AI and urban expansion are reshaping India’s economic prospects.

“The AI revolution is underway, a rush of free-trade agreements is opening new opportunities for exports, and the tide of urbanisation continues to rise,” said Tom Orlik, chief economist at Bloomberg Economics. He added that India is “rising as a major pole in a multipolar world.”

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Produced for the Bloomberg New Economy Forum in New Delhi on October 13–15, the report uses economic modelling, investment data and satellite imagery to assess India’s opportunities and constraints.

Trade potential

Bloomberg Economics estimates that India’s existing free-trade agreements could raise GDP by 1.2 per cent by 2035 relative to its modelled baseline. If agreements with the European Union and New Zealand are implemented from 2027, the gain could reach 1.7 per cent, or approximately USD 140 billion in constant 2025 US dollars.

The potential increase could reach 2.1 per cent, or about USD 170 billion, if India also secures an interim trade agreement with the United States and concludes negotiations with the Eurasian Economic Union, Gulf Cooperation Council and Israel. Under this broader scenario, Indian exports could be almost 10 per cent higher than the baseline.

These are conditional projections, not guaranteed outcomes. Higher US tariffs could reduce Indian goods exports to the American market by about one-fifth by 2035. However, Bloomberg Economics estimates that less than 2 per cent of India’s output depends on US markets, limiting the potential damage to the overall economy.

The report stresses that market access alone will not ensure competitiveness. A modelled 2 per cent reduction in manufacturing production costs could add around 0.5 percentage point to the GDP gain from trade agreements. Improving agricultural productivity and moving underemployed workers into manufacturing and services could generate further gains.

Global capital

Geopolitics is increasingly shaping international investment. Bloomberg Economics estimates that investment flows between rival nations are about 40 per cent lower than those between allies.

Capital is also concentrating in strategic industries: AI and semiconductor projects accounted for roughly one-third of announced greenfield investment in the period examined by the report.

Also read: Moody's raises India's FY27 growth projections to 7 pc

India’s large domestic market and labour pool offer advantages, but competition for investment is intensifying. The report notes that greenfield investment in India rose to nearly 3 per cent of GDP in 2024 before falling sharply in 2025.

Attracting sustained capital will require competitive production costs, predictable policies and deeper integration into global supply chains. Manufacturing, export-oriented businesses, semiconductor-related activities and AI infrastructure could benefit, but the report does not guarantee returns for any particular sector or company.

AI and jobs

Bloomberg Economics estimates that AI could raise India’s annual GDP growth by 0.4–0.9 percentage points through higher productivity, assuming the technology reaches its full potential and there are no lasting job losses. A more constrained scenario puts the potential boost at 0.1–0.3 percentage points annually.

India’s IT-services industry faces both opportunity and disruption. AI could help companies move beyond routine software development, customer support and back-office work towards higher-value products and services. However, automation could reduce demand for existing tasks and weaken the labour-cost advantage that helped build the industry.

The report estimates that 6 per cent of Indian jobs are meaningfully exposed to the immediate efficiency effects of generative AI. The share rises to 12 per cent when workers have full access to AI-powered software tools. Exposure does not necessarily mean job losses, but unemployment and inequality could rise if automation eliminates work without creating sufficient new opportunities.

India’s challenge is to ensure that productivity gains translate into broader economic benefits while helping workers adapt to changing industries.

Urban growth

Bloomberg Economics’ satellite analysis suggests that around 820 million Indians live in urban-like environments, compared with fewer than 510 million classified as urban in official data for 2025.

The difference reflects densely populated settlements that resemble urban areas but are not formally classified as such. These areas could become engines of productivity if supported by effective planning and infrastructure.

Also read: Jobs, skills, AI access will shape next phase of India's growth: World Bank

Dense settlements can bring workers, businesses and ideas closer together. Without adequate transport, housing, water and sanitation, however, density can instead create congestion and higher living costs.

The report calls for stronger municipal institutions, improved land-use planning and infrastructure investment. It also notes that more than half of the urban infrastructure India will need by 2050 has yet to be built.

What it means for ordinary Indians

The report’s projections raise a central question: will economic growth improve everyday life?

Trade expansion could create opportunities in competitive industries. AI could improve productivity and services, but some workers may face displacement. Better-managed cities could improve access to transport, housing and essential services, provided infrastructure keeps pace with population growth.

The gains will not be automatic or evenly distributed. Workers need pathways into productive employment, businesses must be able to adopt new technology, and cities need the capacity to deliver essential services.

For investors, the report identifies potential opportunities in manufacturing, technology and infrastructure, but actual returns will depend on valuations, execution and business performance.

Potential vs prosperity

Bloomberg Economics identifies substantial opportunities for India through trade realignment, AI and urbanisation. Its projected USD 140–170 billion GDP gain from trade agreements is significant, but depends on implementation and domestic reforms.

Also read: Modi cheers India’s GDP growth; why are economists less enthusiastic?

AI can raise productivity without guaranteeing more jobs; urban density can boost economic activity only when supported by effective governance and infrastructure.

Orlik’s description of India as “rising as a major pole in a multipolar world” captures its growing potential. The decisive test, however, is whether India can convert market access, investment and technological change into productive jobs, higher incomes and better public services. Without that, the opportunity could remain larger on paper than in the lives of ordinary Indians.