The National Democratic Alliance (NDA) has emerged victorious in India’s 2024 general election, but with a reduced majority compared to 2019. This slimmer mandate could prompt the government – known for transforming India into a global manufacturing superpower and investing in sectors to reduce the country’s dependence on Western countries – to take a more populist stance in its third term, prioritising the demands of the low-income group and rural development, according to post-election analysis by Goldman Sachs, JPMorgan, CLSA, UBS, Bernstein and Citi.
The NDA’s potential win signals policy continuity for businesses and startups, including continued investment in infrastructure, digitisation and manufacturing. However, lower margins could lead to a reallocation of resources to rural and welfare initiatives, potentially hitting some capital expenditure plans, brokerage firms warned. (Manufacturing giant Adani Group lost nearly $45 billion in value on Tuesday.)
The ruling party’s outspoken stance on digital sovereignty and its recent confrontation with Big Tech are also likely to continue. Over the past five years, the Narendra Modi government has introduced or proposed a number of laws – including attempts to regulate internet apps, asking streaming services to review content for obscenity, and being sued by WhatsApp for requiring the Meta app to break encryption – that have frightened big tech companies.
New Delhi has argued that it wants to protect the interests of its citizens through its proposals.
India, a U.S. ally, is also attempting to build a tech stack to rival many popular and typically American offerings. For example, RuPay, India’s card network, is an attempt to take on Visa and Mastercard, while UPI, an interoperable and real-time payment system built by Indian banks, has already become ubiquitous in India, processing more transactions than all the card networks combined.
India has also rapidly established itself as a global manufacturing hub in recent years, offering attractive incentives for companies such as Apple, Samsung and Google to move their assembly needs to India. Goldman Sachs and Citi said it is likely that India will continue to focus on manufacturing, but its fiscal allocations in the future may be lower than expected.
In April, the BJP unveiled a 100-day plan to strengthen India’s startup ecosystem – if it wins – with the aim of making the country a global entrepreneurship hub. Key initiatives include expanding funding and mentorship programmes and boosting employment in manufacturing and tourism.
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