Forget Trade Tariffs…

This is what Global Trade will Look Like in 10 years
Edward Heng

India Avenue Investment Management

India’s Strategic Ascent in the Global Economy

The global economy in 2025, now valued at US$106.5 trillion, remains deeply interconnected through trade, finance, and technology. Yet beneath the surface of cyclical shifts and geopolitical noise, a structural transformation is underway, one where India’s rise from the periphery to a core pillar of global trade is reshaping how capital is being deployed.

Source: IMF and Forbes, 2025
Source: IMF and Forbes, 2025

India’s GDP of US$4.2 trillion, representing 4% of global output, makes it the world’s fifth-largest economy, trailing only the U.S., China, Germany, and Japan. But the country’s real significance lies not just in size, but in trajectory: it’s emerging as the fastest-growing large economy, underpinned by demographic strength, digital infrastructure, and global supply chain realignment.


From Services Powerhouse to Global Trade Integrator

India’s economic evolution has diverged sharply from the Western industrial template. Unlike the agriculture-to-industry-to-services progression that is typical of developed economies, India leapfrogged directly from agriculture to services, a structural pivot that has now become its competitive advantage. 

Services command 55% of Gross Value Added (GVA), far exceeding industry (27%) and agriculture (18%). The shift has been powered by a combination of human capital and digital infrastructure. 

With millions of English-speaking, tech-literate graduates entering the workforce annually, India has become a global hub for IT, business process outsourcing, healthcare, and financial services. 

Over 1,580 Global Capability Centres (GCCs) operate from India, running high-value functions such as analytics, R&D, and finance for multinational corporations.


The New Trade Reality

Global trade in goods and services now totals US$32.5 trillion annually, expanding even through tariff disruptions and “deglobalisation” rhetoric. As Western economies recalibrate supply chains amid geopolitical fragmentation, India has become a preferred alternative to China as an export hub, offering cost competitiveness and a stable policy environment.

Source: Bloomberg, HSBC Global Private Banking
Source: Bloomberg, HSBC Global Private Banking

India’s policy architecture, anchored by initiatives such as the Production Linked Incentive (PLI) schemes, Digital India, and Make in India, is increasingly translating into tangible economic outcomes. These reforms are catalysing a new phase of industrial acceleration, driving deeper manufacturing localisation, technological upgrading, and diversification of export markets. At the corporate front line, industry leaders such as Tata Steel, Mahindra & Mahindra, Samvardhana Motherson, and Aurobindo Pharma exemplify this transformation, leveraging policy tailwinds to expand global competitiveness and supply chain integration.

Source: LSEG Datastream, Fathom Consulting, HSBC Global Private Banking. Figures are 12-month trailing sum.
Source: LSEG Datastream, Fathom Consulting, HSBC Global Private Banking. Figures are 12-month trailing sum.


The Long Game: Investing in this Structural Story

India’s participation in global trade is no longer defined by low-cost outsourcing; it’s now about value creation, innovation, and integration. As supply chains rewire, global demand shifts toward Asia, and digital trade scales, India is positioned not just to benefit from these forces, but to help define them.

Sectors such as electronics, steel, pharmaceuticals, and automotive are rapidly emerging as India’s next generation of export powerhouses. Yet, within the broader equity landscape, these industries still represent a relatively small portion of benchmark indices, which remain heavily weighted towards financials and domestic consumption. 

This creates a disconnect – while the incremental growth engines of the economy are shifting towards export-oriented sectors, much of this potential remains underappreciated in current valuations. For investors seeking to capture this evolving structural story, active management offers a distinct advantage: enabling targeted exposure to companies best positioned to benefit from India’s export renaissance, rather than relying on passive strategies dominated by legacy sector weights.

........
This document (‘Document’) has been produced by India Avenue Investment Management Limited (‘IAIM’) ABN 38 604 095 954, AFSL 478233 and has been prepared for informational and discussion purposes only. This does not constitute an offer to sell or a solicitation of an offer to purchase any security or financial product or service. Any such offer or solicitation shall be made only pursuant to a Product Disclosure Statement, Information Memorandum or other offer document (collectively ‘Offer Document’) relating to an IAIM financial product or service. A copy of the relevant Offer Document relating to an IAIM product or service may be obtained by writing to us on info@indiaavenueinvest.com or by visiting www.indiaavenueinvest.com. This Document does not constitute a part of any Offer Document issued by IAIM. The information contained in this Document may not be reproduced, used or disclosed, in whole or in part, without the prior written consent of IAIM. Past performance is not necessarily indicative of future results and no person guarantees the performance of any IAIM financial product or service or the amount or timing of any return from it. There can be no assurance that an IAIM financial product or service will achieve any targeted returns, that asset allocations will be met or that an IAIM financial product or service will be able to implement its investment strategy and investment approach or achieve its investment objective.  Statements contained in this Document that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of IAIM. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. Additionally, this Document may contain “forward-looking statements”. Actual events or results or the actual performance of an IAIM financial product or service may differ materially from those reflected or contemplated in such forward-looking statements. Any trademarks, logos, and service marks contained herein may be the registered and unregistered trademarks of their respective owners. Nothing contained herein should be construed as granting by implication, or otherwise, any license or right to use any trademark displayed without the written permission of the owner. Certain economic, market or company information contained herein has been obtained from published sources prepared by third parties. While such sources are believed to be reliable, neither IAIM or any of its respective officers or employees assumes any responsibility for the accuracy or completeness of such information. None of IAIM or any of its respective officers or employees has made any representation or warranty, express or implied, with respect to the correctness, accuracy, reasonableness or completeness of any of the information contained in this and they expressly disclaim any responsibility or liability therefore. No person, including IAIM has any responsibility to update any of the information provided in this Document. Neither this Document nor the provision of any Offer Document issued by IAIM is, and must not be regarded as, advice or a recommendation or opinion in relation to an IAIM financial product or service, or that an investment in an IAIM financial product or service is suitable for you or any other person. Neither this Document nor any Offer Document issued by IAIM takes into account your investment objectives, financial situation and particular needs. In addition to carefully reading the relevant Offer Document issued by IAIM you should, before deciding whether to invest in an IAIM financial product or service, consider the appropriateness of investing or continuing to invest, having regard to your own objectives, financial situation or needs. IAIM strongly recommends that you obtain independent financial, legal and taxation advice before deciding whether to invest in an IAIM financial product or service.

1 stock mentioned

Edward Heng
Investment Analyst
India Avenue Investment Management

Edward is an Investment Analyst at India Avenue, focusing on portfolio construction, macroeconomic research, quantitative analysis, and hedging strategies.

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.

Comments

Sign In or Join Free to comment