India’s ambition to become a $20 trillion economy by 2036 will require an extraordinary acceleration in growth. A new policy report by Equirus argues that achieving the target is possible, but it will depend less on simply pursuing faster growth and more on implementing the right structural reforms.
According to Ajay Garg, CMD of Equirus Capital, and Khushali Dutt, Associate Economist at Equirus Securities, India has already demonstrated how quickly its economy can expand. The country took around 67 years to reach its first $2 trillion of GDP, but added another $2 trillion in roughly a decade.
The report identifies five major growth engines and 20 reforms that could help India make the next big economic leap.
$20 Trillion Economy: Why the Quality of Growth Matters
Reaching $20 trillion would mean expanding the economy nearly fivefold in just over a decade.
The Equirus report points out that such rapid expansion is achievable. China, for example, maintained nominal dollar GDP growth close to 18% annually for 11 consecutive years from a comparable starting point.
However, the report argues that India’s challenge is not simply about increasing the speed of economic expansion.
How India grows could be just as important as how quickly it grows.
Agriculture currently contributes around 17% of GDP and is expected to gradually decline as urbanisation accelerates. Manufacturing contributes approximately 17-20%, but the report believes its expansion could remain constrained by increasing protectionism globally.
That leaves India’s enormous services sector as the biggest potential driver.
Services already account for roughly 54% of GDP and could rise beyond 65%, potentially expanding from around $2 trillion today to more than $11 trillion.
To unlock that potential, Equirus has grouped its proposed reforms into five broad engines.
1. Real Economy: Fix Infrastructure, Logistics and Capital Efficiency
The first growth engine focuses on reforms that can improve productivity without placing a major burden on government finances.
Tax incentives for cold storage
The report proposes a 10-year tax holiday for cold-storage investments to address India’s weak refrigerated supply chain.
Only about 4% of India’s fruits and vegetables are transported under refrigeration, compared with an estimated 80-85% in the US.
Improving cold-chain infrastructure could help reduce the enormous quantity of agricultural produce lost every year, estimated at around 50 million tonnes of horticultural output.
Bring fuel under GST
The report also recommends bringing petroleum products under the Goods and Services Tax (GST).
Fuel taxes currently include central excise duties and state-level VAT, creating a cascading tax burden that particularly affects smaller businesses.
According to the report, logistics costs can consume around 17% of output for the smallest firms compared with approximately 8% for the largest companies.
Bringing fuel into GST could therefore reduce costs for MSMEs and improve their competitiveness.
Make state capital expenditure more effective
Another proposal is to establish a mandatory minimum level of capital expenditure by state governments.
States reportedly left around ₹2.3 trillion of budgeted capital expenditure unspent in FY26.
The report estimates that deploying this unused spending could potentially add nearly ₹5.2 trillion to GDP, without requiring additional borrowing.
List the Indian Railways
The report also recommends listing the Railways.
It estimates that the national railway system absorbs approximately ₹2.8 trillion of taxpayer capital annually. A listing, according to Equirus, could potentially unlock capital while improving financial transparency and efficiency.
2. Capital Markets: Unlock India’s Trapped Wealth
The second growth engine is aimed at making better use of India’s enormous pool of capital.
Create an India Sovereign Fund
Equirus proposes creating a sovereign investment vehicle similar to Singapore’s Temasek.
The government reportedly holds around $249 billion in equity across public-sector companies. Consolidating these holdings into a professionally managed sovereign fund could generate returns that could then be used for infrastructure spending and subsidies.
The idea is to unlock value without relying exclusively on higher taxes or additional government borrowing.
Develop the corporate bond market
India’s corporate bond market remains relatively small compared with its equity market.
According to the report, corporate bonds account for only around 18% of GDP, compared with approximately 130% for equities.
Equalising the tax treatment of bonds and equities could encourage more investment in debt markets and help businesses access alternative sources of long-term funding.
Gradually reduce dependence on small savings schemes
The report also recommends a gradual reduction in the attractiveness of certain administered small-savings schemes.
Products such as PPF and Senior Citizens Savings Scheme currently offer rates of roughly 7% and 8%, respectively, even when market yields decline.
Equirus suggests that even if one-fifth of the money in these schemes — estimated at about ₹4.9 trillion — moved toward market-based bonds, it could significantly deepen India’s debt market.
The report emphasises that small-savings products should continue to remain accessible through post offices, particularly for ordinary savers in smaller towns.
Simplify tax withholding
Another proposed reform involves reducing tax deducted at source (TDS) to a flat 5% and eliminating advance-tax-related distortions.
The report argues that investors are sometimes required to part with 10-20% of investment income before the final tax liability is determined, forcing them to wait months for refunds.
A simpler system could release working capital and make India’s financial markets more attractive to international investors.
Remove double taxation on equity transactions
Equirus also recommends eliminating the overlapping burden of securities transaction tax and stamp duty on cash-equity trades.
The report estimates that STT generated more than ₹400 billion in FY26.
It argues that reducing these transaction costs could improve market liquidity, lower trading costs and make Indian exchanges more competitive globally.
Revive IDRs and build India as a financial hub
The report further recommends reviving Indian Depository Receipts (IDRs) and positioning India as a financial centre for the Global South.
With a large economy, an English-language legal framework and growing influence among developing countries, India could potentially attract more international listings and financial activity.
3. Human Capital: Expand Education, Research and Skills
India’s third growth engine is its people.
The report points out that India’s higher-education pipeline remains highly competitive and restrictive. Around 187,000 students appear for JEE Advanced for approximately 18,000 IIT seats, while many Indian students travel overseas for undergraduate STEM education.
The report therefore calls for a major expansion in education capacity.
Bring private R&D back into focus
India currently spends only around 0.8% of GDP on research and development, which the report describes as low compared with other major economies.
Another concern is the funding mix. Around 80% of India’s R&D spending comes from the public sector and only 20% from private companies — the opposite of the pattern seen in economies such as the US, China and Japan.
Equirus recommends restoring the 200% tax deduction for private R&D and introducing incentives linked to patents and commercialisation rather than simply expenditure.
Expand private participation in education
The report draws a comparison with India’s telecom sector, where private investment dramatically expanded access and reduced prices.
A similar approach in education, it argues, could help rapidly increase capacity.
The agenda also includes funding universities according to outcomes rather than headcount and rebuilding apprenticeship programmes to improve employability.
4. Services: India’s Potential “Quiet Superpower”
Services could become India’s most important economic growth engine over the next decade.
India already hosts more than 1,800 Global Capability Centres (GCCs), representing around half of the world’s total.
The report believes a single, empowered National GCC Policy could help increase this number to around 5,000.
More GCCs would mean greater demand for skilled workers and could generate higher-value exports in areas such as technology, finance, engineering, research and business services.
Turn overseas visits into business missions
The report also recommends using the Prime Minister’s international visits more strategically.
Instead of focusing only on diplomacy, these trips could incorporate structured trade and tourism missions involving major exporters, importers and business leaders.
Business matchmaking, tourism promotion and trade-facilitation commitments could be incorporated into each visit.
The report believes such measures could increase India’s services exports without requiring massive public expenditure.
5. Liveability and Governance: Growth Must Improve Quality of Life
A $20 trillion economy also needs cities capable of supporting a much larger and more productive population.
One of the report’s biggest concerns is air pollution.
It notes that 42 of the world’s 50 most polluted cities are in India, while pollution is estimated to cost the economy around $95 billion annually. Approximately 1.67 million premature deaths are also attributed to air pollution each year.
Equirus proposes substantially increasing funding for clean-air initiatives, with around ₹1 lakh crore targeted at the 20 most polluted cities.
Give cities stronger leadership
The report also proposes directly elected mayors with fixed terms.
At present, municipal responsibilities are often divided between elected mayors, commissioners and other layers of administration, creating unclear accountability.
A directly elected strong mayor, according to the report, could give citizens a clear point of responsibility and enable cities to pursue long-term development plans more effectively.
Can These Reforms Pay for Themselves?
The Equirus report argues that the proposed reform package could potentially generate more economic value than it costs.
Its estimates put the direct cost at approximately ₹3.4 trillion, compared with potential direct gains of around ₹7.9 trillion.
That would represent a net gain of roughly ₹4.5 trillion, or approximately a 2.3-times return.
The report also points out that some measures described as “costs” would actually involve timing changes rather than permanent revenue losses.
For example, reducing withholding taxes or abolishing advance tax would not necessarily eliminate the final tax obligation. Instead, taxpayers would retain their money until the actual tax becomes due, releasing working capital into the economy in the meantime.
The Rupee Could Also Help India Reach $20 Trillion
Because the target is measured in US dollars, India’s exchange rate will play an important role.
According to the report, India’s rupee-denominated growth could potentially rise from a trend of around 10.5% to approximately 14%.
At the same time, stronger economic fundamentals and an improved balance of payments could help reduce the pace of rupee depreciation or even produce periods of appreciation.
Therefore, reaching $20 trillion would depend on both faster domestic growth and a stronger currency.
Five Engines Must Work Together
The Equirus report’s central argument is that India cannot rely on a single sector to deliver the next economic leap.
The real economy, capital markets, human capital, services, and liveability and governance all need to advance together.
Importantly, many of the proposed reforms do not necessarily require enormous government spending. Several involve changes to laws, regulations, taxation or administrative practices.
If successfully implemented, they could unlock private investment, improve productivity, mobilise dormant capital and strengthen India’s ability to compete globally.
India’s $20 trillion economy target by 2036 is undoubtedly ambitious. But the report argues that the tools required to pursue it are already largely available.
The real challenge will be turning those tools into coordinated reforms — and ensuring that India’s next phase of growth is not only faster, but also more productive, competitive and sustainable.