Levers for business success in a dynamic world in 2025

2025 is expected to be a year of volatility with many major events expected that could impact businesses globally. To ensure business continuity, business leaders must be prepared for these dynamic shifts.

While India is projected to become the world's fastest-growing major economy in 2025, its growth is expected to moderate slightly. The IMF forecasts India's growth rate to be 6.5% in 2025, still significantly higher than the global projection of 3.2%, indicating that India will remain a strong performer in the global economy.  How would this translate for Indian companies and industries?

Opportunities still

India is expected to have a more competitive business environment owing to more global investments in the country and increased offerings for the end consumer. This may lead to cautious consumer spending, supply chain pressure or the rise of environmental compliance.

Despite such headwinds, there will be more opportunities for Indian businesses. India's growing geopolitical influence is attracting foreign investment and facilitating beneficial trade agreements. The recent trade pact with the European Free Trade Association (EFTA) exemplifies the growing soft power of India in the world with Iceland, Liechtenstein, Norway, and Switzerland all coming forward with projected investments of $100 billion and a million direct jobs in India over 15 years across sectors in the country.

There are multiple reasons why India is emerging as a prime investment destination. It has a large domestic market and is in a strategic global location, allowing manufacturers to serve both domestic and global demand. The country’s young population, with 65% under the age of 35 years, is a significant workforce as well as a huge consumer base. Government initiatives like "Make in India" and the Production Linked Incentive (PLI) scheme combined with a robust private sector, a thriving IT industry, & growing spending power of one of the largest consumer market in the world, India offers a compelling environment for global companies. Yet they continue to seek alternatives to India. It is hence an urgent need for business leaders to adopt strategies that help them thrive in a dynamic ecosystem.

Levers for businesses to thrive

1. Digital transformation: Prioritize innovations that enhance operational and customer-facing efficiency to deliver real value. For example, global aviation engine manufacturers use AI to create digital twins of their engines by analysing sensor data & provide real-time guidance to pilots to optimize fuel efficiencies.

2. Supply chain: The COVID pandemic and recent conflicts have exposed the vulnerabilities in existing supply chains that are now being addressed. However, to ensure such gaps are not impacting it, companies need to reimagine supply chain models, diversify sourcing, and optimize local and global operations. This might necessitate altering global trade flows or considering new trade agreements. Technology will play a crucial role, as by 2035, 45 percent of supply chains are expected to be autonomous, such as increased usage of robots in warehouses and delivery drones.

3. ESG integration: Integrating environmental, social, and governance principles is essential for a company’s ability to connect with stakeholders, from consumers to investors. According to an April 2024 Deloitte and Tufts University survey, 80% of global investors now have sustainable investment policies in place. Moreover, adherence to ESG principles enhances brand reputation and helps protect the business in the long term.

4. Continuous learning: The inability to upskill or reskill can be disastrous for any business. A World Economic Forum (WEF) report highlights a need to address and bridge the skills gap in India's workforce - of the 13 million joining the workforce annually, only a quarter of management professionals, a fifth of engineers, and a tenth of graduates are employable. This underscores the urgent need for reskilling, upskilling, and fostering a culture of continuous learning to ensure business success.

5. Leveraging government initiatives:  Robust government policies, strengthened implementation along with strong Indian industry performance has helped India’s macroeconomic strategy boost capital expenditure. With infrastructure projects this year representing 3.4% of GDP, the government is encouraging states to provide similar support for infrastructure development. Additionally, governments’ substantial incentives for chip manufacturing, which are being utilised by global players are some key examples of the government’s support for industries impacting economic growth.

In conclusion, businesses must remain dynamic and navigate a world that is shifting gears at a rapid pace and presenting challenges as well as opportunities. Although there may be unforeseen threats, 2025 will present many possibilities. The issue is whether businesses will be bold enough to pull the appropriate levers to map out their future course or not.

Navaneel Kar is Managing Director at IPM India. Views are personal.