With industrialisation, India will need to accelerate the expansion and upgrading of its energy sector, said a report.
India can be a China-like global growth powerhouse of 2020s, but it needs to address several challenges including infrastructure, gender gap and expanding industrial base to realise the potential, Economist Intelligence Unit has said.
"India is the only country that has the potential to change the world in the 2020s in the way that China changed it in the 2000s. It will probably take a little longer than that before India really takes off but, even so, it is going to be a global growth powerhouse of the 2020s," EIU's Chief Economist, Simon Baptist said.
The 'Unlocking India's potential' report had been commissioned by ASEA Brown Boveri (ABB), a global leader in power and automation technologies.
It further said the government wants to increase the manufacturing output to 25 per cent of GDP by 2022, with the creation of 100 million jobs.
Mr Baptist further said that a key driver could be expanding India's industrial base.
To expand its industrial base, India will need to accelerate and implement reforms to improve conditions for business and attract investment. At the same time, companies will need to engage actively with trends such as high-quality manufacturing, smart manufacturing practices, automation and the Internet of Things (IoT).
"One thing holding that back is the maze of state-level regulations and the lack of a truly national single market. While state-based competition can be beneficial, as those states with the will can move faster, those barriers will need to be removed for India to really capitalise on its potential," Mr Baptist added.
Identifying India as one of the 'few bright spots' in an otherwise gloomier global economy, International Monetary Fund (IMF) has also projected that Indian economic growth is set to be higher than China's.
Finance Minister Arun Jaitley has also said that the world needs more growth engines after the recent slowdown in China and India is well-positioned to capitalise on this opportunity and its economic growth is expected to improve despite global headwinds.
After the BJP led National Democratic Alliance (NDA) lost the state elections in Bihar, the PM Modi led government has announced reform measures as it looks to reinforce its image as a growth-focused regime.
About results of the Bihar polls, Mr Baptist said in a tweet that "India will still be growth hotspot, but we are revising down our 2018-2020 forecast as Bihar problem means no upper house majority for Modi".