35 years of liberalisation: Which sectors emerged as biggest winners?

India's economic reforms changed the course of industries from IT and pharma to retail and aviation. Here's a look at the biggest winners and the challenges that continue today

When India opened its economy in 1991, it marked one of the country’s biggest policy shifts since Independence. Faced with a balance of payments crisis, the PV Narasimha Rao government introduced reforms centred on liberalisation, privatisation and globalisation.

 

Industrial licensing was dismantled, import restrictions were eased, foreign investment was encouraged and the private sector was given a larger role. Thirty-five years later, some industries have become globally competitive, while others continue to struggle with structural constraints.

 

1. Information technology and business services

 

Few sectors benefited more from the reforms than information technology and business services. Software Technology Parks, easier access to imported technology and export incentives helped the industry expand beyond the domestic market.

 

According to the India Brand Equity Foundation (IBEF), the information technology and business process management industry generated nearly $300 billion in revenue in FY25, including exports of more than $230 billion. India accounts for about 17.6 per cent of the global outsourcing market and has more than 5.4 million software engineers.

 

Companies such as Tata Consultancy Services, Infosys and Wipro built large global businesses. The industry must now move beyond traditional outsourcing towards artificial intelligence, deep technology and higher-value products while addressing skill shortages, cybersecurity risks and rising costs.

 

2. Telecommunications

 

India’s telecom industry was largely state-controlled in the early 1990s, with limited landline access and no mass mobile market. The National Telecom Policy of 1994 opened the industry to private operators, while spectrum auctions and successive generations of mobile technology expanded coverage.

 

India now has more than 1.33 billion telephone subscribers and over 1 billion internet users. Affordable mobile data supported the growth of the digital economy, with Bharti Airtel and Reliance Jio emerging as major operators.

 

However, high spectrum costs, heavy investment requirements for 5G, elevated debt and gaps in rural connectivity continue to weigh on the industry.

 

3. Automobiles and auto components

 

The abolition of licensing and relaxation of foreign investment rules attracted global carmakers and encouraged domestic expansion. Annual vehicle production rose from about 2 million units in 1991-92 to nearly 30 million.

 

India is now the world’s largest three-wheeler manufacturer, among the two largest two-wheeler producers and one of the leading markets for passenger and commercial vehicles. Tata Motors, Mahindra & Mahindra, Maruti Suzuki and TVS Motor have also expanded overseas.

 

According to Brickwork Ratings, automobile and auto-component projects worth Rs 703 billion are expected to be commissioned between FY27 and FY29. The next challenge is to build domestic capacity in batteries, advanced components and electric-vehicle technology.

 

4. Pharmaceuticals

 

India’s pharmaceutical industry developed into a major export sector by combining its expertise in low-cost generic medicines with access to international markets.

 

A key shift came in 2005, when India amended its patent laws to comply with the World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights agreement. More recently, production-linked incentives have supported pharmaceutical and medical-device manufacturing.

 

India ranks third globally in pharmaceutical production by volume and supplies about 20 per cent of the world’s generic medicines. Pharmaceutical exports increased from about $14 billion in FY15 to nearly $31 billion in FY26.

 

The sector must now invest more in research and development, reduce dependence on imported active pharmaceutical ingredients and strengthen regulatory compliance.

 

5. Financial services

 

In 1991, banking was dominated by public-sector lenders, interest rates were controlled and private participation was limited. Reforms allowed new private banks to enter, deregulated interest rates and strengthened capital-market supervision.

 

The Securities and Exchange Board of India became a statutory regulator in 1992, insurance was opened to private companies and digital payments expanded rapidly after 2010.

 

According to a Bajaj Finserv Asset Management Company study, the market value of banking and financial services companies rose from Rs 1.8 trillion in 2005 to Rs 91 trillion in 2025. Mutual funds, insurance, fintech lending and the Unified Payments Interface have widened access to financial services.

 

Credit availability for small businesses and farmers, stress among non-banking financial companies and gaps in financial inclusion remain challenges.

 

6. Aviation and tourism

 

Aviation was dominated by state-owned carriers in the early 1990s. Deregulation allowed private airlines to enter, while open-skies policies, new airports and rising household incomes expanded the passenger market.

 

India is now the world’s third-largest domestic aviation market and fifth-largest passenger market. According to the Directorate General of Civil Aviation, domestic airlines carried 15.24 million passengers in January 2026, up 4.36 per cent from a year earlier.

 

The industry’s growth is constrained by airport congestion, high aviation turbine fuel costs, airline debt and infrastructure bottlenecks.

 

7. Electronics

 

Electronics has emerged as one of India’s fastest-growing manufacturing industries. Policy support through Make in India and production-linked incentives attracted investments in mobile phones, televisions, components and semiconductors.

 

Electronics exports crossed Rs 4 trillion in 2025, while production reached about Rs 11.3 trillion. India is now the world’s second-largest mobile-phone manufacturer by volume.

 

Mobile-phone production reached Rs 5.5 trillion in 2025, with exports of about Rs 2 trillion. New incentive schemes seek to deepen component manufacturing and battery production.

 

However, the industry remains dependent on imported components and semiconductor chips. Weak supply chains, land constraints and low research spending limit domestic value addition.

 

8. Textiles and garments

 

Textiles entered the reform era with a large manufacturing base, but exports were constrained by the global quota system until 2005. Lower import duties, textile parks and incentive schemes helped modernise parts of the industry.

 

Textile and handicraft exports rose 2.1 per cent to Rs 3.16 trillion in FY26, according to news agency PTI. Ready-made garment exports increased 2.9 per cent to Rs 1.39 trillion.

 

India is the world’s sixth-largest textile and garment exporter, but faces strong competition from Bangladesh and Vietnam, which benefit from lower labour costs and favourable investment policies.

 

9. Food processing

 

Food processing has expanded with urbanisation, higher incomes and changing consumption patterns. Incentives for cold chains, mega food parks and manufacturing have attracted investment in packaged and ready-to-eat products.

 

According to IBEF, India’s processed-food market is valued at about $350 billion and is projected to reach $600 billion by 2030. India’s position as the world’s largest producer of milk and spices provides a large raw-material base.

 

Yet fragmented supply chains, inadequate cold storage and weak logistics continue to limit processing and exports.

 

10. Retail

 

India’s retail market has moved from being almost entirely unorganised to include large domestic chains, global brands and online marketplaces.

 

Foreign investment was permitted in single-brand retail in 2006 and later allowed, with restrictions, in multi-brand retail. E-commerce further transformed the industry, with Reliance Retail, IKEA, Walmart-owned Flipkart, Amazon and other companies expanding their presence.

 

India’s retail market is expected to cross $1.4 trillion by 2027 and become the world’s third-largest by 2030. According to Bain & Company and Flipkart, e-retail gross merchandise value reached $65-66 billion in 2025, growing 19-21 per cent.

 

Offline retail remains dominant, while logistics constraints and the impact of organised retail on small shopkeepers remain important policy concerns.

 

India's economic reforms have transformed sectors such as IT, telecom, automobiles, pharmaceuticals, financial services, aviation, electronics and retail. However, labour-intensive manufacturing, agriculture, power distribution and urban infrastructure have made slower progress. Three-and-a-half decades after liberalisation, India's growth story reflects both the success of market-oriented reforms and the challenges that still need to be addressed.