The Four Strategic Archetypes of India’s Future Arenas

McKinsey’s work on India’s “future arenas” begins with a relatively simple idea. Inside the broad India growth story, there is a subset of sectors where three things line up at the same time: innovation intensity, sustained investment, and a sizeable, fast-growing market. Those sectors, 18 in total (as identified by McKinsey), are treated as “arenas” that could account for a disproportionate share of India’s incremental growth over the next two decades.

Equally important is how those arenas are grouped. McKinsey sorts them into four strategic archetypes using two questions: how strong India’s current capabilities are in a given arena, and whether the primary market is domestic or global. Cross those axes and four quadrants emerge: ‘Build for India’, ‘Pursue accelerated scale-up’, ‘Build global competitiveness’, ‘Achieve global leadership.’ Each implies a different mix of risk, policy dependence, and the kind of capabilities and capital that tend to be involved.

The value of this framework is less in the labels and more in what they reveal: not all “high-growth” sectors are the same. Some are essentially domestic execution stories, others are long-horizon strategic bets, and some are about competing in global markets where the benchmark is the frontier, not the national average.

1. Build for India: Strategic Self-Reliance Bets

This archetype covers semiconductors, industrial electronics, robotics, and nuclear fission. Capabilities in these arenas are still nascent and the focus is primarily domestic. The rationale is strategic rather than purely commercial:

• Semiconductors and industrial electronics sit underneath almost every other modern sector.
• Robotics underpins future manufacturing productivity as wages, compliance, and quality expectations rise.
• Nuclear fission is part of a long-term clean-energy mix designed to complement renewables and manage base-load demand.

These are difficult to ignore because they affect supply-chain resilience, technology sovereignty, and national security. McKinsey’s playbook emphasises patient capacity-building: export-linked incentives, public–private R&D platforms, modular ecosystem designs, and applied research consortia that connect labs, universities, and firms.

In practical terms, that implies long development cycles, substantial public involvement, and payoffs that extend over a long term. Early commercial activity is more visible in design-centric and “fab-lite” semiconductor businesses, component and subsystem makers in industrial electronics and robotics, and engineering, procurement, and construction services around nuclear projects, rather than in fully integrated, capital-intensive plants.

An important feature of this archetype is that benefits show up indirectly. Progress here often appears as fewer supply disruptions, more predictable input prices, or greater access to strategic technologies, rather than as stand-alone headline margins. The economic value is partly systemic, diffusing across other sectors rather than being contained within a single balance sheet.

2. Pursue Accelerated Scale-Up: Domestic Demand Engines

The second archetype comprises renewables with storage, e-commerce, cloud services, travel and tourism, and urban construction. In these arenas, India already has relatively strong capabilities and the primary market is domestic. The core questions are about speed, economics, and execution rather than feasibility.

A few examples anchor the scale:

• Urban construction is estimated at roughly $170–190 billion in 2023, with scenarios that take it close to $490 billion by 2030 as housing demand, urbanisation, and infrastructure spending compound.
• Travel and tourism, currently valued at around $170 billion, is projected to more than double over a similar horizon, supported by domestic leisure, medical tourism, and spiritual travel.
• Renewables with storage links policy targets to system design. India has set a goal of roughly 500 GW of renewable capacity by 2030; turning that capacity into reliable power requires grid upgrades, large-scale battery energy storage, and financing models that recycle capital from early projects into new ones.

A useful way to read this archetype is as the “conversion layer” between macro themes and concrete assets. Demand is visible; the products and services are familiar. The constraints tend to be practical: land, permitting, last-mile connectivity, municipal capacity, and the depth and pricing of local capital. Differences in outcome often hinge less on discovering entirely new models and more on building and operating known ones with discipline and scale.

3. Build Global Competitiveness: The Stretch Zone

The “Build global competitiveness” group includes electric vehicles and batteries, medical devices, biopharma, aerospace and defence, and bio-to-x (biomass-to-fuels, chemicals, and materials). Here, India’s capabilities are emerging but not yet at the global frontier, while the target markets are explicitly international and highly contested.

Each of these underlying arenas in this quadrant brings its own configuration of risk:

• EVs and batteries are capital-intensive, technologically fluid, and exposed to commodity cycles. Some estimates point to a multi-fold increase in battery demand by 2040, but the industry’s structure and dominant chemistries are still evolving.
• Biopharma and medical devices operate under long, regulated development cycles, involving clinical trials, complex approval pathways, and stringent quality standards.
• Aerospace and defence rely on deep systems engineering capabilities, long procurement cycles, and often a single major customer in the form of the state.
• Bio-to-x sits at the intersection of biomass supply chains, process engineering, and climate policy, with economics that depend on both technology performance and regulatory treatment.

McKinsey highlights a toolbox that includes national innovation platforms, sandbox regulations, pooled vehicles for high-risk R&D, joint labs with global partners, and deliberate use of procurement as anchor demand, for example, defence sourcing, vaccine programmes, or public-health initiatives.

What marks this archetype out is that performance is judged against global peers, not domestic averages. It is not enough for these sectors to grow; they need to gain or defend share in markets where standards, IP positions, and cycles are already set by incumbents. That raises the bar on capabilities: clinical development, certification, systems integration, platform and product roadmapping, and the ability to operate credibly within international regulatory systems for years at a time.

4. Achieve Global Leadership: Where India Already Has an Edge

The fourth archetype “Achieve global leadership” covers auto components, space, AI software and services, and cybersecurity. In these arenas, India already shows relatively strong capabilities and a plausible path to global scale. The markets are international; the issue is how much share Indian firms can capture and for how long.

Some indicators point to that shift:

• Auto components have moved from a trade deficit of roughly $2.5 billion in 2019 to a small surplus of around $300 million by 2024, suggesting rising export competitiveness.
• India’s space sector has set a target of reaching about 8% of global market share by 2033, supported by more than 200 startups and several hundred million dollars of funding in recent years.
• AI software and services could generate around $14 billion in revenue by 2030, and the domestic cybersecurity market is already estimated in the tens of billions, reflecting India’s role in managing global IT infrastructure.

McKinsey’s emphasis here is on scaling and defending existing advantages: strengthening IP-led business models, investing in proprietary tools and platforms, deepening multi-year customer relationships, and participating in international standard-setting so that Indian firms help shape, rather than only follow, the rules they operate under. Expanding the skilled workforce beyond the largest metros into tier-II and tier-III cities is presented as another lever for sustaining depth at a competitive cost.

The strategic question in this quadrant is less about entry and more about position in the value chain. In software-heavy segments, that means whether firms own products and platforms or remain primarily service providers. In auto components and space, it is about moving up from build-to-print roles into design, integration, and technologies that are harder to commoditise.

Why the Archetypes Matter

The four archetypes do not indicate which specific firms or projects will succeed, but they do clarify the environment in which each arena operates:

• Build for India arenas involve long-term capability building, high public involvement, and strategic rationales that extend beyond near-term financial returns.
• Accelerated scale-up arenas are largely execution stories at domestic scale, where demand is visible but outcomes depend on regulatory reliability, project selection, and operational discipline.
• Build global competitiveness arenas sit in a stretch zone, with higher technology, regulatory, and timing risk as India attempts to move up the value chain in contested global markets.
• Achieve global leadership arenas are closer to classic scale and defensibility questions, where distinctive capabilities already exist and the challenge is to expand and protect share.

Viewed this way, the archetypes are less about labels and more about mapping risk, time horizon, and policy dependence across the 18 sectors. They also make it clear that these positions are not static. As capabilities deepen and market orientation shifts, an arena can move from one quadrant to another: for example, from domestic scale-up to global competitiveness, or from emerging competitiveness to established leadership.

Used as a lens, the framework narrows the discussion from “India growth” in the abstract to a set of specific positions in specific arenas, each with its own trajectory, constraints, and institutional demands. It is a descriptive map of where different types of firms, skills, and public instruments are likely to matter most. It is not an instruction on what to back.

This is a descriptive framework based on external research and public data. It does not constitute investment advice or a recommendation to invest in any specific sector, company, or asset.

Brand Manager

Aayushi Thakur

Frequently Asked Questions

Q: What are the four archetypes used in McKinsey’s framework?

A: Build for India, pursue accelerated scale-up, build global competitiveness, and achieve global leadership.

Q: Which sectors are grouped under these archetypes?

A: Together they cover semiconductors, industrial electronics, robotics, nuclear fission, renewables with storage, e-commerce, cloud services, travel and tourism, urban construction, EVs and batteries, medical devices, biopharma, aerospace and defence, bio-to-x, auto components, space, AI software and services, and cybersecurity.

Q: What is the main difference between these archetypes?

A: They differ by strength of current capabilities, whether demand is mainly domestic or global, and the mix of technology, policy, and execution risk.

Q: Can sectors move from one archetype to another over time?

A: Yes. As capabilities and markets evolve, sectors can shift, for example from domestic scale-up to global competitiveness.

Q: Are these archetypes or sector groupings investment recommendations?

A: No. They are a descriptive way of organising sectors and do not constitute investment advice.

Sources

1. McKinsey
2. Business Standard
3. Fortune India