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This week's edition covers the role of real estate and urban development for India’s growth, the IMF’s latest outlook on India, what Airbus’ board meeting in India might indicate, and more must-know news.
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Number of the Week
330 Million
India’s urban landscape will grow by the size of the whole US population by 2050.
Rise of the Week: The Real Estate and Urban Development Sector’s Role in India’s Growth Engine
India’s economic growth is reflected in the growing number of factories, logistics centres, innovation parks, or residential districts and all its infrastructure from roads to utilities. Well-funded, efficiently executed, and sustainable urban development is not only crucial for maintaining India’s growth trajectory, but also the foundation for further growth and foreign direct investment.
Image partially generated with Google Gemini (2025)
Real estate and construction physically reflect an economy's health and serve as its foundation. This holds especially true for India and other emerging markets that are in a process of catching up on infrastructural deficits, availability of housing, or qualitative commercial real estate.
Over the past decade, several policy reforms such as the introduction of Real Estate Investment Trusts (REITs) or Infrastructure Investment Trusts (InvITs) laid the groundwork for increasing confidence in the market and investments by large institutional players. Today, the real estate sector is one of the most important sectors in India:
Share of GDP: The real estate sector contributed around 7.5% to India’s GDP in FY2025. This is expected to reach up to 13% by 2030. By 2047, this is expected to reach around 15% of India’s GDP and a market size of USD 5.8 trillion.
Employment: The construction sector employs around 70 million people, second only to the agriculture sector.
Urbanisation is a global megatrend and by 2030, nearly 40% of Indians are expected to live in cities, up from around 37% today. When we consider that the urban footprint in India’s top 8 cities has already doubled in the past three decades, yet development can’t keep up with the demand, the urgency will only intensify.
India is stepping into the biggest urban transformation in its history. Around the world, cities drive more than 80% of GDP, and for India too, the journey to becoming a developed economy runs through its urban centres.
By 2050, India will add more than 330 million people to its urban population, the equivalent of absorbing the entire population of the United States into its urban fabric. This unprecedented migration means close to 100 million new homes must be built, alongside massive investments in transit, infrastructure, and services.
A recent report by the international consultancy CBRE addresses the issue by suggesting Transit Oriented Development (TOD). These mixed-use developments combine residential and commercial space around key infrastructure and transit hubs:
Expanding metros
Inter-state bus terminals
City railway stations
Airports
CBRE sees a development potential of more than 106 million sqft for TOD. While around three times the annual office development pipeline, this is only around 15% of the overall annual residential development.
TOD development can however help connect urban development and might be more valuable due to its location, and developer interest confirm this trend. Equity inflows grew by 48% year-over-year in Q3 2025 and reached USD 3.8 Billion for land acquisition and construction. Yet challenges remain: lengthy planning processes, limited financing and skilled labor, and outdated land-use regulations.
In order to address some of these issues, the Indian government is developing a National Spatial Policy (NSP) that is inspired by Japan’s urban planning approach to tackle rapid urbanisation. It’s a tiered framework to align economic growth with the development of sustainable cities.
India’s real estate and construction sector is booming and will most likely continue doing so. Many European businesses are active in the broader construction, infrastructure, and real estate sectors and stand to benefit significantly. We've covered individual segments in past issues, but even if you're not in those sectors, the trends here signal broader opportunities across India's economy.
Sources: Fortune India, News18, , Equipment Times, Business Standard, CBRE, The Economic Times, Business World
What Else is Rising?
The IMF’s Latest Views on India and the APAC Region
In a new interview with The Economic Times, the International Monetary Fund (IMF) shared its current observations on India and the overall APAC region. While the IMF suggested several reforms, it also recognised the resilience of the Indian market and established policy reforms.
Overall growth rates indicate a continued dominance of the APAC region. The region is contributing 60% to the global growth in GDP and India in particular takes a significant share, maintaining its position as the fastest-growing major economy:
Global | APAC | India | |
|---|---|---|---|
GDP Growth 2025 | 3.2% | 4.5% | 6.6% |
GDP Growth 2026 | 3.1% | 4.1% | 6.2% - 6.5% (subject to tariffs) |
According to the IMF, US-imposed tariffs remain an issue, but also provide opportunities for structural reforms and trade liberalisation such as free trade agreements with the EU to balance their implications on India’s economy. The IMF also outlined additional reforms needed for India to reach its developed nation status by 2047 that requires a sustained growth rate of around 8%.
On the investment side, public funding has been well perceived by the IMF but private investments need to accelerate to provide more jobs and opportunities for India’s population. Many reforms and trade agreements that are under negotiation will help, but the IMF suggests increasing the speed of implementation.
My main takeaway is that APAC remains the region of the future, with India spearheading thanks to its strong growth momentum and geopolitical position. This reinforces why European companies should deepen their India strategy. Despite potential near-term challenges, the growth trajectory is undeniable.
Sources: The Economic Times
Airbus Might Consider a “Make-in-India” Strategy
Airbus’ last board meeting took place in India. Since these meetings typically occur in Europe or major manufacturing hubs like China, holding it in India signals Airbus' growing commitment to India.
The European aerospace leader had several high level meetings during the board’s visit to India:
Indian government: Chairman Rene Obermann met with Prime Minister Narendra Modi in Delhi. Additionally, the board met with Civil Aviation Minister K Rammohan Naidu and Commerce and Industry Minister Piyush Goyal
Suppliers: The Airbus board visited Tata Advanced Systems manufacturing facility in Hyderabad as well as the supplier Dynamatic Technologies in Bengaluru.
Airbus also announced a joint venture with Air India to establish a pilot training school for its A320 and A350 models, an investment of INR 1,000 crore (around EUR 110 million). The move comes as Air India and IndiGo have ordered more than 1,000 aircraft from Airbus, underscoring India’s importance as a market.
India is growing in importance for Airbus. It not only runs an engineering and technology hub in Bengaluru, but also plans to establish final assembly lines for helicopters and military aircraft. Overall, the company already sources USD 1.4 billion from India annually and while this is expected to grow, a full “Make in India” approach for commercial aircraft remains on the horizon rather than imminent. For European aerospace suppliers, Airbus' deepening India presence could signal new partnership and localisation opportunities in the region.
Sources: Times of India
Quick Risers
German satellite startup Exolaunch signed an agreement with the Hyderabad based Skyroot Aerospace to provide end-to-end satellite launch services. (Source: AIM)
Germany’s tunnel-boring-machine maker Herrenknecht AG is expanding its facility in Chennai. (Source: Guidance Tamil Nadu, Business Line)
Maruti Suzuki is now more valuable than Volkswagen, Ford, and GM and is the 8th most valuable carmaker globally. (Source: The Economic Times)
India will invest USD 125 billion in its high-speed road network. (Source: The Economic Times)
US pharma giant Eli Lilly will invest USD 1 billion in manufacturing capacity in India, especially in Hyderabad. (Sources: Times of India)
German Allianz Group appoints new India CEO to drive growth and investment in the country. (Source: The Economic Times)
France’s Safran to double workforce and will increase sourcing from India. (Source: Times of India)
Germany is considered a smarter career move than the US thanks to the US’ H-1B Visa implications. (Source: Times of India)
Google will invest USD 15 billion in India for largest AI hub outside of the US. Note: this is an update of the last week reported and anticipated investment of USD 10 billion. (Source: DW)
India’s unemployment rate reaches 5.2% due to job losses in rural areas. (Source: The Economic Times)
Spotlight: India-Norway Startup & Innovation Forum
The Embassy of India in Oslo, in collaboration with Invest India and DPIIT, is inviting for the India–Norway Startup and Innovation Forum to connect Indian startups with Norway’s vibrant innovation ecosystem.
Source: Embassy of India in Oslo (2025)
The exclusive forum offers opportunities to engage with investors, corporates, incubators, and public institutions across AI, DPI, ClimateTech, HealthTech, FinTech, and CleanTech.
Register and sign up here.
Curiosity Corner
Your random facts and stories about India and the Indo-European friendship.
This week: A comparison of Europe’s and India’s urbanisation!
Europe and India represent two vastly different urban realities. Europe is a highly mature urban continent, with about 76% of its population living in cities. While this figure rose slowly over centuries following the Industrial Revolution, Europe’s focus is now on managing, optimizing, and greening established urban landscapes. In stark contrast, India is still predominantly rural by percentage, with only about 37% of its people living in cities. However, due to its massive population, India's urban population (over 530 million) is already larger than the entire population of the European Union, and it is growing at a historically rapid pace.
This divergence defines their future trajectories. By 2050, Europe's urban rate is expected to slowly plateau around 85%. India, meanwhile, will be in the midst of one of the largest urban transformations in history, projected to add hundreds of millions more to its cities and cross the 50% urban mark. This highlights the core difference: while Europe is managing its established urban legacy, India is in the monumental race to build its urban future. Estimates suggest that nearly 70% of the infrastructure it will need by 2047 is yet to be constructed.
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