India has roughly 25 years to escape the middle-income trap before its declining fertility rate slows growth irreversibly, Neelkanth Mishra, Chief Economist at Axis Bank and Head of Global Research at Axis Capital, warned at ValueQuest’s Vantage 2026 investor conference in Mumbai. The window, he said, is tightening faster than most policymakers acknowledge.
India’s fertility rate has fallen below 2.5 at a per capita income far lower than that of most countries that reached that threshold. “When the median age crosses 40, growth rates start to fall,” Mishra said, adding that India has about “20-25 years” before demographic tailwinds reverse. Most countries in the mid-income stage, he noted, risk getting “old before they get rich.”
Fragility of global supply chains highlighted
Ravi Dharamshi, Founder and CIO of ValueQuest, said supply chains built for efficiency over the past three to four decades have proven “fragile,” from a $3 semiconductor chip disrupting German auto plants to a vessel stuck in the Suez Canal grinding global trade to a halt. “Trade is becoming strategic. Energy is becoming strategic. Technology is becoming strategic,” Dharamshi said.
Geopolitical tensions could trigger market stress
Mishra warned that prolonged tensions could trigger significant market stress, with financial markets potentially “tanking” and volatility becoming “highly excessive,” alongside severe supply chain disruptions. He said Iran’s strategy appears to be prolonging the conflict to pressure US financial markets, with Oman and Turkey acting as intermediaries in back-channel negotiations. China, he added, is also watching closely: “their tolerance for economic pain is also limited.”
India’s semiconductor journey and policy push
On semiconductors, Mishra described a complex, multi-decade supply chain with 60 to 70 distinct niches. “This is a 15-20 year journey,” he said, but added that India had “covered a long distance” in the past three years. He pointed to the Research, Development, and Innovation Fund — worth one lakh crore rupees — and strong bids from large technology and private equity investors as evidence of serious policy intent.
India’s AI strategy focuses on deployment and diffusion
On artificial intelligence, Mishra said India cannot compete in building large AI models, which require “hundreds of billions of dollars.” But on deployment and diffusion, India’s digital public infrastructure gives it a global edge: “our ability to push down this intelligence to the lowest level is going to be much stronger than in many other countries.”
Manufacturing remains key to global power
Dharamshi closed with a reference to the US in World War II, when factories were retooled to produce over 300,000 aircraft and 90,000 tanks. “Wars may be fought on the battlefield,” he said, “but the balance of power is decided in factories.”