By J P GUPTA
The state’s diverse industrial base, rapid infrastructure growth, and robust economic reforms make it a top investment destination.
Uttar Pradesh has emerged as a major player in India’s economy, with its rapid growth in GDP, improving ease of doing business, and world-class infrastructure positioning the state to become a key economic powerhouse on both domestic and international fronts. According to a recent research report by the PHDCCI (PHD Chamber of Commerce & Industry), Uttar Pradesh is well on track to achieve the ambitious goal of becoming a USD 1 trillion economy. This breakthrough, set to shape the future of India’s economic landscape, is backed by substantial investments and a series of reforms.
Uttar Pradesh’s Economic Growth: A Snapshot of Success
The state’s transformation into an economic giant is undeniable. As per Dr. Ranjeet Mehta, Secretary General and CEO of PHDCCI, Uttar Pradesh has experienced remarkable growth in its Gross State Domestic Product (GSDP), rising from ₹16.44 lakh crore in 2020-21 to ₹25.47 lakh crore in 2023-24. This growth trajectory places the state firmly on the path to a USD 1 trillion economy, with a growth rate of 9.6% from 2017-2020 and an impressive 15.7% recovery post-COVID-19 from 2021-2024.
In a meeting with Shri Abhishek Prakash, IAS, CEO of Invest UP, Dr. Mehta emphasized the robust economic and business environment that is steadily improving. “The drivers of Uttar Pradesh’s economic growth have become increasingly strong with daily improvements in business operations, state policies, and infrastructure,” he said.
Key Drivers of Growth: Services, Agriculture, and Industry
Uttar Pradesh’s economy thrives on a balanced mix of services, agriculture, and industry. The services sector leads with a 46.5% contribution to GSDP, encompassing areas such as tourism, real estate, finance, and hospitality. The agriculture sector, vital to the state’s workforce, contributes 27% to the economy, benefiting from agricultural reforms that have increased productivity and farmer incomes.
Agricultural advances in irrigation systems, improved crop varieties, and farmer training have bolstered agricultural output. “The state’s focus on modernizing agriculture has led to improved yields and greater profitability for farmers,” Dr. Mehta explained.
Industry, contributing 26.5% to GSDP, is the driving force behind Uttar Pradesh’s rapid economic growth. The state has emerged as a manufacturing hub, particularly in sectors such as electronics, textiles, pharmaceuticals, automobiles, leather, food processing, and chemicals. This industrial expansion is complemented by investments in infrastructure, including modern roads, railways, and logistics, which have further improved the state’s competitiveness.
Ease of Doing Business: The Key to a Thriving Investment Climate
PHDCCI’s research highlights significant progress in Uttar Pradesh’s ease of doing business (EoDB) rankings. The state has streamlined business regulations and implemented a single-window clearance system to attract domestic and foreign investments. This reform-driven approach has led to a conducive environment for businesses to thrive, with Uttar Pradesh significantly improving its digital infrastructure and simplifying business operations.
Micro, Small, and Medium Enterprises (MSMEs) play a pivotal role in Uttar Pradesh’s economic success. With nearly 90 lakh units, MSMEs contribute to both manufacturing output and employment generation. The state government’s initiatives to provide financing and foster innovation have enhanced MSME competitiveness and supported their growth within the global supply chain.
Foreign Investment and Export Potential
Uttar Pradesh’s strategic location, coupled with its improving infrastructure, has attracted increased Foreign Direct Investment (FDI). Between October 2019 and June 2024, cumulative FDI inflows amounted to USD 1.68 billion, making the state the 10th largest recipient of FDI in India. Key sectors drawing investment include IT, textiles, electric vehicles, and logistics.
Exports, particularly in handicrafts, which comprise 60% of total exports, have also surged. The state’s export potential extends beyond handicrafts to include sectors such as textiles, leather products, machinery, food products, and more. Identified in the PHDCCI report on “States’ Policy Conclave 2022 – Make in India, Make for the World,” Uttar Pradesh has immense untapped export potential in areas such as meat and edible meat products, plastics, footwear, and machinery.
A Vision for the Future: Infrastructure and Investment
While Uttar Pradesh has made significant strides, the future lies in continued investments. Dr. Mehta highlighted the importance of boosting infrastructure, industry, and technological advancements. Additionally, Public-Private Partnerships (PPPs) will be essential for scaling infrastructure projects and accelerating growth.
A key element of the state’s forward-looking strategy is skill development, which has already led to an increase in per capita income. Uttar Pradesh’s per capita income reached ₹93,514 in 2023-24, reflecting a 14% increase from the previous year. This economic growth will not only drive the state toward becoming a USD 1 trillion economy but will also play a crucial role in India’s goal of becoming a developed nation by 2047.
The Road Ahead: Building on Success
With its diverse economic base, growing infrastructure, and focused efforts on sustainability, Uttar Pradesh is poised to remain a major economic player in India’s future. The state’s potential to attract investments spans high-growth sectors such as energy, agriculture, infrastructure, tourism, IT, electronics manufacturing, and textiles. Simplified regulations, reduced business start-up times, and increased transparency make Uttar Pradesh an attractive destination for both domestic and foreign investors.
As Dr. Mehta concluded, “Uttar Pradesh’s dynamic economy, supported by strategic investments and industrial growth, is well-positioned to contribute significantly to India’s development, playing a crucial role in the nation’s journey toward becoming a developed country by 2047.”
As Uttar Pradesh marches toward becoming a USD 1 trillion economy, the state is poised to continue its remarkable growth trajectory, setting a model for other regions to follow in India’s ambitious economic vision.
