Bernstein pens down open letter to PM Modi, first time since 2019 – Business Upturn
Global brokerage Bernstein has written an open letter to Prime Minister Narendra Modi, marking its first such communication since 2019, outlining key structural challenges and policy priorities for India's next phase of growth.
In its India Strategy report dated April 23, 2026, Bernstein said the letter comes at a time when India has made notable macroeconomic progress but still faces unresolved constraints that could limit its long-term potential.
The brokerage noted that while India has moved up global GDP rankings and benefited from a shift towards productive capital expenditure, there is a risk of overestimating recent success. It cautioned that global dynamics are changing rapidly, with supply chains being redrawn and new technological shifts — particularly artificial intelligence — posing fresh challenges.
Employment and AI emerge as key concerns
A central theme of the letter is employment, especially in the context of generative AI. Bernstein highlighted that India's services-driven growth model, powered by a large IT and BPO workforce, could face disruption as automation accelerates.
It warned that India risks becoming a "user" rather than a "creator" in the AI economy, with most value currently concentrated in the US and China. The report stressed the need for India to build domestic capabilities in AI, including foundational models and compute infrastructure.
Manufacturing, agriculture and energy gaps highlighted
The brokerage also raised concerns over India's manufacturing trajectory, stating that despite initiatives like production-linked incentives (PLI), the sector's share in GDP remains limited and job creation insufficient. It pointed out that the much-discussed "China+1" opportunity has been slower to translate into tangible capacity and employment gains.
In agriculture, Bernstein flagged persistent structural inefficiencies, noting that nearly 42-45% of India's workforce depends on a sector contributing only about 15-16% to GDP, underlining the need for reforms in irrigation, subsidies and supply chains.
On energy, the report highlighted India's heavy dependence on crude imports — around 88% — and called for faster electrification and a clearer transition roadmap towards electric mobility to reduce strategic vulnerabilities.
Push for reforms in infrastructure, R&D and taxation
The letter also called for a rebalancing of infrastructure priorities, with greater focus on railways and mass transit systems over aviation, given India's structural advantages in rail infrastructure.
Bernstein flagged low investment in research and development — at around 0.6-0.7% of GDP — as a key constraint to innovation, particularly in emerging sectors such as semiconductors and advanced manufacturing.
On fiscal policy, it cautioned against the growing reliance on large-scale cash transfer schemes by states, arguing that such spending could crowd out capital expenditure and limit long-term productivity gains.
Call for decisive policy action
Concluding its note, Bernstein emphasised that India does not lack capital, talent or ambition, but requires faster and more decisive policy execution. It warned that continued delays in reforms could lead to long-term dependence in critical sectors and limit the country's ability to fully realise its growth potential.
The brokerage framed the letter as a roadmap for investors and policymakers alike to assess India's risks and opportunities over the next decade, urging a shift from incremental progress to structural transformation.
Key Insights
- This topic is currently trending
- Experts are closely monitoring developments
- It may impact future decisions
