Perhaps India CAN become the ‘next China’ and drive global growth

Since INTO INDIA has been involved with India, the mantra from economists and diplomats has been that “India is not the next China “. Is that about to change?

It could be, according to Amit Kumar, a research analyst with the Takshashila Institution’s Indo-Pacific studies program.

China has been top of mind for good reason – contributing more than a quarter to global gross domestic product expansion between 1990 and 2020. In the period from 2013 to 2021, China contributed almost 39% of global GDP growth — 13% more than the G7 countries combined.

How could India become the next China?

India would need to sustain a near double-digit growth rate for nearly three decades.

It would need to integrate with the global manufacturing supply chain, transition into an export powerhouse and attract enormous foreign investment.

But 40 years ago, we would have said the same things about China.

China’s rise from the 1970’s was boosted because of the deepening U.S.-Soviet rivalry and the Sino-Soviet split, prompted the US and the West to open up to China in 1971.

This is happening now with India.

Due to the deepening strategic competition with China, Beijing’s expanding diplomatic and economic clout, its belligerent foreign policy and economic coercion, has sparked concerns of overdependence and strategic vulnerability in the West.

India is emerging (has emerged?) as the preferred partner for the West.

We should not forget that China’s growth was also driven by global businesses looking for cheaper manufacturing.

This is now happening with India. Global firms now see India as an alternative to China.

The Indian Government has already supported high-profile projects involving the manufacturing of iPhones and the assembly of semiconductors – sending an “invitation” to others.

China also had a rapidly growing consumer base. No other Asian country had such a base – until India.

India has the second-largest consumer base – defined as people spending above $12 a day – of over 500 million, second only to China’s 900 million. Estimates show that by 2030, India’s consumer base will expand to 773 million, trailing only China’s 1.062 billion.

The gap between China and India will only shrink from here on.

NEXT BLOG – What India has to do to become the next China.