Can India Become the New China?

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Can India Become the New China? | Euro Exim Bank
  • It is a well-known fact that China is considered to be the world’s factory
  • This is because of several reasons such as its manufacturing prowess, the availability of cheap labour, its ability to adapt to new technologies
  • Over the past couple of decades, China has made huge strides in terms of its economic growth as well as its production capabilities
  • These factors have resulted in a situation where China has become a vital component of the global economy
  • However, since 2019, China’s global dominance has started to reduce to an extent
  • The first reason for this is that China is looking to dominate geopolitics around the world. This has pitted it against other major powers such as the US
  • China and the US have also been engaged in a trade war, thereby having a negative impact on the Chinese trade. China has also been engaged in a trade war with other countries such as Australia
  • The ongoing COVID crisis has also hurt Chinese exports and its ability to dominate global trade
  • Several economists and experts have argued that India has the potential to become the new China and replace the East Asian giant in the global economy
  • This blog assesses India’s current capabilities and analyses whether the South Asian nation can replace China in the medium term

Does India Have the Potential to Replace China?

  • India is currently the third-largest economy in the world in terms of Purchasing Power Parity (PPP)
  • There are only two countries ahead of India in this regard, i.e. the US and China
  • Further, it is also forecasted that India will overtake the US economy sometime in the middle of the 21st century. This means that India would be in a good position to challenge the might of China
  • However, in order to do so, India needs to ramp up its manufacturing capabilities
  • Although the Indian manufacturing industry has made giant strides in recent years, it stands nowhere compared to China
  • Indian manufacturing firms have the ability to match up to their Chinese counterparts if they are able to leverage the power of technology
  • There is no dearth of human capital in India. This can prove to be a major boost towards India’s quest to become the new China
  • The Indian government has been taking steps in order to ensure that the country becomes more business-friendly
  • Over the past couple of years, India’s ranking in the ease of doing business ratings has improved significantly
  • During 2019, the South Asian country improved its position in the ranking by 14 places. It now stands at 63rd position out of 190 countries
  • Despite this jump, the country still has a long way to go and has the ability to improve its ranking even further
  • Another area where India can improve itself and come close to China is its export volumes. At present, India’s total exports are far behind China’s. India must develop policies that help it in increasing its total export volumes
  • Such policies could also help the country in improving its trade deficit and ensure that India is able to become a true superpower


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