In our previous article, we covered the success story of China, which managed to perform a real miracle and become a global trade leader in just 10 years. However, according to experts, China is not the only country with huge potential for an economic breakthrough. Many see India as a potential competitor to China and the United States. India’s large population, vast territory, and favorable climate give it undeniable advantages—much like China. The main global difference between the countries lies in their social and cultural aspects. Today, we want to trace how India has changed over the last 10 years.
India’s GDP Growth
As early as 2010, thanks to high domestic demand driving production growth, India quickly recovered from the financial crisis. In 2014, the sweeping “Make in India” campaign was launched, aiming to spur economic development by boosting domestic manufacturing and increasing the manufacturing sector’s contribution to GDP to 25% in 10 years. Overall, in the past decade, India’s GDP grew by more than $1 trillion, reaching $2.7 trillion.
Another important indicator is GDP per capita, which in 2020 was $2,191—still significantly below the world average of $10,000. However, the nearly 40% increase in this indicator is a sign of positive changes in the standard of living.
Promotion of Indian Exports
The launch of the “Make in India” program was followed by active development of export-oriented manufacturing. Inspired by China’s example, India sought to take up an ever larger share of the global market and gradually shift from producing vast quantities of low-quality goods to building trust in select brands capable of ensuring high quality and adding value to the “Made in India” label.
Alongside the “Make in India” initiative, the active promotion of Indian exports began, since replicating China’s success could only be achieved by increasing its global presence and making a strategic shift from a large volume of cheap, low-quality goods to a smaller number of trusted brands backing the “Made in India” label. Moreover, due to India’s massive pharmaceutical manufacturing, the country became a base for vaccine production for many countries during the pandemic, boosting foreign trade by nearly half and indicating vast untapped potential.
Limitations and Challenges
India’s GDP Growth
As early as 2010, thanks to high domestic demand driving production growth, India quickly recovered from the financial crisis. In 2014, the sweeping “Make in India” campaign was launched, aiming to spur economic development by boosting domestic manufacturing and increasing the manufacturing sector’s contribution to GDP to 25% in 10 years. Overall, in the past decade, India’s GDP grew by more than $1 trillion, reaching $2.7 trillion.
Another important indicator is GDP per capita, which in 2020 was $2,191—still significantly below the world average of $10,000. However, the nearly 40% increase in this indicator is a sign of positive changes in the standard of living.
Promotion of Indian Exports
The launch of the “Make in India” program was followed by active development of export-oriented manufacturing. Inspired by China’s example, India sought to take up an ever larger share of the global market and gradually shift from producing vast quantities of low-quality goods to building trust in select brands capable of ensuring high quality and adding value to the “Made in India” label.
Alongside the “Make in India” initiative, the active promotion of Indian exports began, since replicating China’s success could only be achieved by increasing its global presence and making a strategic shift from a large volume of cheap, low-quality goods to a smaller number of trusted brands backing the “Made in India” label. Moreover, due to India’s massive pharmaceutical manufacturing, the country became a base for vaccine production for many countries during the pandemic, boosting foreign trade by nearly half and indicating vast untapped potential.
Limitations and Challenges
One of the major obstacles for India is environmental restrictions associated with the country’s high share of manufacturing, although there are also positive trends toward development and a shift to renewable energy sources, namely, a 6% increase in the use of renewable electricity.
The situation with technology development is currently more controversial than in other areas. Due to limited material resources, R&D in India receives insufficient financial support, as resources are channeled toward industry and solving socio-economic issues. Another negative trend is the large number of research publications that lack scientific value and exist only because there is funding available for their publication. The Indian government is doing its best to clean up the research market, but the situation is still far from ideal.
As for digitalization, India has made great strides over the past ten years: the volume of the country’s digital economy has doubled, and it now accounts for 3.1% of GDP. The country can boast an impressive number of software developments and a highly skilled IT workforce. India reached these figures despite the challenging living conditions faced by much of the rural population, which are far from modern standards.
There are serious concerns about social inequality, as more than 23% of the population remains below the poverty line, while the number of dollar millionaires in the country is rising significantly: it has grown by more than half a million in the past ten years, while the poverty rate has declined by less than 6%. Given the threats posed by the pandemic, this situation is likely to worsen.
Thus, we can see that it is social problems—which require enormous investment to solve—that prevent India from competing with China in the coming years. Without a doubt, we can speak of the country’s potential, the active development of domestic production, and its strengthening position in the global market, but existing barriers do not yet allow India to join the ranks of global leaders.
About RASPP
The situation with technology development is currently more controversial than in other areas. Due to limited material resources, R&D in India receives insufficient financial support, as resources are channeled toward industry and solving socio-economic issues. Another negative trend is the large number of research publications that lack scientific value and exist only because there is funding available for their publication. The Indian government is doing its best to clean up the research market, but the situation is still far from ideal.
As for digitalization, India has made great strides over the past ten years: the volume of the country’s digital economy has doubled, and it now accounts for 3.1% of GDP. The country can boast an impressive number of software developments and a highly skilled IT workforce. India reached these figures despite the challenging living conditions faced by much of the rural population, which are far from modern standards.
There are serious concerns about social inequality, as more than 23% of the population remains below the poverty line, while the number of dollar millionaires in the country is rising significantly: it has grown by more than half a million in the past ten years, while the poverty rate has declined by less than 6%. Given the threats posed by the pandemic, this situation is likely to worsen.
Thus, we can see that it is social problems—which require enormous investment to solve—that prevent India from competing with China in the coming years. Without a doubt, we can speak of the country’s potential, the active development of domestic production, and its strengthening position in the global market, but existing barriers do not yet allow India to join the ranks of global leaders.
About RASPP
The Russian-Asian Union of Industrialists and Entrepreneurs (RASPP) is a public organization implementing government cooperation programs aimed at strengthening partnerships between Russian and Asian public and business associations.
One of RASPP’s most important objectives is to assist the business communities of Russia and Asia in developing and strengthening multilateral relations, as well as attracting investment into the Russian Federation. Over its 10 years of operation, RASPP has attracted more than $800 billion in direct foreign investment to Russia and increased trade turnover by over $1 billion.
RASPP specializes in business solutions for import, export, investment attraction, and implementation of investment projects in Asian countries. It also organizes business events and trade missions in these areas. In addition, RASPP provides free assistance in sourcing industrial equipment from China.
Advantages:
For consultations, you can send a request by email to business@raspp.ru or by phone at +7-963-963-8363. Natalia Sapunova, Head of the Department for Trade and Economic Cooperation at RASPP, will be happy to assist you.
One of RASPP’s most important objectives is to assist the business communities of Russia and Asia in developing and strengthening multilateral relations, as well as attracting investment into the Russian Federation. Over its 10 years of operation, RASPP has attracted more than $800 billion in direct foreign investment to Russia and increased trade turnover by over $1 billion.
RASPP specializes in business solutions for import, export, investment attraction, and implementation of investment projects in Asian countries. It also organizes business events and trade missions in these areas. In addition, RASPP provides free assistance in sourcing industrial equipment from China.
Advantages:
- Over 10 years of experience
- Russian-speaking specialists in China
- Turnkey supply chain organization
For consultations, you can send a request by email to business@raspp.ru or by phone at +7-963-963-8363. Natalia Sapunova, Head of the Department for Trade and Economic Cooperation at RASPP, will be happy to assist you.