The next China? US media pours cold water on India. India is touted as another China - but here are four key areas that this South Asian power still needs to catch up with | competitors | China
The US business insider website published an article on July 12th titled "India is touted as another China - but here are four key areas that this South Asian power still needs to catch up with.". The full text is excerpted as follows:
After surpassing China in population, India's potential seems to have become more prominent, prompting many observers to see this South Asian country as the next noteworthy economy. People's optimism about India is so high that Goldman Sachs predicts that by 2075, the Indian economy will surpass that of the United States.
But India is not an easy place for foreign investors to navigate.
On August 15, 2022, Indian Prime Minister Modi delivered a speech during the Independence Day celebration in Delhi.
India still needs to catch up with its Asian competitor China in the following four areas. Firstly, India lacks China's supply chain ecosystem. Despite Prime Minister Narendra Modi's efforts to attract foreign direct investment since taking office in 2014, India's manufacturing system still lags behind China.
Analysts from UBS Group wrote in a report titled "Is India the Next China?" released on May 17th that "India lacks a manufacturing ecosystem, which is precisely one of the key drivers of China's astonishing economic growth." Experts told business insider websites that although India, which relies on a rapidly growing young population, is seen as a new force that can compete with China, it still lacks the structure to become a manufacturing powerhouse. These experts believe that India does not have the interconnectivity of large-scale ecosystems like China. In China, products are assembled from components directly purchased domestically. They say that Indian manufacturers usually need to import parts from abroad, which increases the cost of finished products.
Secondly, India's infrastructure investment lags behind that of China. One of the reasons why India has not established a huge manufacturing network is that it has not invested as much capital in infrastructure as China. According to UBS Group's report, the Indian government is making efforts to improve in this regard.
Thirdly, India's social indicators still lag behind China. Although India's population exceeds that of China, its social indicators still lag behind China. A lower literacy rate means that India does not have a large number of skilled labor like China, which has always been an important component of China's economic growth story.
Fourthly, due to the decentralization of decision-making processes, India's business processes may take longer. In an article published by the US International Trade Agency in September last year, it was pointed out that "India's power and decision-making are decentralized, and there are differences in political leadership, governance quality, regulations, taxation, and labor relations among states."
Ashutosh Sharma, the research director of Forrest Research in the United States, told business insider websites in December last year that compared to India, China can take action faster because India "has too many stakeholders to meet.". An analyst at UBS Group wrote, "In our view, the economic development gap between the two countries will take a long time to significantly narrow."
