US media: India still needs to do a lot of South Asia to become the "next China". But Enterprise | China
On June 27th, the website of The Wall Street Journal published an article titled "Modi's American Tour Reshapes India's Defense and Technology Industry.". The full text is excerpted as follows:
The identity of "non China" has helped India attract businesses to come. Generous subsidies are another tempting factor, as was the recognition given by the United States last week. But India still needs to convincingly address the structural problems that have long hindered its development, including outdated infrastructure, cumbersome red tape, and low labor force participation rates, especially among women.
Indian Prime Minister Modi's visit to the United States last week brought many significant deals to his country, most notably the joint production of jet fighter engines. This is a sign of deepening trust between the two countries.
Modi also received investment from American semiconductor companies. Memory chip manufacturer Micron announced that it will invest $825 million in its first assembly and testing plant in India. The factory will start operating by the end of 2024. Chip equipment manufacturer Applied Materials of the United States will invest in building a new engineering center in India.
Cheap and abundant labor is an attraction: India has just surpassed China to become the world's most populous country. But the key reason why companies are investing heavily in this South Asian power is that people have been searching for alternatives to China for a long time.
Like many other countries, India is also striving to attract more semiconductor investment. The Indian government will provide significant subsidies to facilitate the Micron agreement. The company stated that the total investment, including financial support from the central government of India and the government of Gujarat, will reach 2.75 billion US dollars. In other words, the Indian government has made a big move on its own.
Although the factory will not produce the advanced process chips that countries dream of, it can still push India to a higher level in technology. This will help India compete with countries such as Malaysia. Currently, many chip packaging factories are headquartered in Malaysia. In addition, this will also deepen and expand India's electronic ecosystem as a whole. To truly compete with China, India urgently needs these capabilities.
In recent years, the generous subsidies provided by the Indian government have greatly promoted the development of the country's electronic manufacturing industry. According to data from Kant Point Research in the United States, the number of iPhones manufactured in India increased by 65% year-on-year in 2022. Exports have also increased significantly. The data indicates that these iPhones accounted for 20% of the total number of smartphones manufactured in India last year, reaching a record high. The Indian government has provided subsidies to manufacturers such as Foxconn, who are currently assembling iPhones in India.
However, subsidies are only the beginning. In order to achieve the goal of allowing businesses to continue investing, India will need to upgrade its infrastructure and create a better business environment for businesses. Labor force reform will be particularly crucial. The increasing protectionism in the field of software technology may cause foreign companies to hesitate, which may also hinder local companies from developing global competitiveness.
For a long time, people have believed that India will be the "next China", but the country has repeatedly disappointed investors. The deteriorating geopolitical landscape between China and the United States has given India a shot in the arm, but India needs to seize this opportunity and push for necessary reforms. Otherwise, at best, India would only be the "+1" in the "China+1" strategy, rather than a true alternative.