- Major automakers have largely shunned India when it comes to investing in electric vehicle (EV) assembly plants and battery gigafactories.
- However, some leading industry players, including Tesla, Byd, Fisker Motors, Nissan, and Renault, have shown interest in manufacturing EVs and batteries in India.
- India has become the world's third-largest auto market and surpassed China as the most populous nation.
- The Indian government recently blocked Byd's proposal, potentially due to geopolitical tensions between India and China.
- Tesla CEO Elon Musk has expressed optimism about India's EV potential, stating that it has "more promise than any large country in the world."
### Summary
Under the rivalry between the US and China, many middle and small powers are making their own mark on the international order by reshaping the world economy, affecting the global balance of power, and increasing their economic weight, military potential, and diplomatic stature. These changes have been caused by unhappiness with globalization, the risks of overreliance on rivals for vital supplies, and the rise of China.
### Facts
- The unhappiness with globalization in the West, especially in America, has caused economic anxiety, social discontent, and political backlash.
- Covid-19 exposed the risks of overreliance on another country, especially a rival, for vital supplies.
- Russia's invasion of Ukraine revealed the EU's dependence on Moscow for energy.
- The rise of China has rattled the US and other countries, leading to the search for a new geo-economics.
- US allies in the Indo-Pacific are strengthening their defenses through military and technological cooperation with Washington.
- Geo-economics and geopolitics have merged, with the US leading in redefining globalization that does not harm national security, technological supremacy, and economic leadership.
- India is at the crossroads of new geo-economics and geopolitics, being America's natural geopolitical partner and an attractive partner in geo-economics.
- Middle powers like India are benefiting by aligning themselves with the US and forming independent groupings at the global or regional levels.
- Many players are multi-aligning and multi-networking through mini forums, ad hoc groupings, and shifting coalitions, making the international order very fluid.
### Summary
Commerce and Industry Minister Piyush Goyal believes that India will become the engine of global growth, with its economy projected to reach $35 trillion by 2047. India's young population and vibrant democracy are key factors contributing to its sustainable and inclusive growth.
### Facts
- India is expected to become the growth engine of the world, according to Commerce and Industry Minister Piyush Goyal.
- The country's GDP is projected to reach $35 trillion by 2047, offering significant business opportunities.
- With a population of 1.4 billion people, India recently surpassed China as the world's most populous country.
- India's young population, with over 600 million people aged between 18 and 35, is expected to continue for at least the next few decades.
- India is estimated to provide 24.3% of the incremental global workforce over the next decade.
- The country's digital economy has grown rapidly, with initiatives like the Aadhaar program and the Skill India program promoting digital literacy and skills development.
- India aims to create sustainable and inclusive growth, focusing on value creation and becoming a matter of pride and envy.
🇮🇳💼🌍📈🌱
### Summary
India's total exports and imports of goods and services surpassed $800 billion in the first half of 2023, with a healthy growth in the services sector offsetting a slowdown in global demand.
### Facts
- 📈 Exports of goods and services rose by 1.5% to $385.4 billion in January-June 2023 compared to the same period in 2022.
- 📉 Imports declined by 5.9% to $415.5 billion during the first half of 2023, compared to January-June 2022.
- 💵 Standalone goods exports dropped by 8.1% to $218.7 billion, while imports contracted by 8.3% to $325.7 billion.
- 💼 Services exports grew by 17.7% to $166.7 billion, while imports rose by 3.7% to $89.8 billion during the six-month period.
- 💰 The depreciation of the Indian Rupee didn't prevent the decline in merchandise exports, and weak global demand and loss of competitiveness in labor-intensive sectors contributed to the modest decline.
- 🌍 Several factors, including conflicts, inflation, monetary policies, and financial uncertainty, are expected to weaken world trade in 2023.
- 🛡️ India should focus on increasing product quality and supply chain competitiveness, retain policy space in free trade agreements and Indo-Pacific Economic Framework for Prosperity (IPEF), and be prepared to respond to unilateral policy decisions.
- 📊 Among the product categories contributing to India's exports, 11 out of 29 registered positive export growth, while 18 declined during January-June 2023.
- 📱 Smartphone exports surged to $7.5 billion in the first half of 2023, up from $2.5 billion in the same period in 2022.
- 🌐 India's exports declined in 134 of the 240 countries it exports goods to, with major declines observed in the USA, UAE, China, Bangladesh, and Germany.
- 🌐 India's export promotion should focus on the 41 countries where its exports exceed $1 billion, accounting for 87% of its exports.
- 👥 The top 15 countries with which India has the highest trade deficit include China, Russia, Saudi Arabia, Iraq, and Switzerland.
- 📉 The share of free trade agreement partners in India's merchandise exports decreased from 30.1% in the first half of 2022 to 26.8% in 2023.
- ⛽ Import of crude petroleum declined by 7.6% to $73.2 billion in January-June 2023, with Russia's share in India's import of petroleum crude increasing significantly.
- 🌍 Import growth from major suppliers like Iraq, Saudi Arabia, and the UAE declined during this period.
India's path to prosperity depends on the growth of all states, with some states performing better than others in terms of per capita income and economic outcomes, highlighting the need for policy interventions to address disparities and promote inclusive growth.
India Inc. is facing challenges in developing company culture, addressing the expectations of a multi-generational workforce, and navigating concerns around AI and job security, according to Dale Carnegie's global president and CEO.
India aims to become a $35 trillion economy in 25 years, with a plan to add $30 trillion to its economy in the coming years, according to Union Minister Piyush Goyal.
India's economy is experiencing consistent growth, and is predicted to become the fourth-largest economy within 18 months and the third-largest by 2028, driven by strong fundamentals and infrastructure development, while successfully reducing poverty; however, further reforms in areas such as patents, judicial, administrative, and process reforms are needed to boost economic growth.
India is projected to become the third largest economy in the world in the near future, but it needs to continue implementing reforms, improving infrastructure, and investing in education, according to World Economic Forum President Borge Brende at the B20 Summit in New Delhi.
Billionaire Ray Dalio sees India as a promising investment opportunity due to its recent successful moon landing and projected 7% growth rate, describing it as having the right potential and leadership for growth similar to China in the 1980s. Dalio believes Indian prime minister Narendra Modi has the capacity to influence the world order. On the other hand, Dalio has become less optimistic about China and suggests a massive debt restructuring is needed. Other notable figures, such as Tesla CEO Elon Musk and Goldman Sachs, also express confidence in India's economic prospects.
India has become an attractive destination for global electronics manufacturers, with companies like Apple, Cisco, and Luxshare setting up manufacturing operations in the country to diversify from China and tap into India's large market, workforce, and vibrant presence of micro, small, and medium enterprises; however, there is a need for policy intervention to ensure growth extends beyond assembly units and focuses on creating an ecosystem for component manufacturing and value-addition to move up the value chain.
India's economy is facing challenges as GDP growth declines, investment demand weakens, inflation rises, and job creation remains a major concern, highlighting the need for a comprehensive economic plan to address these issues.
Engineering exports from India to Russia experienced a significant surge in July 2023, more than doubling expectations, while exports to the US and China faced setbacks, highlighting the need for Indian exporters to explore the untapped potential of African and Latin American markets.
India has seen an increase in its tariffs and trade policy measures in recent years, reversing the trend towards liberalization and increasing trade restrictions, which is a global phenomenon as many countries are adopting industrial policies to promote domestic production and exports; however, the effectiveness of these policies and their impact on economic growth and job creation remain to be seen.
India is positioning itself as an alternative to China in the global supply chain, aiming to become a major manufacturing hub and increase its role in the production of goods, as the world seeks solutions to supply chain disruptions caused by health crises and geopolitical events.
Globalization is shifting towards a strategy of security of supply, with companies diversifying their manufacturing operations and seeking suppliers closer to home, such as India, in order to reduce risks and uncertainties associated with relying solely on China.
India's recent achievements and economic growth have positioned it as a rising global power, but the country must address its challenges in poverty, job creation, education, and inequality in order to fully realize its potential.
The economist Tharman Shanmugaratnam highlights India's challenges in achieving sustained economic growth, addressing social and economic disparities, and integrating with China and ASEAN. He emphasizes the need for India to focus on education, increase exports, reform employment and land acquisition laws, and take advantage of its untapped potential.
India's economic rise is seen as inevitable due to factors such as a consumer boom, context-appropriate innovation, a green transition, a demographic dividend, access to finance, major infrastructure upgrades, policy reforms, geopolitical positioning, and a diaspora dividend, although challenges such as unbalanced growth, unrealized demographic potential, and unrealized ease-of-business and innovation potential still need to be addressed.
India's record stock market valuation and increasing foreign inflows are positioning the country as a safe and attractive investment option, especially amidst the economic troubles and struggling financial markets of its neighboring rival, China.
India's positive structural factors, including economic growth translation, supply chain dynamics, and a youthful demographic, make it a top investment choice for HSBC and Morgan Stanley.
India is set to become a global AI powerhouse, as companies like Reliance Industries and Tata Group partner with NVIDIA to bring AI technology and skills to the country to address its greatest challenges.
India, along with several countries including the UAE, Saudi Arabia, EU, France, Italy, Germany, and the US, will launch an economic corridor connecting India, the Middle East, and Europe, which is expected to significantly boost trade and connectivity.
India, along with the US and Europe, successfully countered China's global influence at the recent G20 summit, bolstering India's rising power and giving a boost to the US-led world order.
India's steel producers anticipate a rise in local manufacturing and a decrease in prices after the government's imposition of an anti-dumping duty on steel wheels from China, leading to increased competition and lower domestic prices.
India's economic growth is estimated to be closer to 7.5%, with the country's first quarter growth at 7.8%, reflecting India's increasing stature in the world.
U.S. and European firms are shifting investment away from China to other developing markets, with India receiving the majority of redirected foreign capital, due to concerns over China's business environment, economic recovery, and politics. However, diversification is unlikely to result in a rapid decline in exposure to China as the markets foreign firms are investing in are still heavily reliant on trade and investment with China.
China's economy has entered deflation territory and the debt crisis has worsened, while India's economy is thriving with GDP growth expected to exceed 7% and unemployment rates at a 12-year low; it is predicted that India will surpass China in per capita income by 2044 due to factors such as female education expansion, labor force growth, and higher total factor productivity growth.
Despite concerns over the strong US economy and the slowdown in China, emerging markets may still see opportunities for growth due to factors such as a slow divorce from China, India's appeal as an alternative, South Korea's tech market, Mexico's trade links with the US, and the potential for rate cuts in developing economies.
The latest PMI data shows a contraction in developed markets, while emerging markets continue to grow, albeit at a slower pace, indicating overall solid performance in the third quarter of 2023. However, new export orders for emerging market manufacturing contracts at a slower rate, and India remains a bright spot amid the global headwinds.
The Indian government is planning to rationalize tariffs on components used for making electronics goods to boost local production and increase competitiveness for exports.
Nvidia CEO Jensen Huang visited India to explore the country's potential as a source of AI talent, a site for chip production, and a market for Nvidia's products, as the US restricts exports of high-end chips to China. India's ambitions to boost electronics manufacturing and develop AI capabilities align with Nvidia's interests, making it a strategic market for the company. However, India still faces challenges in becoming an AI hub, such as the lack of exascale compute capacity and sufficient AI talent.
Major U.S. companies are increasingly seeking manufacturing alternatives in countries like India to diversify their supply chains and reduce dependence on China due to the pandemic and escalating tensions between Washington and Beijing.
The Asian Development Bank (ADB) has lowered its GDP forecast for India for the fiscal year 2023-2024 due to a slowdown in exports and potential disruptions in agricultural output, but expects growth to be fueled by increased private investment and industrial production in the following year. The ADB also suggests that larger inflows of foreign direct investment (FDI) could surpass expectations and boost economic growth in FY25, particularly in the manufacturing sector.
Apple has moved $7 billion worth of iPhone production from China to India and plans to increase production in India to $40 billion within the next five years.
India could be one of the fastest-growing markets for JPMorgan in the Asia Pacific region next year, as companies look to diversify their supply chains beyond China and take advantage of India's scale and potential for high-end manufacturing.
India has the opportunity to exert influence over China by providing small loans to heavily indebted countries, which would give India a seat at the negotiating table and enable them to demand debt reductions from China.
Tensions between the West and China are impacting global markets, leading to potential inflation and higher interest rates, while presenting opportunities for emerging nations and tech giants; strategies such as bringing manufacturing home and "friendshoring" are being pursued, with India viewed as a strong competitor to China in manufacturing; the clash between China and the West also has implications for sectors such as semiconductors, luxury goods, and investment in China; investors are divided on how to approach the Chinese market.
China's economic slowdown, driven by a real estate crisis and prolonged Covid-19 measures, is raising doubts about its status as the largest economy in the world by 2030, while India is emerging as a promising economic powerhouse and attracting significant investments.
Private sector investment in India's economy is expected to play a significant role in job creation, GDP growth, and relieving the government's investment load, according to Ranen Banerjee, Partner at PwC India.
India's inclusion in JPMorgan's emerging market bond index signals major changes in the global capital markets, boosting capital inflows by $20-25 billion and improving liquidity for Indian assets and the rupee, ultimately attracting more investment. India's rise in the global economy will have significant consequences, positioning it as a nonaligned player and surpassing China in certain measures, while ongoing disputes with Pakistan and China continue to shape its geopolitical landscape.
Asia's competitive advantage has shifted from cheap labor to industrial services, including logistics, waste management, and data centers, according to a report by KKR's heads of global and Asia macro, who believe that the demand for infrastructure and logistics in countries like India, China, Japan, and others will continue to accelerate. Japan, in particular, is experiencing a capex cycle and corporate reform that is boosting shareholder returns, making it an attractive investment opportunity. Meanwhile, India is witnessing significant growth in infrastructure investment and exports, leading to increased productivity and economic growth. China's economy is undergoing a transition, with a growing digital economy and emphasis on decarbonization.
Pakistan needs to reevaluate its geopolitical and economic strategy, prioritizing sustainable and inclusive economic growth and embracing trade with India in order to address its debt and accelerate development, with potential benefits including increased exports and improved energy supply. India should also play a proactive role in normalizing trade relations with Pakistan, as it shares an interest in a peaceful border and stands to gain commercially from a strong relationship. A trade-centered approach could align with Pakistan's military and contribute to its long-term security and national development.
The US economy is predicted to slow down by mid next year, which will have a negative impact on global GDP, according to Neelkanth Mishra, Chief Economist for Axis Bank. Mishra also mentioned that China will grow slowly but not collapse, while India will be affected through various pathways such as a decline in services growth, goods demand, dumping of products, and financial market volatility. However, he believes that India's trajectory looks good in the next 5-7 years.
Indian startups have played a pivotal role in India's push towards a $5 trillion economy, with sectors like electric vehicles, fintech, jobs creation, technology, bilateral trade, and healthcare contributing significantly to their growth and success.
Israel's declaration of war on Hamas could impact India's plans to build an India-Middle East-Europe economic corridor, as it may drive up insurance premiums and shipping costs and derail the entire project unless all countries in the region are on board. Israel is India's 11th largest trade partner, and any disruption in trade could hurt India economically.
India's economy needs to grow at a rate of 8% per year and focus on investment in traditional sectors in order to surpass China as the largest contributor to the global economy, according to Barclays.
India's recent economic gains are unlikely to surpass China as the world economy's main growth engine, according to HSBC Holdings Plc, as India currently has too few economic drivers and China's importance cannot be easily replaced; however, HSBC does expect India to make significant contributions to global demand for commodities, consumption, and capital goods.
