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How India Is Best Poised To Fill The Gap Left By China

Over the years, India and China have become the two major Asian superpowers, contributing to the major GDP of the continent. As of 2021, the nominal GDP of China has been recorded as 26%, while that of India is 21%, proving how both these countries are accelerating towards a better economic state. To improve global outreach, both these countries have adopted economic liberalisation via which they have opened foreign trade routes, reduced public sector monopoly, and increased the overall employment opportunity. Even then, India is running behind China in terms of economic growth, management, etc. China is capable enough to tackle the declining world economy. But the same can’t be said for India!

Reasons Why India is not the next China?

In the 1970s, both India and China had economic and demographic problems. China decided to spur its economy by investing heavily in infrastructure and manufacturing, which was a key policy as it employed millions of people and thereby boosted its economy. India, on the other hand, has developed a significant level of dependence on imported goods from China. First, we need to understand the circumstances leading to this level of dependence between the two Asian giants. China, of late, has captured the Indian consumer market through its cheap and easily accessible products. 

India China trade: In 2019-20, China accounted for more than 5% of India’s total exports and 14% of imports. This means India has a massive trade shortfall with China, which is one of the largest exporters in Asia. The state-backed investment data reveals that India is the seventh-largest importer of goods manufactured in China. According to the Ministry of Commerce, Chinese exports to India include electrical appliances like smartphones and others, capital goods like power plants, iron and steel products, and others.

  • Chinese investment in India: There is significant Foreign Direct Investment from China. They come in sectors like installation industries, renewable energy, electrical equipment, automobiles, and chemicals. Some of India’s largest mobile phone manufacturers include Vivo, Oppo, etc. They have roughly 75 manufacturing facilities for smartphones, consumer appliances, construction equipment, chemicals, etc. However, FDI does not reflect the complete picture of the Chinese business reach in India.
  • Infrastructure and manufacturing: India is yet to come even closer to China when it comes to building infrastructure and manufacturing products. China has proven to be a massive factory for manufacturing various products worldwide. Fast movement of its products and quickly identifying in need countries and supplying them with their required products has been its specialty. This is one of the reasons why China is one of the world leaders on top of the supply chain in the world economic market.
  • China is a one-party state:  China is a one-party state. It doesn’t require approval from multiple political organisations or face internal resistance while bringing a transformation or introducing something new. This has given the country more leverage to decide and implement economic steps.  

How can India fill the gap and come to par with China?

According to a study, in the coming 20 years, India can compete head-to-head with China in terms of position in the world economy and the field of global factory or manufacturing.

Some points below can give India the push it requires to accelerate ahead of China.

  • Chinese goods import: Today, India is heavily dependent on using Chinese products in daily life. This, in turn, is taking China way ahead of India in the world economy in terms of growth and GDP. Hence, India has to start manufacturing and producing better alternative products from China and spread awareness about the same so that people can start using these instead of using Chinese products.
  • Central Government projects: The Indian government has to be firm and quick in approving development projects throughout the country. Challenges in acquiring land for these projects have been a constant hurdle for the central and state governments as they fail to provide proper compensation to the citizens whose houses were there in the land to be used for the project. These compensations can be improved by improving the country’s government budget, efficiently organising a sound tax system, and preparing an essential economic calendar. So, they are putting efforts into labour-intensive sectors.
  • Political issues: India can focus on its domestic flaws and backdrops to accelerate industrialization. Political misfires and competition amongst parties lead to corruption and, in turn, delay the transitioning of India into a superpower. China, a one-party country, doesn’t face any political issues regarding industrialization.

However, we cannot ignore that China has suffered a lot at the hands of the Covid outbreak. Its economy took a major fall as the country dealt with containing the situation. Since 2019, there have been some major shifts in the economic paradigm of China, which has given India an upper hand in accelerating its economic growth. 

Conclusion

China has accelerated way ahead of India in the world economic forum after its independence, and that is after 1949. Because it is way ahead in infrastructure, manufacturing, and growth, it is difficult for a country like India to match its abilities in these fields. Due to some issues that might have occurred internally, India’s welfare and industrialization might get a bit delayed. However, India can aim to overcome its vision to compete with China in the next 20 years by properly organising its government, keeping aside political disputes, and effectively building its products and putting them to use by its citizens.

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