Can India Overtake China’s Economy in Coming Years?
China, world’s largest exporter by value, exported US$2.499 trillion worth of goods around the globe in 2019. About half (49%) of Chinese exports by value in 2019 were delivered to fellow Asian countries while 20.1% were sold to North American importers. China shipped another 19.9% worth of goods to clients in Europe. Out of its total exports, Electrical machinery, equipment form 26.9%, machinery including computers constitute 16.7%, furniture, bedding, prefab building, plastics and vehicles together constitute another 10%.
On the other hand, India exported US$322.8 billion worth of goods around the globe in 2019. Almost half (47.8%) of India’s exports by value were delivered to fellow Asian countries while 19.3% were sold to European importers. India shipped another 18.8% worth of goods to North America. The product composition of exports includesMineral fuels including oil (13.7% of total exports), Gems, precious metals: $36.7 billion (11.4%), Machinery including computers (6.6%), Organic chemicals (5.7%), Vehicles (5.3%) and Pharmaceuticals (5%).
This vast gap in export trade between the two countries indicates opportunity for India to take the leap, which can happen over a period of time but can be jumpstarted due to the confidence lost by china in the eyes of US and EU due to the Covid-19 pandemic. However, in order to be competitive with the Chinese economy, the impetus through following initiatives and policy measures requires the attentions of the Government and policy makers:
Schemes and incentivization:There is a requirement for the government to consider announcing attractive schemes and incentives to invite companies to manufacture in India’s eastern coast and traditional manufacturing clusters. The Government has already planned for developing channels to convey easy availability of land in mega special economic zones (SEZs) and ready-to-move-in facilities. There has to be focus on stable FDI regulations, sector-specific sops and easing of regulatory hurdles to improve competitiveness.
Better infrastructure:Apart from providing the necessary land pool, it is essential that logistics and supply chain is better augmented, guaranteed power supplies, better roads and port linkages need attention.
Focus on specific sectors, which have already made inroads:The focal point of India should be on sectors, which can bring faster results such as pharmaceutical companies, but with focus on local generic drug production ratherthan relying on Chinese imports. Post India’s ban onimports of plastic scrap, infrastructure already in place for mobile phones can be utilized for setting up other businesses. Agri-produce meeting with export quality norms and cold storage facilities and other sectors such as machinery with existing ecosystem.
Labour reforms:There is no dearth of unskilled and cheap labour in India. However, to cater to the world-class requirement sector specific skilled labours will be the need of the hour. The labour laws and policies need a relook in order to cater to the investor sentiments.
With planned strategic roadmap and robust action devoid of bureaucratic rigmarole, India can bring its economy back to track and become an attractive investment hub for businesses from world over.
_20240701120452_original_image_20.webp)
