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Can India overtake China?

India and China in the business market

With the effect of globalisation in the business market, business firms have started expanding their operations in the international market and with regards to this, various countries have also started promoting and encouraging FDIs for the motive of strengthening their economies. Globalisation and encouraging FDIs is another great measure for enhancing GDP along with generating employment opportunities for the local public. India and China are two giant players of Asia-Pacific region which are in power currently across the globe and with regards to this, China is known as the manufacturing hub of the whole world but on the other hand, India is also utilising their internal resources for the motive of building their reputation as the technology hub of the world (Seidler & Bawa, 2016).

According to Banerjee & Banik (2018), China has acquired second place as the biggest economies in the globe after US. India has also paced up their operations and with their new economic reforms and policies; India is expanding its economy quickly. In the race of attracting FDIs, India stands nowhere in comparison to China because China provides very cheap labour with high-tech services at cheap rates in comparison to India. China’s primary labours are high productive as well as high skilled through which Chinese economic conditions have gone up so fast in last twenty years. China analysed their position in the global market twenty years back and at that time, China was suffering from high population and it was constantly increasing. As per the opinion of Shkvarya, Grigorenko, Strygin, Rusakovich & Shilina (2016), Chinese government came up with few strict regulations and policies for controlling population rate and on the other hand, Chinese government also came up with certain effective policies for utilising their population in order to enhance their productivity as well as to compete with the world.

On the basis of research conducted by Ghosh, De & Ghosh (2018), India and China both are considered as the fastest growing economies across the globe and whenever an international corporation willing to expand their business in international market for growth, they seek for Indian as well as Chinese market. But as Chinese government does not support expansion of international companies, they promote their domestic companies and in relation to this, they seek for providing labour and other services at cheaper rates in comparison to other worldwide markets. This is the reason why multinational corporations’ products are labelled as “Made in China”. With its high-tech and high productive labour, China has made its position as the largest manufacturing hub in the worldwide market. In comparison to China, India has also paced up its operations and it has managed to spawn their companies to stand up in the international market with the objective of competing with the international firms. As per Joshi (2015), Wipro, Infosys, Dr. Reddy’s Labs are some of the Indian Companies which has made their presence in the international market along with enhancing its efficiency. Forbes 200 has issued a report for top companies in the international market, 13 Indian companies managed to gain place while there were just 4 Chinese companies in the list of top international companies.

Globalization and encouraging FDIs for GDP enhancement

As per opinion of Zhao (2017), Indian government has moulded their policies so that international companies could be attracted to set up their business. This helps the organization to generate employment opportunities for the local public along with enhancing the individual disposable income. Indian government has developed their infrastructure much stronger than China in order to support private enterprises. Indian capital markets are highly effective as well as efficient through which their economic conditions are getting smoother day-by-day. Pu (2017) says that Indian capital markets are more transparent as Chinese capital markets which is another big factor through which Indian economic conditions have gone up in past certain years. China and India, both are considered as the two major powers of the world and in relation with this, they are also offering competing models of development. While analysing the GDP of China and India, it could be evaluated that India is far behind from China as Chinese GDP is USD $11.2 lakh crores while Indian GDP was just USD $2.26 lakh crores in 2016. Figures shows that there is massive difference between both the markets but there are various opportunities for Indian market to beat China in the international market. Thus, there are huge possibilities that Indian market will overtake Chinese market in coming years as Chinese market is being saturated and they only promote and encourage domestic companies to expand their business. Although, they have sufficient resources like advance technology, high productive labour but still Chinese companies are not somewhere in competition with international companies (Nigam, 2017). 

According to Ansar, Flyvbjerg, Budzier & Lunn (2016), the major reason behind the massive gap in Indian and Chinese economic conditions is their economic reforms. Indian government moulded their economic reforms in the early 1990s which was approximately a decade after China began liberalising. Growth rate of India is just 20% which is quite lower than Chinese growth rate but with the speed, India is moving towards development and towards utilising their resources, India will soon overtake China. The best measure for a country to enhance its economic conditions is utilising the available resources because for those resources, countries are not required to pay off to someone. This saves their time, money along with generating huge employment opportunities for their people. In the early 1990s, China used to utilise their own resources which helped them to record double digit growth at that time only but due to certain issues like war with Pakistan for Kashmir, Indian government did not able to look forward for utilising their resources for competing with the international market.

According to Huang & Khanna (2003), Till now, India’s diaspora has just recorded at less than 10% of the foreign money flowing to India. In this scenario, Chinese diaspora was much high from which India is far behind, Indians have focused more on intellectual capital to contribute through which they could have been proven more valuable. In relation to this, Indian diaspora has famously differentiated itself in terms of knowledge-based industries. In the race of high diaspora, China has won this race and in relation to this, they have been awarded with the title of world’s factor while India could also acquire the position of world’s technology hub with their diaspora. Both the countries have different development strategies and with regards to this, it cannot be said that India is outperforming in comparison to China, but the fact cannot be denied that India is working tremendously well certain areas in comparison to China. These are some of the indications which show that India could easily overtake China.

China's dominance as the manufacturing hub

As per Ollapally (2016), recently, slight slowdown in the economic growth has been noticed in China’s economic conditions but that is not enough for India to overtake China’s place and this has been the weakest growth since the global financial crisis. Still, Indian market is not able to fulfil global demand. China is more towards maintaining relationship with the terrorist agencies and with Pakistan and Middle East countries which are majorly known for terrorism. Due to this, relationship between China and other big international players are not much effective due to which Chinese companies are not in the top international companies. But on the other hand, current political conditions of India looks stable enough which also encourages FDIs and it also grabs the interest of multinational corporations to set up their businesses in India.

Current prime minister of India, Narendra Modi is more into developing relationships with the other big international players in order to obtain support from them. This helps India to enhance their economic conditions along with generating more employment opportunities. India has two companies who have make their trillion dollars value i.e. Reliance and TCS. These two companies have generated various employment opportunities for the local pubic and these companies have made the country efficient enough to overtake China.

Thus, in order to bring the logical discussion to a conclusion, it can be said with certainty that in a couple of decade, India will surpass the economy of China. The major drivers or the factors which harbinger towards the growth of India as a superpower are its abundance natural resources, young population, tech innovation, infrastructure growth, increased spending in consumer health and sanitation and the determination of the largest democracy to surpass China and emerge as the most advanced economy.

References

Ansar, A., Flyvbjerg, B., Budzier, A., & Lunn, D. (2016). Does infrastructure investment lead to economic growth or economic fragility? Evidence from China. Oxford Review of Economic Policy, 32(3), 360-390.

Banerjee, A. N., & Banik, N. (2018). Political Economy of Resources and Infrastructure in India. In Changing the Indian Economy (pp. 1-19).

Ghosh, D., De, S., & Ghosh, D. K. (2018). Overtaking the US Economy by China and India: How Sound Are the Expectations?. International Journal of Business, 23(1).

Huang, Y. and Khanna, T., 2003. Can India overtake china?. Foreign Policy, 137(July–August), pp.74-81.

Joshi, D. (2015). How can India catch up to China? The importance of social investment. India Review, 14(2), 238-267.

Nigam, N. (2017). China versus India: Emerging Giants in the World Economy. In The China Business Model (pp. 215-249).

Ollapally, D. M. (2016). Understanding Indian policy dilemmas in the Indo-Pacific through an India–US–China maritime triangle lens. Maritime Affairs: Journal of the National Maritime Foundation of India, 12(1), 1-12.

Pu, X. (2017). Ambivalent accommodation: status signalling of a rising India and China's response. International Affairs, 93(1), 147-163.

Seidler, R., & Bawa, K. S. (2016). Opinion: India faces a long and winding path to green climate solutions. Proceedings of the National Academy of Sciences, 113(44), 12337-12340.

Shkvarya, L., Grigorenko, O., Strygin, A., Rusakovich, V., & Shilina, S. (2016). THE IMPACT OF THE GLOBAL ECONOMIC CRISIS ON ASIAN TECHNOLOGY MARKETS (INDIA AND CHINA). Central Asia & the Caucasus (14046091), 17(2).

Zhao, H. (2017). China and India: The quest for energy resources in the 21st Century. Routledge.

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