It is a well-known fact that China is considered to be the world’s factory
This is because of several reasons such as its manufacturing prowess, the availability of cheap labour, its ability to adapt to new technologies
Over the past couple of decades, China has made huge strides in terms of its economic growth as well as its production capabilities
These factors have resulted in a situation where China has become a vital component of the global economy
However, since 2019, China’s global dominance has started to reduce to an extent
The first reason for this is that China is looking to dominate geopolitics around the world. This has pitted it against other major powers such as the US
China and the US have also been engaged in a trade war, thereby having a negative impact on the Chinese trade. China has also been engaged in a trade war with other countries such as Australia
The ongoing COVID crisis has also hurt Chinese exports and its ability to dominate global trade
Several economists and experts have argued that India has the potential to become the new China and replace the East Asian giant in the global economy
This blog assesses India’s current capabilities and analyses whether the South Asian nation can replace China in the medium term
Does India Have the Potential to Replace China?
India is currently the third-largest economy in the world in terms of Purchasing Power Parity (PPP)
There are only two countries ahead of India in this regard, i.e. the US and China
Further, it is also forecasted that India will overtake the US economy sometime in the middle of the 21st century. This means that India would be in a good position to challenge the might of China
However, in order to do so, India needs to ramp up its manufacturing capabilities
Although the Indian manufacturing industry has made giant strides in recent years, it stands nowhere compared to China
Indian manufacturing firms have the ability to match up to their Chinese counterparts if they are able to leverage the power of technology
There is no dearth of human capital in India. This can prove to be a major boost towards India’s quest to become the new China
The Indian government has been taking steps in order to ensure that the country becomes more business-friendly
Over the past couple of years, India’s ranking in the ease of doing business ratings has improved significantly
During 2019, the South Asian country improved its position in the ranking by 14 places. It now stands at 63rd position out of 190 countries
Despite this jump, the country still has a long way to go and has the ability to improve its ranking even further
Another area where India can improve itself and come close to China is its export volumes. At present, India’s total exports are far behind China’s. India must develop policies that help it in increasing its total export volumes
Such policies could also help the country in improving its trade deficit and ensure that India is able to become a true superpower
Conclusion
To conclude, it is clear that the global trade industry continues to evolve. In such a scenario, importers and exporters can often seek help from external sources. Institutions such as Euro Exim Bank offer customized support in the form of financial instruments and bespoke trade advisory services. Euro Exim Bank offers technology-driven financial instruments such as Bank Guarantees and Letters of Credit (LCs). Further information about Euro Exim Bank and its key product offerings is available