In a world economy desperate for a growth engine, many observers suggest that India is the new China. Just as China‘s GDP grew at high-single-digit rates for several decades, India is now poised, they suggest, to grow at high-single-rates for an extended period. With ample, low-cost labor, India can serve as workshop for the world.
Its emergence will support the maintenance of global supply chains, as evidenced by Apple’s decision to expand iPhone production in the country. India will then follow China by lifting hundreds of millions of people out of poverty, contributing to the new global middle class. Providing low-cost manufactures and services to the rest of the world, the Indian export machine will boost consumption standards worldwide.
Prime Minister Narendra Modi, who won his third term, has prioritized economic growth. His ambitious program of infrastructure investment has relaxed a major bottleneck, namely the difficulty of transporting inputs to factories and final outputs to market. More reliable electricity generation and telecommunications have made possible rising exports of software, back-office services, and customer support services.
All this has made India a destination for companies seeking to diversify away from China. U.S.
firms alone already employ more than 1.5 million workers in India‘s manufacturing and service sectors. In a country notorious for the difficulty of doing business, it is now possible to set up a company entirely online.
Digital fi.
