India: The New “Factory” of the World? – VisualPolitik EN

By | November 1, 2022

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Since the country suffered a huge crisis in 1991, it had to make a lot of reforms to open up to the world and that improved its economy. But even so, India has not been able to reproduce the industrial model that has characterized all the economic success stories in Asia, such as those of Japan, South Korea or China itself.

However, since 2021, disappointment has given way to optimism. And suddenly, India reappeared again: private equity, portfolio managers and even large multinationals have turned their attention to this market.

What exactly explains this change, and why is this country now suddenly capturing the imagination of analysts, economists and investors around the world? And the most important question of all: could India really become something like the new China?

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[Music] India celebrated the 75th anniversary of Its independence in August 2022. we are Talking about a country that is home to Almost 20 of the entire global Population as shocking as it may seem to You one in five people worldwide live in This country so it naturally follows That India may become much more Important to everyone’s future than we Might think at first glance by the way We are talking about a tremendously Diverse country for example according to The country’s census 114 different Languages are spoken of those no less Than 22 are considered national Languages and are recognized in the Constitution itself but in addition to Diversity India has another Characteristic it has traditionally been One of the most bureaucratic countries On the planet perhaps that is why it’s Still a very poor country these days However India’s Fortune could be Changing and with it the future of the Global economy the question that more And more experts are raising is could India become the new China let’s find Out Foreign That struggles to get going Over the past 20 years extreme poverty In India has plummeted by around 90 According to the World Bank data at No

Effects around two percent of the Population check this out But wait a minute because despite this We can’t say that things have gone well For this giant of a country Became independent in 1947. its per Capita income was about 18 of the World’s average today 75 years later the Percentage is basically the same in Other words despite being a very poor Country in more than seven decades it Has not made any progress in reducing Its poverty Gap with respect to Developing countries and that as you can Imagine has consequences for example According to the latest National Household status survey published in 2020 only 9.5 of the population has a Computer available for use only 18.6 of Households have a washing machine and Only eight percent own a car these are Datas that reflect the reality of a Country that has not yet reached its Full potential in fact in recent years Many multinationals have failed in this Country basically because the middle Class remains relatively small and Relatively poor one of the latest cases Has been that afford the automobile Company announced that it would abandon The Indian market after accumulating More than two billion dollars in losses General Motors and Harley Davidson had Taken similar action somewhat earlier so

You see the Indian population may be Gigantic but its Market remains Minuscule but perhaps the most striking Data or metric is the comparison person With China [Music] Until 1990 the two countries had roughly The same income but since then things Have changed a lot since that year India’s GDP per capita has multiplied by Six not bad but China’s GDP per capita Has multiplied by 40. and we’re talking About a relatively good period for India Since the country suffered a huge crisis In 1991 it had to make a lot of reforms To open up to the world and that Improved its economy but even so as you Can see the Gap was enormous India has Not been able to reproduce the Industrial model that is characterized To the economic success stories of Asia Like Japan South Korea or China itself However since 2021 disappointment has Given way to optimism and suddenly India Reappeared again private Equity Portfolio managers and even large Multinationals have turned their Attention to this market so the question Is what exactly explains this change and Why is the country now suddenly Capturing the imagination of analysts Economists and investors all around the World and the most important question of All could India really become something

Like the new China do you want to know Of course you do so let’s get cracking Change of pace [Music] Took the United Kingdom as the fifth Largest economy in the world it is also The fourth largest by value of its Listed companies and third behind only The United States and China a number of Unicorn companies for those of you who Don’t know unicorns are startups valued At over one billion in addition we can Now find news items like this one India Is likely to be the fastest growing of The major economies this year in order To visualize this change Let’s Travel to Tamil Nadu a State located in the south Of the country here the Indian Multinational Tata is manufacturing Components for Apple’s latest iPhones This is the first time that India has Been integrated into one of the most Sophisticated Supply chains on the Planet it is so to speak the pilot Experiment of a landing that may become Much more important I firmly believe That this is going to be India’s decade Natarajan Chandra sekaran and this is Not all talk major Indian business Groups plan to invest more than 250 Billion dollars over the next few years To increase their manufacturing capacity In the country however as we have seen The last few years have not been

Anything to get excited about so why do So many experts now consider it likely That the country’s economic takeoff is Eminent Well the truth is that we can highlight Four key factors four Windows of Opportunity for India to become the new China the first one is that over the Past few years a single National Market Has been forged you see remember what I Said when I talked about diversity well In a way until now we could not speak of A single Market but of many extremely Fragmented Regional markets something That naturally limited the economies of Scale of the companies but that is Something that has changed or at least Is changing in recent years the Government has introduced a single sales Tax common regulations for the whole Country and also infrastructure has been Greatly improved for example the National Road network has increased by 50 since 2014 and new air facilities Have enabled a doubling of Passenger Numbers at almost a 50 increase in Freight transport by air it is a very Similar story as regards Telecommunications the result is an Increasingly integrated Market of some 1.4 billion consumers allowing companies To be much more efficient and take Advantage of enormous economies of scale [Music]

Secondly the government has digitized Much of the administration and financial System from biometric identification to A digital payment system known as UPI More and more tasks are being performed By Indians using their cell phones this Allows processes to be much faster and Much cheaper for example the government Now pays public aid through digital Systems therefore reducing bureaucracy And ensuring that the money reaches its Intended recipients we are talking about A system that in the last 36 months has Paid out nearly 200 billion dollars to Almost 950 million people and keep in Mind it is estimated that until the Adoption of these digital media the vast Majority of the money never reached the Recipients of the aid but was lost in The endless bureaucratic processes and Corruption of all kinds but that’s not All this digitization of the Administration has also meant that Indian families are receiving funds at Full speed and has also boosted a huge Market of professionals and Technology Startups that are now growing like crazy The third Factor involves China you Heard that right China Foreign Videos here on visualpolitik the Asian Giant is not experiencing the best of Times neither from an economic nor a Political point of view the real estate

Market blowout and the bad relations With the United States are making many Multinationals Scrabble to look for Alternatives and as you can imagine India seems a perfect candidate we’re Talking about a huge young population And relatively low salaries and Precisely to attract more companies the Indian government has launched a 26 Billion dollar plan for multinationals To set up factories in the country Companies such as Samsung and Foxconn Are already using these incentives to Expand their presence in India [Music] And fourthly and finally we have the Huge Indian expatriate community that Can be found all over the world remember That we are talking about more than 30 Million people who during 2021 alone Sent nearly 90 billion dollars in Remittances back to India this community Is also relatively wealthy for example According to the Census Bureau data the Indian Community is the wealthiest Ethnic group in the United States we are Talking about an average household Income of a hundred and twenty thousand Dollars and in fact according to a Recent Stanford University study nearly Nine percent of the founders of the 500 U.S unicorns were born in India in Addition some large multinationals such As Microsoft Google Chanel and Deloitte

Among many others are led by members of This community whether first or second Generation then of course all of these People have enough Capital to invest in Their country of origin and not only That they are also becoming an important Lobbying engine to modernize local laws And institutions you could say they are No longer complacent well if we put These four ingredients these four key Factors in a Shaker we have what many Experts consider to be the perfect Recipe for India to take off over the Next few years and become the new China To become the new trending country and The new great Factory of goods and Services in the world of course Achieving this goal might not be so easy Check this out [Music] The face of India [Music] On the flip side visualpolitik Community It is one thing to have the opportunity And quite another to know how to take Advantage of it so far there have been Many times when India seemed ready to Take off and then it came to nothing in Order to prevent the balloon from Bursting again the country has to solve Four major problems firstly education by And large is a disaster according to a 2017 report about 25 of Indian youth Between the ages of 14 and 18 were

Unable to read basic text in their own Language and more than half were unable To execute a division secondly the state Continues to be a heavyweight in the Economy despite the progress made India Is still a very bureaucratic country and Public companies are terribly Inefficient to give you an idea in the Index of economic freedom India is Ranked 131st and thirdly the Public Accounts are not in good shape public Debt already stands around 90 of GDP and The budget cannot get out of the red and That is only taking about the central Government because the accounts of some Regional governments are practically on The brink of disaster [Music] [Applause] Finally surprising as it may seem to you Women are still largely excluded from The labor market the labor participate Rate of a woman is even lower than in Countries such as Saudi Arabia and that Obviously hampers the family income and Talent of hundreds of millions of women Be that as it may what we have looked at Today are the positives and negatives of A country that seems to be facing its Best opportunity the question is do you Really believe that India will become The new China will the land of the Mirages be able to remedy its problems You can leverage your impressions in the

Comments below for the time being Indian President Narendra Modi has promised That the country will achieve Development in the next 25 years the Question is will he succeed loyal Viewers if you found this video Interesting don’t forget to like And Subscribe to visualpolitik if you have Not already done so just hit the little Bell button down there so you don’t miss Any of our new updates all the best and I’ll see you next time Foreign

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