After the long economic prevalence of the West for centuries, we are currently seeing Eastern powers continue to rise and play an ever greater role in the world stage of global business and diplomacy. One of the latest rising stars over the past two and a half decades has been India, which over that time has seen a similar explosion in economic growth to that of China, which began in the 1980s.
This newly acquired economic might is going to give India increasing geopolitical sway going forward. It has already reached the 3 spot in the world measured by purchasing power parity, and as early as 2 years from now, in 2027, India will also surpass Germany and Japan in terms of GDP. India has made a major change in philosophy, opening up its arms to the influence of Western investors, creating special economic zones and attempting to make business as pain-free as possible.
Power in Demographics
It’s no secret that India is a massive country, home to dozens of ethnicities numbering nearly two billion. In terms of the youngest generation, it has already surpassed that of China, and India’s working age population will do the same by 2030. This gives India a demographic window that many advanced economies have already lost.
With all these young people, India is spearheaded by a vast an expanding labor force, making productivity and output fierce. There are a lot of team members to innovate and deliver, and on top of that a lot of people to consume those goods. It’s a self-reinforcing cycle of demand and growth.
In great contrast, Germany and Japan have long seen their growth rates decline. A big reason for that has been the aging populations in both countries, as well as red tape and restrictions in Germany, which prevent the nation from permitting valuable energy sectors that would help better fuel the economy. Germany has suffered immensely ever since the Nord Stream pipeline was blown up and it’s now not getting the same fuel from Russia that it had gotten since the Soviet days.
Its government doesn’t allow its citizens to even produce much energy other than limited alternative energy. And the more time that goes on, the more pressure that will be put on the dwindling youth to provide for the massive numbers of senior citizens, who live for quite a long time
Urbanization
Another thing we can’t forget is that every year, millions of Indians move from rural areas to cities in search of better opportunities, expanding the urban population and spurring investment in infrastructure, housing, and public services. Cities like Bengaluru, Hyderabad, and Pune are not only tech hubs but also magnets for manufacturing and services. Students are now flooding into these cities and the smart cities projects have created wonderful public transit systems.
India could have 800 million middle-income consumers by 2030. This surge will unlock one of the largest consumer markets in history. These people are engaging in pastimes like:
- standup comedy, which became a big thing in the 2010s when streaming spread to India
- cricket matches, mainly the IPL
- online casinos like Odds96
- eGaming, a huge attraction, mainly on cell phones
- Disney+ viewing
India’s 1990s Economic Policy Liberalization
This broke the damn. By the early 2000s, India hit a growth rate of 6 to 10% every year. Tthe Goods and Services Tax in 2017 got rid of a mess of a tax system as businesses have much less red tape to deal with now across India’s states. The Insolvency and Bankruptcy code did a lot for investor confidence and encouraged a healthier credit environment.
A lot of important state services citizens can now obtain online too, in particular the UPI payments system, which allows citizens to exchange money for services immediately without having to pay an inconvenient commission.
Manufacturing and Industry
The aggressive efforts that India has made to attract more companies to move their manufacturing bases there is a big reason why the China +1 trend has begun to service, with a lot of multinational corporations now seeking elsewhere. India has of course long been a huge favorite of such companies looking India’s direction for outsourcing. The wages are very competitive to hire Indians.
The Make in India initiative has helped India focus on reducing import dependency and create millions of domestic jobs per year. Priority areas have been identified as:
- electronics
- automotive
- defense
- textiles
- renewable energy
These areas are heavily subsidzed and infrastructure for them is supported. Other prioritized areas on which trillions of rupees have been spent are:
- modernizing ports
- building expressways
- expanding freight rail corridors
- improving power supply reliability
- Internet accessibility
That said, land acquisition is still a challenge and logistics costs are higher than in some other nations. Currently, India draws most of its GDP from services, but there is a shift taking place toward becoming more well rounded with manufacturing.
Technology
India’s IT services sector has built global reputations for software development, IT consulting, and business process outsourcing, serving clients across industries. As digital transformation accelerates worldwide, Indian IT firms are increasingly moving up the value chain — from low-cost coding to advanced analytics, artificial intelligence, cloud computing, and cybersecurity services.
Startups
Beyond established firms, India boasts one of the largest and fastest-growing startup ecosystems in the world. It is currently ranked as the third-largest startup hub globally, behind only the U.S. and China. You’ve now got superstars like:
- Flipkart
- Byju’s
- Paytm
Public-private partnerships are supporting research and development in high-tech AI. These areas are no laughing matter and are not relevant to the future alone. Nowadays, all the leading nations around the globe are intensely competing in machine learning, as it will put them at an immense advantage in stationing their bases around the globe and procuring products they need to outmuscle each other’s military might and diplomatic partners.
One of the spectacular ways that tech startups have adjusted is in delivery. India is an extremely diverse country whose people not only speak different languages but also crave completely different goods. Warehouses in a similar vein to Amazon have managed to steal market share from it and deliver goods in all sorts of states to people’s doors in a flash. Chief among these is Flipkart. Paytm is also making rounds around the globe, giving PayPal a run for its money.
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