India’s economy is growing at a much healthier rate than any other major economy in the world. The country’s growth rate has emerged as a threat to all developed economies particularly its northern neighbour China.  Currently, India ranks at number five in the list of largest economies in the world. But many economic thinkers have opined that the country is well on road to climb up this ladder and leave some of these major economies behind. Recently,  Cisco, Chairman Emeritus, John Chambers, had said that he expected India to eclipse China’s economy by the end of the current century.

Indian Tech & Infra posted Chambers’ comments on its ‘X’ handle:

Such positive statements on India reflect the importance of Indian economy in the entire world. It makes one wonder will India really surpass its northern neighbouring country in time to come?   And if it’s really so, then, it will not be a waste of time to ponder upon as to how India will achieve this feat? Well, albeit, currently India lags behind China in every aspect, but, if it gets its act right, then, it can really surpass China.

India and China’s economy compared!

Manufacturing is one sector on which India can bet to overcome China! If India gets its act right on this sector then it’s economy can grow larger in size than its Asian competitor.  Although, the country’s manufacturing sector has not really flourished according to its true potential. But with correct economic policies of the government, India can get its act right and help increase its Gross Domestic Product (GDP) by betting on this sector. Currently, the share of this particular sector in total GDP of the country stands at around 17%. While, that of services sector is 60% and that of agriculture sector is 12%. So, there is lot of room left for the growth of manufacturing sector. While, on the other hand, the future of China’s economy doesn’t look as bright as India’s. Experts say the strategies implemented by China’s to grow its  economic in the past are not sustainable.  

China’s Ageing Population:

The average age of people in India’s arch rival is currently 40 years compared to India’s 28.  According to a report by Bloomberg, China might face problem of shortage of young labour in its factories in the next 20 to 30 years. While, India is the only country in the world which will not face this problem in as many years. During an interaction with India’s External Affairs Minister, S. Jaishankar,  the Chinese envoy to India, Xu Feihong,  had said that the firms in India are always welcome to set up factories in China. Following is the post regarding Feihong’s statements:

According to Bloomberg, in few years from now, India will have abundance of skilled and young labour. While, China will struggle with ageing factory workers.  This gives huge advantage to India to compete in the manufacturing sector.    

China Plus One:

Currently, many developed countries in the world are looking to shift their already established factories from China to elsewhere. And India with its young and cheap labour is a major attraction of such global investors. They are looking for cheaper alternative to China. This factor is expected to benefit India massively.  

India in a sweet spot:

Currently, India’s GDP stands at $3.7 trillion. While, that of China is around $17.8 trillion. But, India’s economy is growing at a faster rate which is not expected to slow down any time soon. While, Chinese economy is growing at a much lower rate than India’s. And, China has struggled to reverse this trend in the recent past. And they doesn’t seem to be able to change this trend in the future as well. In FY24, India’s GDP growth rate was 8% while that of China was 5%. These factors discussed above constructively place India in a very sweet spot.