This is our last post on the knowledge series, "Is India the new China?"
Can Indian companies take their business global? If yes, in which area could this happen?
Indian companies can take their business global only if they have defensible advantages. In the past three decades, IT services firms, leveraging Indian strengths in software, managed to go global due primarily to cost arbitrage advantages but as this advantage has diminished, global competitors have caught up and maybe gone ahead in some cases.
The best way for Indian companies to go global and remain competitive is to create world class products and brands.
This is a harder path compared to service businesses but if they succeed, they will remain globally competitive for longer periods. I am hopeful we will see this happen in the next decade. Some areas could be apparel, jewelry, food and beverages, pharmaceuticals, engineering, design services, etc.
In a strange way, the COVID pandemic may help India. Global supply chains, especially those with a China link, are under pressure and many could eye India as an alternative, as it offers similar human capital advantages. This could help India become competitive in manufacturing, and this is another area where, in a decade or so, India could become globally competitive. It’s the only country with the scale to match China, but will not be the next China.
India’s economy will continue to grow in the years ahead but it will take a long time to match China’s size today where in the later is five times bigger. China’s economy would have to crash and India’s to grow at over 10% a year for several decades for it to catch up. Neither is likely to happen.
For Investors, India is one of the large population markets that is yet to be discovered. Restrictions make it difficult but not impossible to access the market. As the bond and stock markets and certain sectors open up further, waiting for this convenience would imply higher opportunity costs.
Anyone who has visited India will agree to the fact that the passage to the country is not smooth but rich historical and cultural bounties await those who embark on the journey.
Needless to say, we are a country that offers great potential for growth and has to bring in the necessary reforms and policies, explore and grab the opportunities at the right time, expand into the right markets and become investor friendly to widen its dimensions across the world.
Having said this, let’s conclude this series on positive note that we need not be the next China. We will be the first India, setting a legacy of our own.
Stay tuned for the next series. Happy reading..!