India, which many analysts believe is expected to become the “next China,” has finally made a breakthrough in the export market and become one of the top five suppliers of Christmas decorations and T-shirts to the United States.
At the same time, India has surpassed the United Kingdom to become the world’s fifth largest economy, and India’s next goal is to surpass Japan by 2029 and become the world’s third largest economy. Why is India so confident? Can it really become the next China?
Indian exporters’ orders from Europe and the United States surge
According to Singapore’s Lianhe Zaobao, according to US customs data, the total amount of Christmas merchandise shipped to the United States by sea in August this year reached 20 million US dollars, nearly three times the same period last year. Among them, India’s shipments exceeded those of the Philippines, squeezing into the list. Top five. This is mainly because some of China’s exports have been affected by the epidemic, and rising labor costs have prompted buyers to diversify their supply sources.
Malhotra, head of Indian company Asian Handicrafts, said: “This year, we have shipped more than 3.2 million Christmas decorations, far exceeding the 2.5 million last year. Although China accounts for a large share of the Christmas decoration export market, there are now A lot of new buyers are coming to us.” This trend isn’t limited to Christmas merchandise. Indian exporters have received a surge in orders from Europe and the United States, especially in low-cost and labor-intensive areas such as clothing, handicrafts and non-electronic consumer goods. This year, India also surpassed El Salvador to become one of the top five suppliers of cotton T-shirts to the United States.
When China and the United States started the trade war in 2018, the trend of diversifying global supply chains had already emerged. However, the orders China lost at that time mainly went to Vietnam and other countries, and India did not benefit much. Since the beginning of this year, the situation has begun to change. In the five months since April this year, India’s exports have reached nearly half of the previous fiscal year.
A World Economic Forum report predicts that India will become the country with the most abundant labor force by 2030, contributing more than $500 billion to the global economy every year. Analysts believe that as countries gradually recover from the epidemic, now is the time for India to accelerate investment in improving long-term competitiveness and prioritize areas with potential.
Goal: third in the world
According to US media reports on September 3, Gross Domestic Product (GDP) data from the International Monetary Fund (IMF) showed that India’s economy has surpassed the United Kingdom in the last quarter of 2021 and further expanded its lead in the first quarter of this year. India As a result, it has become the fifth largest economy in the world (the top four are the United States, China, Japan and Germany). The IMF also predicts that in five years, India’s GDP will exceed that of the UK by 20%.
Since India was once a British colony, many Indian entrepreneurs and politicians were excited after the news came out. Anand, chairman of the Indian Mahindra Automobile Group, said excitedly: “This news will make every hard-working Indian feel gratified.” Indian Foreign Minister Jaishankar also praised India for achieving “huge social transformation” and said that “as the world’s fifth largest economy, India should show confidence.”
Looking to the future, many Indians are indeed confident. On August 15, in his Independence Day speech, Indian Prime Minister Narendra Modi called on the people of all India to work together to make India a developed country by 2047.
According to Indian estimates, the country will surpass Germany in 2027 and Japan in 2029, becoming the world’s third largest economy.
Concerns beyond growth
However, international financial institutions including Goldman Sachs and Morgan Stanley have maintained a cautious view on India’s economic prospects, believing that although India’s current growth rate is strong, its growth momentum is insufficient.
The first is the weak employment situation. Data recently released by the Indian Economic Monitoring Center show that in June, India’s rural unemployment rate rose to 8.03% from 6.62% in May, and the urban unemployment rate rose to 7.30% from 7.12% in May.
Kundu, an economist at Société Générale, said that India’s unemployment rate is too high and real wages are at record low levels, which will only lead to insufficient domestic consumption growth in India. In his view, India’s economic growth cannot accommodate the approximately 12 million new labor force every year.
In addition, high inflation and the resulting increase in costs are also hitting the Indian manufacturing industry. Data released by the Indian Central Bureau of Statistics on August 31 showed that from April to June, India’s manufacturing industry grew by 4.8% year-on-year, compared with 49% in the same period last year; the mining industry grew by 6.5% year-on-year, compared with 18% in the same period last year; the construction industry A year-on-year increase of 16.8%, the data showed an increase of 71.3% last year.
In fact, since July, the pace of growth of the Indian economy has slowed down significantly. Bank of America pointed out that most Indian economic indicators in July declined from June. These data include a slowdown in port cargo volume and air cargo volume in July, as well as a sharp decline in gasoline and diesel demand.
Institutions including the Reserve Bank of India expect that from July to September�India’s economic growth is likely to be only around 6.2%. Some institutions believe that by then, the Reserve Bank of India will have to lower its forecast for India’s full-year economic growth of 7.2%.
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