Offshoring your manufacturing to China is so yesterday. Right now, it’s all about India.
Driving the news: Between Canada pursuing a free trade agreement with India and Apple’s reported plans to make 25% of all iPhones in the country (a development the company has not confirmed), India is shaping up to be the world’s next hot manufacturing destination.
Why it matters: As China starts to lose favour as a trade partner with the West amidst population decline, supply chain snarls, and rising geopolitical tensions, India might offer a solution thanks to a young, growing population that could handle mass production demands.
- Morgan Stanley predicts that India will drive a fifth of global growth this decade and become the world’s third-largest economy by 2027. Last fiscal year, the country saw the most foreign direct investment ever, bringing in $84.84 billion in foreign money.
Why it’s happening: Indian Prime Minister Narendra Modi is pushing hard to turn India into an economic powerhouse. The country is set to spend 20% of its budget this year on capital expenditures and invest ~$24 billion over the next few years into companies across various industries to compete with China.
Yes, but: There’s still work to be done for India to challenge China’s status as the world’s factory. The labour quality and infrastructure for manufacturing are simply not yet at China’s level, while rampant income inequality continues to hamper potential economic growth.