Key Takeaways
- India has overtaken China as the world’s most populous country, with over 1.45 billion people and a youthful workforce that offers a significant demographic advantage.
- Despite its potential, India faces critical challenges, including outdated infrastructure, bureaucratic red tape, and skill gaps.
- The “Make in India” initiative has attracted foreign investment but has yet to fully deliver on its promise of transforming India into a global manufacturing powerhouse.
- Geopolitically, India enjoys favourable relations with major economies, giving it an edge as businesses look to diversify supply chains away from China.
- To become the next global manufacturing leader, India must invest in infrastructure, simplify regulations, enhance workforce skills, and improve quality control.
- If successful, India could create millions of jobs, boost its economy, and reshape global trade. However, failure to address key issues could result in a missed opportunity.
India overtaking China as the world’s most populous country isn’t just a demographic milestone—it’s a bold new chapter in global economics and raises the question, will India replace China and become the world’s manufacturer? With over 1.45 billion people, India seems poised to become the world’s next manufacturing powerhouse. The question isn’t whether India wants to replace China; it’s whether it can deliver on that ambition.
For years, China has dominated global manufacturing with an unbeatable combination of low costs, massive infrastructure, and a government-driven focus on industrial growth. But cracks are appearing in that dominance. Rising labour costs, geopolitical tensions, and an ageing population are forcing global companies to look elsewhere. India, with its youthful workforce and growing economy, is naturally being considered as the next big alternative.
A Demographic Goldmine—But Is It Enough?
India’s demographic advantage is undeniable. More than 50% of its population is below the age of 25, and over 65% is under 35. In contrast, China’s median age has climbed to 39.6,
while India’s remains at 28.4.
This youthful workforce offers an enormous opportunity for industries looking for low-cost labour. Add to this a burgeoning middle class hungry for consumer goods, and India looks like a dream market.
But demographics alone don’t build factories. It takes infrastructure, streamlined policies, and a skilled workforce to turn potential into production. And that’s where the cracks begin to show.
Infrastructure: India’s Achilles’ Heel
Let’s be honest—India’s infrastructure is far from world-class. While China boasts ultra-modern highways, high-speed rail networks, and ports that can handle massive global trade volumes, India’s roads, ports, and power grids struggle to keep pace with demand.
Transportation bottlenecks increase costs for businesses. Power outages are still common in many industrial hubs. Even land acquisition for factories is bogged down by bureaucratic delays and legal hurdles. While initiatives like the Bharatmala Pariyojana and Sagarmala are steps in the right direction, they are years away from delivering results at scale.
So, while companies like Apple and Samsung may be setting up manufacturing units in India, the country isn’t yet ready to handle large-scale manufacturing across industries without significant logistical challenges.
The Ambition and Reality of “Make in India”
Launched in 2014, the “Make in India” initiative was intended to transform India into a global manufacturing hub. The government promised foreign investors streamlined regulations, better infrastructure, and a business-friendly environment.
Ten years later, the results are mixed. Yes, foreign direct investment (FDI) has increased, and certain sectors, like electronics, have seen growth. But manufacturing still contributes only 13% to India’s GDP, compared to China’s 26%.
The intention is clear, but execution remains a challenge. Without significant policy reforms and better coordination between central and state governments, “Make in India” risks being more of a slogan than a revolution.
India’s Manufacturing Sector Growth Potential
India’s manufacturing sector holds immense potential. According to the India Brand Equity Foundation (IBEF), India is now the third most sought-after manufacturing destination globally. One of the key areas showcasing India’s potential is the electronics industry, which is expected to grow significantly, fueled by rising domestic demand and supportive policies.
Additionally, India’s push for infrastructure development, such as the establishment of Electronic Manufacturing Clusters (EMCs) and incentive schemes like the Modified Special Incentive Package Scheme (MSIPS), further enhances its appeal to global investors.
India’s Strategic Advantage
Here’s where India has a real edge over China: geopolitics. China’s aggressive stance on trade and territorial issues has strained its relationships with major economies like the United States, Australia, and the European Union. India, on the other hand, enjoys favourable relations with these nations, making it an attractive partner for businesses looking to diversify their supply chains.
The Australia-India Economic Cooperation and Trade Agreement (ECTA), signed in 2022, is a prime example. This agreement aims to reduce trade barriers and increase bilateral investment, particularly in sectors like mining, technology, and manufacturing. For Australia, India’s rise presents an opportunity to reduce its dependence on China and tap into a growing market.
But goodwill alone isn’t enough. India must prove that it can offer the reliability, efficiency, and scale that businesses have come to expect from China.
The Road Ahead: Can India Deliver?
India’s potential to become the next global manufacturing hub is real, but potential doesn’t guarantee success. The country must address several critical issues:
- Infrastructure Investment. India needs faster implementation of infrastructure projects to improve transportation and logistics.
- Policy Reforms. Simplifying regulations, reducing bureaucratic red tape, and ensuring consistency across states are key to attracting large-scale investment.
- Skill Development. A youthful workforce is only an advantage if it has the right skills. Expanding vocational training and education in manufacturing-related fields is crucial.
- Quality Control. Indian manufacturers must focus on meeting international quality standards to gain a reputation for reliability and precision.
The stakes couldn’t be higher. If India succeeds, it could create millions of jobs, lift millions out of poverty, and reshape global trade dynamics. If it fails, it risks missing a once-in-a-generation opportunity to redefine its place in the world.
Conclusion
India’s bid to replace China as the world’s manufacturing powerhouse is ambitious, and rightly so. With the right moves, it could transform not just its own economy, but also the global supply chain. However, the road ahead is fraught with challenges.
To win this race, India must act boldly and decisively. The world is watching, and the pressure is heating up. Will India rise to the occasion and become the world’s next factory? One thing’s certain—it’s a story worth following closely.
References:
https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1606511
https://shipmin.gov.in/division/sagarmala
https://static.pib.gov.in/WriteReadData/specificdocs/documents/2024/sep/doc2024925401801.pdf
https://www.ibef.org/industry/manufacturing-sector-india
https://www.meity.gov.in/esdm/emc2.0
https://www.meity.gov.in/esdm/incentive-schemes
https://www.dfat.gov.au/trade/agreements/in-force/australia-india-ecta
