Home Economy Can India become the next manufacturing hub after China?

Can India become the next manufacturing hub after China?

India’s powerhouse is its youth ratio and well-established service sector; China’s strength is its population combined with cheap labor available in a well-established ecosystem.

Competition is scaling high in the global markets. Economies are in a hustle-bustle to overtake one another as new products keep getting launched in the market. If today there’s a new phone launched, tomorrow there’ll be a new type of desktop with special features. There’s an uproar in the market among the competitors who are constantly busy proving who’s got an edge over whom. Why is this race so fierce? Why do we keep getting news headlines about some economies performing badly while some booming after having gone down the path of loss?

Fareed Zakaria, a renowned International Journalist and one of the best-selling authors, in his book titled ‘The Post-American World’, introduces us to a new phase that the world is currently in- ‘rise of the rest’. The first phase was believed to be the era of modernity, where scientific developments took place in Europe; having experienced loss in its economy, Europe lost its global influence because it could no longer establish its dominance over the economies. Meanwhile, the United States of America (also known as the USA), chanced upon the opportunity to take control over the global economy, and made the countries believe that its products are the best, its ways are the best, and it’s the USA who rules over the entire world.

This followed ‘Americanisation’, where the USA proliferated its culture, traditions, food habits, lifestyle, etc., to other countries. What followed is the division of the world into three categories- the USA, Europe, and the ‘rest’. This rest is believed to comprise nations mostly belonging to the developing segment. Until a few years ago, countries like China, Dubai, Singapore, etc. were never viewed as global competitors.  Surprisingly, the heated ongoing debate has somewhat turned the tables in favor of the ‘rest’, where the question is no longer pertaining to whether the USA  will remain the global leader, but rather it is focused on whether China will be the next global leader?

What made Chinese economy grow so fast? And, can the Indian economy overtake the Chinese economy in the future? Let’s ponder upon it!


The international market is a pool of competitors from across the globe. To establish one’s business and influence would require a lot of factors to be met with. To list a few priorities:-

  1. Value of Time is very essential when it comes to marketing business and trying to make a global presence. It is not just the relative time difference pertaining to geography that matters, but essential components like being active about the current developments in the market, and being punctual is very essential. Most of the investors might not appreciate if a business dealer is not punctual.
  2. Communication is another important challenge because the international market is a pool of parties hailing from different countries, who might not be fluent or aware of your native language. Keeping translators, or being well-versed in the language of your opponent dealer is essential as communication leads to understanding which facilitates the business; the improper communication of ideas might lead to outright rejection of the deal, or due to lack of presentation skills it might not appeal the other party.
  3. Market Demand and Supply analysis help a party in better decision making for the manufacture of products. There are two aspects to this- one aspect requires you to study the market, both domestically and internationally, to understand what is the demand in the market; the other aspect allows you the leverage to study the market and launch your product, where you convince the customers why they should purchase your product; this is essentially you creating a customer base for yourself. What follows this is you producing the product in adequate quantity to maintain a sufficient supply chain of your product in the market.
  4. Technological Capabilities essentially requires a company to be technologically sound in the market. With rapid advancements taking place in the field of technology, it is very important that one has the requisite technological skills for operating a product, or inventions in the field of products using Artificial Intelligence, for instance. This would give an edge to a marketer over the rest in a globalized market today.

Factors determining China’s competence

Post-1989, China entered the global competition after having studied the market properly. As historical facts suggest, it has uplifted millions of people from below the poverty condition back in the 90s. How could a country with the largest population in the world, and one of the worst affected economies, rise to power?  Once upon a time, prior to 1989, China did not participate in the global economy, resisted multinational companies from entering into its territories, and out-rightly rejected globalization. After having experienced the setbacks, China finally decided to reform its economy; it changed the policy structure governing its economy and adapted itself to the globalized principles. The transformation provided stark results. We look around today, and most of the products we find in India, be it an electronic device or just a stationary, for instance, a pen is mostly manufactured in China.

Several factors contribute to China’s rapid growth in the manufacturing sector- its large population contributes heavily to mass production due to the availability of cheap labor; this reduces the cost of production as well. Diversification in products is another catch because it helps capture a large market. Further, it has well-established business ecosystems in the most part of its country; these ecosystems are organized with a planned model to assemble cheap labor, technical support, financial assistance, and channelize them to the requisite marketers for manufacturing products. Moreover, China’s strategic planning in choosing its target customer has aided its business in manufacturing requisite products to meet its customers’ demands.

India’s standing in global competetion

India is the second most populated country in the world, yet it does not match China’s competition in the global economy. There is a stark difference between the share in the manufacturing sector of both these economies- while China’s share is 50%, India’s happens to be around 22%.  Currently, India’s economy is far behind the Chinese economy in the global market. India is mostly known for outsourcing services in the technical sector, whereas China is manufacturing goods in physical form too, that too in abundance. This is one of the biggest reasons why China has a larger share in the global market.

What does the future hold?

The future is unpredictable. We cannot come to a definite conclusion as to what will be the outcome, but we surely can make an estimation out of the probabilities. India’s powerhouse is its youth ratio and well-established service sector; China’s strength is its population combined with cheap labor available in a well-established ecosystem. Now, considering these two situations, we can derive a two-fold conclusion- on one aspect, China is capturing the current market by being the manufacturing hub, who is delivering products at footsteps across the globe; on the other aspect, we find India could have a better chance in future owing to its high ratio of the youth population.

Why does this factor count?

It’s mostly because the current population of China mostly belongs to the middle-aged or old age group; after a few years, the working population of China would eventually become inefficient owing to their age factor. But in India, the working efficiency has a higher chance of improving in the near future owing to the current youth ratio. Hence, it is important for India to make smart decisions for securing its future in the manufacturing sector if it wants to capture the global market.


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