India Key to Global EconomicRevival
As the world slowly flattens the COVID-19 curve and key economies around the world restart their functioning, India’s Make in India initiative holds a key to the global economic revival. It assumes greater salience as several major world economies, such as American, Japanese, German, British, South Korean and Australian among others look to move out and diversify their businesses from China.
So why is India relevant? India has jumped to 63rd rank in the World Bank’s Ease of Development 2020 report, and has also been ranked as the 9th largest recipient of Foreign Direct Investment destination in 2019 by the World Investment Report 2020 of the United Nations Conference on Trade and Development (UNCTAD). The total FDI into India showed a 18% jump from US$ 62 billion in 2018-19 to US$ 73.45 billion in 2019-20, in the steel, digital and energy sectors. The report lists professional services and digital economy as some the most sought-after industries in India for venture capital firms and technological companies. Since 2000, the highest cumulative investments have been recorded in the services sector, computer software and hardware, telecommunications, trading and construction development.
As per the Global Innovation Index (GII) published by the World Intellectual Property Organization (WIPO), India ranks 52nd in innovation, improving from 57th in 2018, and topping the list amongst the Central and South Asian nations. India also ranks 77th in the input pillar “Institutions” that measures political, regulatory and business environments; and 53rd in the input pillar “Human Capital and Research” which is based on education level, tertiary education and research and development. India ranks currently at 7th in the “Number of Graduates in Science and Engineering” and 35th in “Research and Development”. When it comes to infrastructure measures which includes the performance of Information and Communication Technologies (ICT), general infrastructure and ecological sustainability India ranks 17th.
With regard to market sophistication India ranks 20thboth, in terms of “Ease of Getting Credit” and “Market
Capitalisation”; 3rd in “Domestic Market Sale” and 6th in “Ease of Protecting Minority Investors”. In business sophistication India has jumped from 51st in 2018 to 27th rank, and 23rd in University/ industry Research Collaboration”, something that should interest the academic stakeholders in Australia. India is a major success in Knowledge and Technology and ranks 1st in ICT services exports (as a percentage of total exports) and also ranks 22nd in the list of “Exporter of Creative Goods”.
With an eye on kick-starting the economy after a battering from COVID-19, as a part of India’s self-reliant pursuit, PM Modi’s Aatmanirbhar Bharat (self-reliant India) initiative saw a colossal a $266 billion #VocalForLocal stimulus package, that constituted 10% of the GDP. The stimulus was aimed at supporting the cottage industries and Micro, Small and Medium Enterprises (MSMEs). PM Modi also emphasised on the Aatmanirbhar Bharat initiative in his address in the India Global Week 2020 summit on 9 July. The Modi government aims to make India a US$ 5 trillion economy by 2025, an estimate announced before the COVID-19 outbreak, which appears very challenging now, but the government nonetheless remains steadfast in realising this objective. It provides a vast array of opportunities for global and Australian investors, particularly in infrastructure, energy and cost-effective manufacturing in automobile, electronics, telecommunications, white goods and pharmaceuticals to list a few.
From the Australia perspective, the stakeholders must remain alert in tapping into opportunities opening up rapidly across ten priority states in ten priority sectors, inter alia education, agribusiness, resources and tourism, energy, health, financial services, infrastructure, sport, science and innovation identified in the Peter Varghese’s report, An India Economy Strategy to 2035”. Perhaps, not many are aware that the state of Uttar Pradesh with over 200 million people, has been ahead of many of the India states, in engaging with global firms seeking diversion for their businesses from China. It is one of the ten key states listed in the report. India certainly holds the key to the revival of the global economy.