India Chases China’s Economy: Here’s What’s Holding Them Back

By: Lauren | Last updated: Jan 16, 2024

India’s economy is significantly improving, and the recent growth is due, in large part, to the country’s current government.

However, India still needs to make some big changes if they want to become a global leader like the USA or China.

India’s GDP Grew by 6% in 2023

According to expert economists, the Indian government is working tirelessly to improve the country’s overall economy. 

Farmers, commission agents, and wholesale buyers mingle as they trade agricultural produce from Bulandshahr at the Azadpur Mandi

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One way they have made this dream a reality is by increasing its gross domestic product (GDP) output by 6% in just one year, which is more than either China or the USA was able to do in the same timeframe. 

The Government in India Is Spending a Fortune on Infrastructure

In order to improve the economy and country as a whole, the Indian government is spending a small fortune on infrastructure projects, such as rebuilding roads, ports, and power stations. 

The Imperial Towers twin towers residential skyscrapers and business district development in Tardeo South Mumbai, India

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They are hoping these projects will not only bring stability to the citizens of India but also encourage private investors both domestically and internationally. 

India’s Stock Market Is Thriving

India’s internal stock markets are doing better than ever before. In fact, the country’s business capital is currently more valuable than that in Hong Kong. 

Stock market ticker in front of office building in India

Source: Linkedin

Since the start of 2024, India’s business capital is valued at $4 trillion, which is $1 trillion more than it was at this time in 2023. 

Fighting for China’s Spot at the Top

The improved stock market value and government investments are great news for India, but it’s not enough to make them a global financial success.

A Chinese day trader reacts as he watches a stock ticker at a local brokerage house, Beijing, China

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However, it seems that India plans to take advantage of China’s current economic problems, and if they do, it will mean big and lasting changes for India. 

India Wants Apple

One way in which India plans to monopolize on China’s situation is by making itself available to Apple. The tech company is slowly moving out of China, and India wants it to land on its soil. 

iPhone 15 handsets are on display as they go on sale at the Apple Store

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Currently, 7% of all iPhones are made in India, which makes up about 5% of the Indian market. However, some economists believe that 25% of all iPhones may be manufactured in India by 2025, which will certainly improve the economy significantly. 


India’s Economy Isn’t Quite Where it Needs to Be

But, expert economists say that these factors are not enough to make India a potential player in the world’s global market.

In this photo illustration, a close up of Mahatma Gandhi on Indian banknote

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In fact, although India is technically doing well financially, these experts say a lot has to change if they want to become a developed nation by 2047, as they’ve previously claimed. 


What’s Wrong with India’s Economy?

Although it may seem like there are a lot of positives within India’s current economy, there are also quite a few issues. 

Traffic and pedestrians mingle on a street in Uttar Pradesh, India's most populous state

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The first and foremost is that both Indian and international private companies have yet to invest sufficient funding. due to fears of the country’s challenging regulations. 


The World Bank Weighed in on India’s Economic Issues

Auguste Tano Kouamé, India’s director at the World Bank, explained at a news conference last year that, “To accelerate the growth of confidence, public investment is not enough.”

Glass building with the words “World Bank” on the side

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He continued, “[They] need deeper reforms to make the private sector invest.” And while India’s popular prime minister Narendra Modi has made some of the necessary changes to the country’s policies, Kouamé and other economists argue it’s not enough.


India’s 1.4 Billion Residents Aren’t Benefiting Yet

It’s important to note that while the world is talking about private domestic and international investors, India’s stock market, and its fight for Apple production, few are addressing the fact that these great improvements have yet to help India’s 1.4 billion residents. 

Opposition Bharatiya Janata Party parliamentarians protesting against rising prices in the Parliament House complex in New Delhi

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Its citizens are still struggling against increased food and fuel costs. Furthermore, only 20 million of the 1.4 billion people living in India can afford international products. 


India Prime Minister Narendra Modi’s Fight to Improve the Economy

Narendra Modi has been the prime minister of India since 2014, and throughout his time in office, he has led the charge in improving the country’s economy through government spending and minimizing corruption. 

Indian Prime Minister Narendra Modi speaks at a news conference

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But Modi seems to only be removing the red tape for larger companies, not for the little guy. According to economist Arvind Subramanianfrom Brown University, “Domestic investors [still] feel a little bit vulnerable.”


People Don’t Believe in India Just Yet

There are several signs India’s economy is improving every day, but economists believe that there are still red flags stopping significant change and growth for the country. 

India's Prime Minister Narendra Modi greets crowds of supporters during a roadshow in support of state elections in 2022

Source: Ritesh Shukla/Getty Images

However, if Prime Minister Modi and India as a whole continue on the path they’re currently on, that could change in the very near future and India may just become a world economic leader.