India – an internationalising economy

Ranked third among the world’s richest individuals, Gautam Adani, with a fortune of $121 billion, overtook Jeff Bezos and Bill Gates in March 2022. He is neither European, American, Chinese, nor Russian, but Indian. India, which Prime Minister Narendra Modi describes as the world’s largest democracy, is the country with the third-highest number of billionaires, behind the United States and China, with 166 wealthy individuals compared to only nine in the 2000s. While the expression “Chinese miracle” has entered common usage, the notion of an “Indian miracle” deserves equal recognition. India has recorded 578% growth over the past 20 years, compared to 127% for the United States and 116% for France, and is expected to overtake China by the end of next year according to Coface. India has now risen to the rank of an industrial, nuclear, and commercial superpower and claims a major role both in Asia and on the global stage. Over the past 30 years, the country has gradually reduced poverty, corruption, illiteracy, and the caste system as a major vector of inequality.

India is now the world’s fifth-largest economy, the second most populous country, and the fourth-largest military power. As a key pillar of the emerging BRICS alliance, its “Swiss army knife” factories of natural resources have enabled its economy to open up and take off.

Rapid progress

Thirty years ago, India was only the world’s 15th-largest economy. Today, it is expected to overtake Germany by 2027. While India recorded 6.8% growth in 2022 and forecasts 6% growth for 2023, the United States, China, Europe, and one-third of the world’s countries are on the brink of recession, according to IMF Managing Director Kristalina Georgieva. The proportion of Indians living in poverty has collapsed, falling from 45% in 1993 to 7% in 2021, and 56% of Indian households now belong to the middle class. India is currently the world’s fourth-largest agricultural producer and the second-largest producer of wheat and sugarcane.

The strategy of rapid growth

Protectionist measures designed to promote domestic activities, implemented after independence in 1947, supported a socialist economic model until the 1990s. This changed when Finance Minister Manmohan Singh, under Prime Minister Narasimha Rao, introduced liberal reforms by moving away from state-owned enterprises, reforming the banking system, and developing heavy industries and power plants. Today, 94% of Indians have access to electricity, compared to 70% in 2007, and benefit from subsidies and unemployment insurance. In parallel, the Digital India programme aims to transform the country into a major technological hub in medicine, pharmaceuticals, and information technology. In less than 30 years, living standards have soared, reaching annual consumption of $1.5 trillion by the end of 2022. This demand, combined with liberal reforms and the valorisation of private capital, constitutes the formula that has propelled India to the top of the Forbes rankings.

The internationalisation of the economy

India in 2023 is recognised as a pioneer in pharmaceutical production, a sector expected to double by 2030 to reach $120 billion, supported in particular by strong domestic demand. However, its trade balance has remained strictly in deficit for years, reaching $175 billion in 2023, 80% of which is devoted to covering its energy needs. Narendra Modi has introduced several laws to attract foreign investment. He seeks to negotiate free trade agreements with Europe while maintaining the “Made in India” principle, which he also applies in ongoing negotiations with Airbus and Rafale. Currently, 60% of Indian imports consist of oil, LPG, coal, gold, and diamonds from China, the United States, the United Arab Emirates, Switzerland, and Russia. Since last year, India has intensified its trade with its new partner by taking advantage of the energy crisis despite the embargo, under a treaty dating back to 1971 that binds it to the former USSR. India has become the largest buyer of Russian oil, which rose from 1% to 18% of Indian petrol station supplies in just one year.

Neutrality or ambiguity, a skilful nuance

Refusing to take sides in the Sino-American rivalry, the Indian government has also avoided taking a position in the conflict opposing Russia to Ukraine and NATO, seeking to remain as neutral as possible while opposing Western economic sanctions. Thanks to its diplomatic skill, India has managed to maintain stable relations with the United States, which are in fact its largest customers. A member of the UN, WTO, IMF, Commonwealth, and G20, India is negotiating with Mercosur and has signed dozens of free trade agreements worldwide.

Indian giants

At the head of India’s largest publicly listed companies stands Reliance Industries, the global leader in polyester production, employing 342,000 people and valued at approximately $176 billion. In the services sector, the 488,000 consultants of Tata Consulting, present in 46 countries, and the 335,000 engineers of Infosys contribute to India’s image of international “prestige.” Among foreign companies, the Indian subsidiary of the British firm Hindustan Unilever, for example, has seen its share price rise by 85% over five years.

A serious competitor to Beijing

Experts agree that India remains a safe bet for investors. Far from having completed its development, its potential for growth remains significant. Through its imports of Russian oil and gas, India increasingly presents itself as an alternative to China, whose growth has slowed more sharply. India seeks to capitalise on Beijing’s difficulties, particularly its zero-Covid policy. Having become the world’s leading vaccine manufacturer through the production of AstraZeneca doses, India offers labour costs far more competitive than China’s—around five times cheaper—and leverages its neutrality to attract industries and subcontracting factories. In this context, Foxconn, Apple’s supplier, is considering producing the iPhone 14 in India, while semiconductor plants and pharmaceutical industries have multiplied since the 2010s. Moreover, India’s population is well educated, with literacy rates rising from 60% to 92% over 30 years. Each year, 1.5 million engineers graduate from Indian universities, some of whom go on to lead multinational corporations. Sundar Pichai heads Alphabet, Google’s parent company, and Arvind Krishna is the CEO of IBM. In addition, India’s 28 million-strong diaspora sends more than $90 billion back to the country every year.

An India of traditions

Within the country, 70% of jobs are informal, without contracts or legal protection. Although Indian women have risen to billionaire status—such as Akshata Murty or Falguni Nayar, the first woman to lead a unicorn company valued at over $1 billion—the condition of women remains problematic, with only 59.3% being literate. Furthermore, the caste system hierarchises society into five ranks (priests, warriors, merchants, servants, and untouchables), associated with specific professions and determining access to housing, banking services, and the labour market, thereby hindering—or even preventing—social mobility.

Bureaucratic inertia and inequalities, the indian challenges

Despite these advances, India faces several challenges that slow its economic development. Bureaucratic inertia is compounded by a lack of road and rail infrastructure essential for transporting goods across its territory. Inequalities remain stark, as the country’s 100 richest individuals own as much wealth as its 600 million poorest citizens. The agricultural sector has also been marked by protests for nearly a year against agricultural liberalisation reforms. Farmers from across the country blocked the entrances to major cities such as New Delhi for months. As the world’s second-largest coal consumer and third-largest carbon emitter, Prime Minister Modi—despite his pledges—appears to prioritise climate issues mainly during election periods.