How does the Indian economy offer an alternative to China?

3 mins read

US-based broadcaster CNN wrote about how Indian Prime Minister Narendra Modi‘s economic policies are creating an alternative to China.

Stating that financial experts from all over the world are aware of the progress India has made in the two periods under Modi since 2014, CNN reminded that the Indian leader aims to turn the country into a $5 trillion economy by 2025.

While China is dealing with numerous economic problems and capital is fleeing the country, the atmosphere in India is quite the opposite.

The Shanghai, Shenzhen and Hong Kong stock markets, which declined after their peaks in 2021, have lost $5 trillion in value in recent years.

Foreign direct investments in the country decreased by 12 percent in January compared to the same month last year.

In India, the stock market is at an all-time high, with the total value of listed companies exceeding $4 trillion at the end of last year.

According to a report by New York-based investment bank Jefferies, this figure could more than double to $10 trillion by 2030.

Japan is one of the countries attracting investors looking for an alternative to China. The Tokyo stock market hit a 34-year high last week on a weaker yen and rising corporate profits. But the country is now in recession and has lost the title of the world’s third largest economy to Germany.

Data from MSCI, the global stock market index compiler, also confirms the interest in India.

MSCI said this month that India’s weight in emerging markets rose from 17.98 percent to 18.06 percent, while China’s weight fell to 24.77 percent.

The IMF expects India to grow by 6.5 percent in the next fiscal year, while its growth forecast for China remains at 4.6 percent. Jeffries analysts believe India will be the world’s third largest economy by 2027.

At a time when an increasing number of foreign companies are seeking to avoid local political risks in China, institutional investors are also cautious about buying shares in Chinese-listed companies, even though they currently look very cheap.

India, on the other hand, is characterized by good relations with the West and other major economies, and calls for multinational companies to set up factories in the country.

Almost all market observers who follow India closely are in favor of the Indian People’s Party (BJP – Bharatiya Janata Party), led by Modi, taking the lead in this year’s elections.

Another election victory for Modi is expected to add predictability to the country’s economic policies.



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