India: the new China

[Lucky_Country]

From what I have been reading India is growing at a far rapider pace that China.

India is supposed to be ~10 years behind China in its development and the China boom really started to kick in around 05-06.

Companies are looking far further ahead than most investors maybe we should to.

 

[Joules MM1]

India, the other shortable instrument

05/31/2012 01:37:29 AM

India's Jan.-March GDP growth slows sharply to 5.3%, well below forecasts

May 30, 2012, 11:35 p.m. EDT

India's DLF posts 39% drop in Jan.-March profit

http://www.marketwatch.com/story/india-gdp-growth-could-dip-below-6-2012-05-30

 

[CanOz]

Could India start a new Asian economic crisis?

India Markets Plunge Pressures Singh as Economy Teeters

 

[Trembling Hand]

Could India start a new Asian economic crisis?

India Markets Plunge Pressures Singh as Economy Teeters

Boy! - good call. Certainly its smacking around everything else today.

 

[Wysiwyg]

From what I have been reading India is growing at a far rapider pace that China.

Chinese President Xi Jinping sees 'factory China' and 'back office India'
powering global economy --

AHMEDABAD: The "world's factory" and the "world's back office" could together
drive global economic growth, Chinese President Xi Jinping said as he began a rare visit to
India on Wednesday, playing down mistrust that has long kept the Asian giants
apart.



Read more at:
http://economictimes.indiatimes.com...ofinterest&utm_medium=text&utm_campaign=cppst

 

[mullokintyre]

A great shame that this thread has had so few posts.
India will overtake China as the alrgest single country population at some time in the next ten years, and its fertility rate of 2.2 is way ahead of China's 1.7.
It has a median age of 28, some ten year younger than China's.
It is the largest democracy by population.Given that China occupies so much of the Oz tarde psyche, perhaps its time to look at our tarde relationship with India.
From The Evil Murdoch press

On Thursday, the Australia-India Economic Cooperation and Trade Agreement enters into force. It is no surprise to me that India chose Australia as the first major economy in more than a decade with which to complete a trade agreement.
Indian consumers appreciate the high quality and assured safety of Australian products, and Indian students value the transformative opportunities our education system offers.

More broadly, our economic relationship is underpinned by a Comprehensive Strategic Partnership and Australia’s vibrant Indian diaspora, who are the living bridge between our countries.
Trade diversification is a central plank of the government’s trade policy strategy. And as I’ve said before, Australia is economically stronger when global trade flows freely. More trade is a key part of how we build the economic future Australia needs.

Deepening our trade and investment ties with India, one of the fastest growing major economies, strengthens our economic resilience. India’s youthful population, diversified economy and growth trajectory present significant opportunities for Australian businesses, including in education, agriculture, energy, resources, tourism, healthcare, financial services, infrastructure, science and innovation, and sport.

As a result of the trade deal, more than 85 per cent of Australian trade exports to India enter duty free. This will rise to 90 per cent in coming years. In addition, India’s high tariffs will be reduced substantially for sensitive products such as wine and almonds.

Australian exporters will benefit from two tariff cuts in quick succession; the first takes place on Thursday upon entry into force and the second on January 1 and annually thereafter.

Australian businesses are very much alive to the enormous trade diversification opportunities in an export market valued at more than $24bn last year.

Western Australia’s largest lobster exporter, Geraldton Fishermen’s Cooperative, has secured a distributor in India in anticipation of ECTA’s entry into force. ECTA secured elimination of India’s 30 per cent tariff on fresh rock lobster from day one and phased elimination of the 30 per cent tariff on frozen rock lobster by January 1, 2028.

The immediate elimination of India’s 30 per cent tariff on lamb and mutton will allow the Australian sheepmeat industry to benefit from the anticipated growth in demand in India for high-quality lamb and mutton. Roger Fletcher, from Fletcher International Exports said ECTA would enable the Australian supply chain to match specific sheepmeat cuts with market segments and cuisines in India, and thereby help diversify export markets.

From Thursday, tariffs on premium wine to India are slashed by half from 150 per cent to 75 per cent, dropping to 70 per cent on Sunday, and will phase down to 25 per cent across nine years.

Like China, India has a massive diaspora in other countries, Australia being no exception.
The attention on China should be waning as the attention to India increases.
Mick

 

[divs4ever]

A great shame that this thread has had so few posts.
India will overtake China as the alrgest single country population at some time in the next ten years, and its fertility rate of 2.2 is way ahead of China's 1.7.
It has a median age of 28, some ten year younger than China's.
It is the largest democracy by population.Given that China occupies so much of the Oz tarde psyche, perhaps its time to look at our tarde relationship with India.
From The Evil Murdoch press

Like China, India has a massive diaspora in other countries, Australia being no exception.
The attention on China should be waning as the attention to India increases.
Mick

it is quite difficult to get exposure to India without all sorts of extra trading account bells , there are only a few Australian domiciled ETFs that focus there , normally the investor has to resort to 'Asian ETFs ' or similarly focused LICs so you are only looking at 10% to 20% exposure

my international focus is towards India but am not very successful at it ( so far )

so far IIND , ASIA , EAI , and PAI are my main holdings with Indian exposure

India is obviously a major potential growth market , but don't neglect other up and coming nations in a fixation with India

 

[divs4ever]

Is India the world's best growth story?​

Is India the world's best growth story?

India has overtaken China as the world's most populous nation and under a reformist Prime Minister, it's growing faster than most other emerging markets. It's also got well-run companies, some of which are global leaders.

www.firstlinks.com.au

my international focus is towards India but am not very successful at it ( so far )

so far IIND , ASIA , EAI , and PAI are my main holdings with Indian exposure

 

[Dona Ferentes]

another 'discovery' of India.

India: On Track to Become the World's #3 Economy​

By Ed D'Agostino |05 March, 2024

India’s growth story is unprecedented.
It has the fastest-growing major economy in the world—GDP grew 8.4% in the final quarter of 2023, according to data released last week. Many analysts expect it to pass Germany and Japan to become the world’s third-largest economy. Deloitte South Asia CEO Romal Shetty thinks that will happen by 2027.

Much of this growth stems from favorable demographics. Last year, India surpassed China to become to the largest nation by population. It’s also the only top-five economy that’s young—40% of people there are under age 25. And India will stay relatively young because it’s the only top-five economy where births exceed the replacement rate.

EM to DM in 25 Years​

India’s Prime Minister, Narendra Modi, wants to turn India into a developed country “within the next 25 years.” That is ambitious, but not implausible.
Modi, who’s up for reelection this year, has been opening the economy to foreign investment since he came to power in 2014. Foreign direct investment reached $71 billion for the 2022–23 financial year, and India’s information technology minister says they’re targeting $100 billion in annual FDI “in the next few years.”

Modi is turning India into a manufacturing hub through programs like Make in India, capturing business from Western companies seeking a cheaper and friendlier alternative to China. Manufacturing accounts for 17% of India’s GDP, but projections show that figure reaching 25% as early as next year.

Electronics manufacturing is growing particularly fast, almost doubling between 2017 and 2022. It’s expected to reach a compound annual growth rate of 24% from now to 2027.
Apple, for example, plans to make roughly a quarter of all iPhones in India within 2–3 years. This will help the company minimize its dependence on China. Foxconn, a Taiwanese electronics manufacturer and major Apple supplier, is spending $1.5 billion to set up shop in India as well.

India’s Digital Infrastructure—a Leader in Fintech​

For the past decade, Modi has been building out India’s digital infrastructure, called India Stack, to facilitate growth and modernization. India Stack (developed under Infosys co-founder Nandan Nilekani) is underpinned by India’s biometrics-based national ID program, Aadhaar. The system sounds a bit invasive to my American ears, but its benefits are undeniable. 99% of Indians have signed up for Aadhaar because it gives them access to digital banking and other aspects of modern life that you and I take for granted.

The numbers are telling. Today, at least 78% of Indians over the age of 15 have a bank account. That’s a massive leap from 2011, when only 44% of Indians over 15 had one.

In today’s India (and other emerging markets), your smartphone is a gateway to e-commerce, insurance, banking… everything. What sets India apart is its digital payment system, combined with broad access to the internet. A smartphone can be had for $12 from Reliance Jio. Mobile data is cheap and readily accessible.

Bridging the East-West Divide​

India comes with its fair share of risks. The unemployment rate for new graduates under age 25 tops 40%. And the political environment is tense—a problem India’s high unemployment and stark class divides exacerbate.

That said, India will both drive and benefit from the core active investment themes I’m focused on—the multipolar world, reshoring /friendshoring, and AI. I’ve written before that in the coming years, most nations will fall into one of two spheres: the US sphere or the China sphere. Few will be able to do business with both, but India will be one of them, and Indian companies will benefit.

Historically, it’s been difficult for Western investors to access India. In recent years, a host of India ETFs have been created—some better than others. Many are stuffed with companies that have little revenue coming from India, or with state-owned entities.

One way to gain exposure to India’s expanding middle class and fast-growing digital economy is the India Internet & Ecommerce ETF (INQQ). Last week, I spoke with Kevin Carter, the ETF’s founder. He made a compelling case for India’s e-commerce growth. The demographic trends are striking.
Still, Indian stocks are pricey, having run up considerably over the past year. They’ll have to grow into their price-to-earnings ratios. Be sure to do your own due diligence.

 

[divs4ever]

another 'discovery' of India.

India: On Track to Become the World's #3 Economy​

By Ed D'Agostino |05 March, 2024

India’s growth story is unprecedented.
It has the fastest-growing major economy in the world—GDP grew 8.4% in the final quarter of 2023, according to data released last week. Many analysts expect it to pass Germany and Japan to become the world’s third-largest economy. Deloitte South Asia CEO Romal Shetty thinks that will happen by 2027.

View attachment 172196​

Much of this growth stems from favorable demographics. Last year, India surpassed China to become to the largest nation by population. It’s also the only top-five economy that’s young—40% of people there are under age 25. And India will stay relatively young because it’s the only top-five economy where births exceed the replacement rate.

EM to DM in 25 Years​

India’s Prime Minister, Narendra Modi, wants to turn India into a developed country “within the next 25 years.” That is ambitious, but not implausible.
Modi, who’s up for reelection this year, has been opening the economy to foreign investment since he came to power in 2014. Foreign direct investment reached $71 billion for the 2022–23 financial year, and India’s information technology minister says they’re targeting $100 billion in annual FDI “in the next few years.”

Modi is turning India into a manufacturing hub through programs like Make in India, capturing business from Western companies seeking a cheaper and friendlier alternative to China. Manufacturing accounts for 17% of India’s GDP, but projections show that figure reaching 25% as early as next year.

Electronics manufacturing is growing particularly fast, almost doubling between 2017 and 2022. It’s expected to reach a compound annual growth rate of 24% from now to 2027.
Apple, for example, plans to make roughly a quarter of all iPhones in India within 2–3 years. This will help the company minimize its dependence on China. Foxconn, a Taiwanese electronics manufacturer and major Apple supplier, is spending $1.5 billion to set up shop in India as well.

India’s Digital Infrastructure—a Leader in Fintech​

For the past decade, Modi has been building out India’s digital infrastructure, called India Stack, to facilitate growth and modernization. India Stack (developed under Infosys co-founder Nandan Nilekani) is underpinned by India’s biometrics-based national ID program, Aadhaar. The system sounds a bit invasive to my American ears, but its benefits are undeniable. 99% of Indians have signed up for Aadhaar because it gives them access to digital banking and other aspects of modern life that you and I take for granted.

The numbers are telling. Today, at least 78% of Indians over the age of 15 have a bank account. That’s a massive leap from 2011, when only 44% of Indians over 15 had one.

In today’s India (and other emerging markets), your smartphone is a gateway to e-commerce, insurance, banking… everything. What sets India apart is its digital payment system, combined with broad access to the internet. A smartphone can be had for $12 from Reliance Jio. Mobile data is cheap and readily accessible.

Bridging the East-West Divide​

India comes with its fair share of risks. The unemployment rate for new graduates under age 25 tops 40%. And the political environment is tense—a problem India’s high unemployment and stark class divides exacerbate.

That said, India will both drive and benefit from the core active investment themes I’m focused on—the multipolar world, reshoring /friendshoring, and AI. I’ve written before that in the coming years, most nations will fall into one of two spheres: the US sphere or the China sphere. Few will be able to do business with both, but India will be one of them, and Indian companies will benefit.

Historically, it’s been difficult for Western investors to access India. In recent years, a host of India ETFs have been created—some better than others. Many are stuffed with companies that have little revenue coming from India, or with state-owned entities.

One way to gain exposure to India’s expanding middle class and fast-growing digital economy is the India Internet & Ecommerce ETF (INQQ). Last week, I spoke with Kevin Carter, the ETF’s founder. He made a compelling case for India’s e-commerce growth. The demographic trends are striking.
Still, Indian stocks are pricey, having run up considerably over the past year. They’ll have to grow into their price-to-earnings ratios. Be sure to do your own due diligence.

i just hope they can keep the growth at rational levels and not suffer a 'boom and bust cycle , like other growing economies before them

 

[Sean K]

another 'discovery' of India.

India: On Track to Become the World's #3 Economy​

By Ed D'Agostino |05 March, 2024

India’s growth story is unprecedented.
It has the fastest-growing major economy in the world—GDP grew 8.4% in the final quarter of 2023, according to data released last week. Many analysts expect it to pass Germany and Japan to become the world’s third-largest economy. Deloitte South Asia CEO Romal Shetty thinks that will happen by 2027.

View attachment 172196​

Much of this growth stems from favorable demographics. Last year, India surpassed China to become to the largest nation by population. It’s also the only top-five economy that’s young—40% of people there are under age 25. And India will stay relatively young because it’s the only top-five economy where births exceed the replacement rate.

EM to DM in 25 Years​

India’s Prime Minister, Narendra Modi, wants to turn India into a developed country “within the next 25 years.” That is ambitious, but not implausible.
Modi, who’s up for reelection this year, has been opening the economy to foreign investment since he came to power in 2014. Foreign direct investment reached $71 billion for the 2022–23 financial year, and India’s information technology minister says they’re targeting $100 billion in annual FDI “in the next few years.”

Modi is turning India into a manufacturing hub through programs like Make in India, capturing business from Western companies seeking a cheaper and friendlier alternative to China. Manufacturing accounts for 17% of India’s GDP, but projections show that figure reaching 25% as early as next year.

Electronics manufacturing is growing particularly fast, almost doubling between 2017 and 2022. It’s expected to reach a compound annual growth rate of 24% from now to 2027.
Apple, for example, plans to make roughly a quarter of all iPhones in India within 2–3 years. This will help the company minimize its dependence on China. Foxconn, a Taiwanese electronics manufacturer and major Apple supplier, is spending $1.5 billion to set up shop in India as well.

India’s Digital Infrastructure—a Leader in Fintech​

For the past decade, Modi has been building out India’s digital infrastructure, called India Stack, to facilitate growth and modernization. India Stack (developed under Infosys co-founder Nandan Nilekani) is underpinned by India’s biometrics-based national ID program, Aadhaar. The system sounds a bit invasive to my American ears, but its benefits are undeniable. 99% of Indians have signed up for Aadhaar because it gives them access to digital banking and other aspects of modern life that you and I take for granted.

The numbers are telling. Today, at least 78% of Indians over the age of 15 have a bank account. That’s a massive leap from 2011, when only 44% of Indians over 15 had one.

In today’s India (and other emerging markets), your smartphone is a gateway to e-commerce, insurance, banking… everything. What sets India apart is its digital payment system, combined with broad access to the internet. A smartphone can be had for $12 from Reliance Jio. Mobile data is cheap and readily accessible.

Bridging the East-West Divide​

India comes with its fair share of risks. The unemployment rate for new graduates under age 25 tops 40%. And the political environment is tense—a problem India’s high unemployment and stark class divides exacerbate.

That said, India will both drive and benefit from the core active investment themes I’m focused on—the multipolar world, reshoring /friendshoring, and AI. I’ve written before that in the coming years, most nations will fall into one of two spheres: the US sphere or the China sphere. Few will be able to do business with both, but India will be one of them, and Indian companies will benefit.

Historically, it’s been difficult for Western investors to access India. In recent years, a host of India ETFs have been created—some better than others. Many are stuffed with companies that have little revenue coming from India, or with state-owned entities.

One way to gain exposure to India’s expanding middle class and fast-growing digital economy is the India Internet & Ecommerce ETF (INQQ). Last week, I spoke with Kevin Carter, the ETF’s founder. He made a compelling case for India’s e-commerce growth. The demographic trends are striking.
Still, Indian stocks are pricey, having run up considerably over the past year. They’ll have to grow into their price-to-earnings ratios. Be sure to do your own due diligence.

LOL, read this article somewhere else and started searching for Indian ETFs..

 

[farmerge]

LOL, read this article somewhere else and started searching for Indian ETFs..

I did some work for a local tank building company based locally.
They set up business in India about 10-12 years ago and the owner was going on about their potential growth back then.
Huge wealth in the massive middle class and upper crust of society over there.
Not too sure how the lower castes and untouchables will fare with the booming economy though.
I guess the rubbish tips and begging will still be their saviour.

 

[divs4ever]

i hold IIND ( bought March 2022 $9.51 )

and ASIA ( not so India-centric currently ) in 2018 av. SP $5.275 , but took some cash off the table ( in ASIA ) January 2021 @ $12.25 .

for ASIA top ten

CODE	COMPANY	ASSET
TSM	Taiwan Semiconductor Manufacturing Co Ltd ADR	12.52%
005930	Samsung Electronics Co Ltd	10.57%
00700	Tencent Holdings Ltd	8.75%
BABA	Alibaba Group Holding Ltd ADR	8.24%
INFY	Infosys Ltd ADR	7.24%

Top 10 Holdings

CODE	COMPANY	ASSET
NTES	NetEase Inc ADR	5.53%
000660	SK Hynix Inc	4.78%
2454	MediaTek Inc	3.99%
2317	Hon Hai Precision Industry Co Ltd	3.43%
JD	JD.com Inc ADR	2.77%

for IIND top ten

CODE	COMPANY	ASSET
INFY	Infosys Ltd	7.36%
TCS	Tata Consultancy Services Ltd	7.22%
BHARTIARTL	Bharti Airtel Ltd	5.33%
COALINDIA	Coal India Ltd	5.20%
ICICIBANK	ICICI Bank Ltd	5.04%

Top 10 Holdings

CODE	COMPANY	ASSET
KOTAKBANK	Kotak Mahindra Bank Ltd	4.89%
500696	Hindustan Unilever Ltd	4.72%
500124	Dr Reddy's Laboratories Ltd	4.13%
RELIANCE	Reliance Industries Ltd	4.02%
VBL	Varun Beverages Ltd	3.88%

on my watch-list but not held is

NDIA

top ten

CODE	COMPANY	ASSET
HDFCBANK	HDFC Bank Ltd	11.51%
RELIANCE	Reliance Industries Ltd	10.11%
ICICIBANK	ICICI Bank Ltd	7.57%
INFY	Infosys Ltd	6.26%
LT	Larsen & Toubro Ltd	4.56%

Top 10 Holdings

CODE	COMPANY	ASSET
ITC	ITC Ltd	4.12%
TCS	Tata Consultancy Services Ltd	4.09%
BHARTIARTL	Bharti Airtel Ltd	3.11%
532215	Axis Bank Ltd	3.10%
KOTAKBANK	Kotak Mahindra Bank Ltd	2.85%

 

[frugal.rock]

India has been too slow imo to be the next China.

Large amounts of manufacturing in the last few years has quickly left China for the likes of Malaysia, Indonesia, Phillipines, Vietnam, Thailand and even partly Cambodia.
Check their rapidly rising GDP data to match.

The next China is..... drumroll..... Yes, you guessed it, China. Slowly but surely, you just wait and see.

China has over 60% of the manufacturing for the green agenda. 'nuff said

 

[divs4ever]

India has been too slow imo to be the next China.

Large amounts of manufacturing in the last few years has quickly left China for the likes of Malaysia, Indonesia, Phillipines, Vietnam, Thailand and even partly Cambodia.
Check their rapidly rising GDP data to match.

The next China is..... drumroll..... Yes, you guessed it, China. Slowly but surely, you just wait and see.

China has over 60% of the manufacturing for the green agenda. 'nuff said

remember India was still under British rule until 1947 , it still has a naturally growing population despite the immigration

the next China yes , but will it be 20 years or 50 years ??

but China won't fade away quickly unless it makes some terrible mistakes , it should track India fairly closely

 

[frugal.rock]

the next China yes , but will it be 20 years or 50 years ??

Still don't agree.
Belt and road business and good old fashioned outsourcing.
Example currently;

Indonesia harnesses Chinese capital and innovation to dominate world nickel production | The Strategist

Indonesia’s success in deploying Chinese capital and innovation to become the dominant force in the global nickel industry has been achieved in the face of concerted opposition from the European Union through the World Trade ...

www.aspistrategist.org.au

 

[frugal.rock]

remember India was still under British rule until 1947

That's the biggest problem old chum. Ingrained bureaucracy and red tape. Easier, cheaper and quicker to start up in south east Asia.

 

[divs4ever]

Still don't agree.
Belt and road business and good old fashioned outsourcing.
Example currently;

Indonesia harnesses Chinese capital and innovation to dominate world nickel production | The Strategist

Indonesia’s success in deploying Chinese capital and innovation to become the dominant force in the global nickel industry has been achieved in the face of concerted opposition from the European Union through the World Trade ...

www.aspistrategist.org.au

but India has location , and a growing population , add in a clever Indian leader could mend fences with Bangladesh and Sri Lanka , maybe even Pakistan

the main thing India has to do is resist conflict with China so both can grow at their own pace

the Chinese 'belt and road will meet some hurdles ( Europe ) but will most likely partly achieve it's aims

 

[JohnDe]

India has been too slow imo to be the next China.

Large amounts of manufacturing in the last few years has quickly left China for the likes of Malaysia, Indonesia, Phillipines, Vietnam, Thailand and even partly Cambodia.
Check their rapidly rising GDP data to match.

The next China is..... drumroll..... Yes, you guessed it, China. Slowly but surely, you just wait and see.

China has over 60% of the manufacturing for the green agenda. 'nuff said

I have to agree, unless there is big change in how the different political classes.

Never say never.

Most people know that India is a rising economic power. It is already the world’s fifth-largest economy and is growing faster than any big rival, with a turbocharged stockmarket that is the fourth-largest of any country’s. It is also common knowledge that India’s prime minister, Narendra Modi, is its most powerful in decades and that, as well as economic development, his agenda includes a Hindu-first populism that can veer into chauvinism and authoritarianism. Less well known is that these competing trends of development and identity politics are together fuelling a striking third trend: a growing north-south split.​

To see India’s future, go south
The country’s regional division could make it—or break it

Most people know that India is a rising economic power. It is already the world’s fifth-largest economy and is growing faster than any big rival, with a turbocharged stockmarket that is the fourth-largest of any country’s. It is also common knowledge that India’s prime minister, Narendra Modi, is its most powerful in decades and that, as well as economic development, his agenda includes a Hindu-first populism that can veer into chauvinism and authoritarianism. Less well known is that these competing trends of development and identity politics are together fuelling a striking third trend: a growing north-south split.

The wealthy south is where you will find the slick new India, with its startups, it campuses and gleaming iPhone-assembly plants. Yet Mr Modi’s party gets a low share of its votes from there and relies on the poorer, more populous, rural, Hindi-speaking north. This north-south divide will be a defining issue in the election in April and May, in which Mr Modi is expected to win a third term. How the split is managed in the long run is of critical importance to India’s prospects. In one alarming scenario, it could create a constitutional crisis and fracture India’s single market. In a more benign future, resolving this divide could moderate India’s harsh identity politics.

Geographical divides often influence how countries develop. America’s politics and economy still reflect the legacy of the civil war. When Deng Xiaoping sought to open up China’s economy in 1992, he took a “southern tour” to Guangdong province. His endorsement of its entrepreneurial culture and history of openness thwarted Communist Party conservatives and led to the boom that fuelled China’s rise as an economic superpower.

Understanding India’s divide begins with economics. The south has long been richer and more urban. The southern five of India’s 28 states (Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana) contain 20% of the population, but account for 30% of its loans and for 35% of the flow of foreign investment in the past three years. Better government, education and property rights help explain this outperformance and have fostered enterprise and a more sophisticated financial system. A gap that has existed since independence in 1947 has widened over the decades. In 1993 the south contributed 24% of India’s gdp. The latest figure is 31%.

When foreign bosses visit India they still pay tribute to the national government in Delhi, but many of the most exciting business opportunities require a flight to the south. Consider the shift in global supply chains from China to India: 46% of India’s electronics exports are from the south. In India’s famous startup scene, 46% of tech “unicorns” are southerners, coming especially from Bangalore. The five southern states provide 66% of the it-services industry’s exports. The latest craze is for “global capability centres”, where multinationals assemble their global auditors, lawyers, designers, architects and other professionals: 79% of these hubs are in the south.

Most people know that India is a rising economic power. It is already the world’s fifth-largest economy and is growing faster than any big rival, with a turbocharged stockmarket that is the fourth-largest of any country’s. It is also common knowledge that India’s prime minister, Narendra Modi, is its most powerful in decades and that, as well as economic development, his agenda includes a Hindu-first populism that can veer into chauvinism and authoritarianism. Less well known is that these competing trends of development and identity politics are together fuelling a striking third trend: a growing north-south split.

The wealthy south is where you will find the slick new India, with its startups, it campuses and gleaming iPhone-assembly plants. Yet Mr Modi’s party gets a low share of its votes from there and relies on the poorer, more populous, rural, Hindi-speaking north. This north-south divide will be a defining issue in the election in April and May, in which Mr Modi is expected to win a third term. How the split is managed in the long run is of critical importance to India’s prospects. In one alarming scenario, it could create a constitutional crisis and fracture India’s single market. In a more benign future, resolving this divide could moderate India’s harsh identity politics.


Geographical divides often influence how countries develop. America’s politics and economy still reflect the legacy of the civil war. When Deng Xiaoping sought to open up China’s economy in 1992, he took a “southern tour” to Guangdong province. His endorsement of its entrepreneurial culture and history of openness thwarted Communist Party conservatives and led to the boom that fuelled China’s rise as an economic superpower.

Understanding India’s divide begins with economics. The south has long been richer and more urban. The southern five of India’s 28 states (Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana) contain 20% of the population, but account for 30% of its loans and for 35% of the flow of foreign investment in the past three years. Better government, education and property rights help explain this outperformance and have fostered enterprise and a more sophisticated financial system. A gap that has existed since independence in 1947 has widened over the decades. In 1993 the south contributed 24% of India’s gdp. The latest figure is 31%.

When foreign bosses visit India they still pay tribute to the national government in Delhi, but many of the most exciting business opportunities require a flight to the south. Consider the shift in global supply chains from China to India: 46% of India’s electronics exports are from the south. In India’s famous startup scene, 46% of tech “unicorns” are southerners, coming especially from Bangalore. The five southern states provide 66% of the it-services industry’s exports. The latest craze is for “global capability centres”, where multinationals assemble their global auditors, lawyers, designers, architects and other professionals: 79% of these hubs are in the south.


Even as the south acts as India’s economic engine, its politics are on a separate planet from those of the north. There the emphasis is on the Hindi language, macho Hindu identity politics and, often, the demonisation of Muslims. Mr Modi’s Bharatiya Janata Party (bjp) promotes all that alongside its mantra of national development, partly out of ideological fervour and partly because it wins elections.

In the south that bjp formula works less well. Since the 1960s voters have backed regional parties that promote English, Tamil and other local languages, and advocate less strident Hindu values. In 2019 only 11% of the bjp’s voters and a mere 10% of its parliamentary seats were from the south. In the party’s one southern bastion, Karnataka, the bjp lost control of the state legislature in elections in 2023. Mr Modi dreams of running a modern, tech-enabled central government that reaches across the whole country. Yet for all his electoral triumphs, he still lacks a truly national mandate.

How will these geographical tensions be resolved? A thriving national single market is crucial to India’s growth because it allows firms to achieve economies of scale for the first time and permits a more efficient allocation of national resources, from energy to labour. Inter-state trade rose from 23% of gdp in 2017 to 35% in 2021, underpinning growth. Mr Modi has done an impressive job of creating nationwide infrastructure, from a unitary tax system to transport and digital-payments schemes.

Yet under India’s constitution most of these reforms required co-operation between the central government and the states. So will the next lot. Education, which needs deeper reform, is a joint responsibility. More young Indians in the jobs-scarce north must be able to move to find work in the south. To power its economy and cut emissions India needs a truly national energy market.

Pessimists fear a re-elected Mr Modi will upset the constitutional balance. Southern leaders already accuse him of targeting them with bogus corruption probes, withholding central-government funds and extracting an unfair level of tax to subsidise the north. The south could also lose out after 2026 when parliamentary-constituency boundaries are due to be redrawn. Against the south’s wishes, the bjp could impose Hindi as the national language.

Over the next decade this kind of confrontation could get in the way of essential economic reforms. In the very worst scenario it could even lead to calls to break up India. Talk of secession last surfaced after independence and was suppressed with a ban in 1963 on any politician proposing it.

A different future​

Fortunately, India and Mr Modi have a far better alternative. Another way for the bjp to be competitive in the south is for it to moderate its Hindutva message, restrain its promotion of Hindi, put more weight on economic development and advance more moderate successors to Mr Modi than his coterie of headbangers. It is early days, but our reporting from alongside the bjp’s southern leadership this week suggests that some of these shifts may be taking place. South India already offers a vision of the future for India’s economy. If Mr Modi and his party choose wisely, the south may be an augury for its politics, too.■

 

[Dona Ferentes]

an email doing the rounds from a NRI.

rose coloured glasses?

“Great to read your email about India, I couldn’t agree more, this really does seem to be the next big opportunity and one that will run for many decades to come.
'I thought I would share how I think about India and some of the factors that make me bullish…

The young working & skilled population of the world

I think just like how China became the manufacturing factory of the world; India’s working youth will become both the skilled human talent factory for the world and at the same time become a major consumer market of the world. India simply has the demographic dividend which China and many other countries don’t have. For me this is the fundamental factor, it’s hard to compete on demographics. It’s something that is programmed in and now primed for success. Now can this demographic dividend be nurtured and capitalised on or not? Now, I turn to the other factors.

The Modi & BJP leadership

It’s critical to have the right leader at the top, someone who can make sure India capitalises on its opportunity and its demographics. Modi has originally come from a poor background rather than from the Gandhi ruling elite and India has seen major differences since he has been in power. Modi and BJP have gathered a big following and built a strong political position. I’m not saying they are perfect but in terms of building infrastructure, growing the economy, dealing with corruption, etc. What used to be a 24-hour journey from the airport to my village along terrible roads, numerous lorries collapsed on the sides of the roads is now a 5 hour journey and a much smoother ride. People notice the roads; they use them every day. The money to build the roads would never get to building any roads. Still a lot of work to be done on infrastructure but it can get there in time. Modi has made a lot of changes.

Tax Infrastructure

You must have also heard about the demonetisation of certain notes that made a lot of black money worthless. A lot of people had to dump/burn bags of money. India is putting in the infrastructure and systems to combat black money and this will enable the government to more effectively tax and generate more funds to invest. For a long time, black money has been the norm in society on all levels (I guess it’s more democratic). India had little hope, it just didn’t have the systems and infrastructure to effectively to track anything or collect tax. They now have systems more advanced than ours to effectively collect tax. Now you need an Aadhaar card for many transactions. This should provide additional funds to invest in the country.

Optimism

The big difference I notice when I go to India, I can feel the optimism, you can almost taste it in the air. Everyone knows India is going places, they are positive about the country and the future outlook. When I get back to the UK, we just feel like our country is going downhill, quite pessimistic or neutral at best. The optimism is important for everyone, for businesses to invest in the future, for students to invest in their future and for the government to invest in the future. Put simply, when I go to India, I have that gut bullishness in me. The youth of India are seeing the world’s biggest tech companies and also non-tech companies being run by Indians. Their ambitions and belief now are very very very different to the some of the prior generations. This new generation of Indians don’t have the psychological limitations of the older Indians. They know there is no limit now, this was not the case before.

Momentum

India’s momentum keeps growing, as the economy moves forward, as people see more development, as the young talent grows, it feeds on itself. India’s international presence is emerging too. When the rest of the world starts taking India more seriously, India will naturally also start taking itself more seriously too. What is happening with China now, just feeds into India’s momentum. Again, for me the fundamental driver is that demographic dividend. The country just needs to nurture, protect, and fuel that core asset and the momentum will continue.

Pent up real consumer demand

The consumer lifestyle that we have been living for a long time is all new for Indians. We’re already got everything we need really. India has pent up demand for just about everything. When I went to India as a young boy, there was one TV in the village, we used to all gather in that one house to watch. Now many houses have one TV. In the future all houses will have one TV and then they will have multiple TVs. This is real and new demand. Just think about how many supermarkets need to open across India. How many families still need to buy the first car in the household....

(cont.)

Indians abroad

A lot of Indians aim to move out of India (I think this will change at some point though!) and they have moved to many countries including places like Ukraine too. This presence abroad is now turbo charging the speed at which things are brought back to India. It comes back to this next generation of young Indians that don’t have the limitations of the past generations, have more of a global presence and most importantly have opportunities that just weren’t there before. I have to say I personally don’t agree with all the illegal immigration here, it really should be stopped. Seems to be going on in a lot of countries.

Educational Bias

Parents have a strong bias to education, in an ultra competitive country, it’s seen as imperative to career success, marriage success (they look at your educational credentials) and going abroad success. I was surprised when my cousin told me he takes his daughter to extra tuition in the morning before school and also after school. That sounds like a lot of tuition! It’s almost like mandatory as everyone is doing it, so you have to send your kids too. My point is India is going to keep educating and churning out a skilled workforce. As the educational infrastructure and systems improve in the years ahead combined with the parent’s educational focus, this is going to generate massive value The educational infrastructure has a lot of scope to improve. I think we’re just getting started.

Tech Bias

As we know, India has a strong technology capability, which is still in its early stages. Technology becomes more and more important, and I think this has barely begun in India. I believe we will see a bigger Silicon Valley in India. The technology bias and the just the sheer population of the country, I don’t see why the capital would not move to where the talent is. At the moment, the talent has been moving to where to the capital is.

Numbers Game

Just the sheer size of the population and the share of the world population means a big number of things will come out of India. When the numbers are that big and therefore that competitive too, you will naturally produce some of the best talent across a range of industries.

Kumb Mela

Indeed, all the prior points are important when looking at India, however the best of what India has to offer is outside of all that kind of stuff. The Kumb Mela is the largest peaceful gathering of humans in the world, where Hindus bath in the river Ganges. This happens in 4 different locations in India, in each location, every 12 years (with a half Kumb Mela at 6 years). I first found out about this when I was young, maybe around 10, I had seen it on the BBC news, they were showing this event could be seen from outer space. When I went to India around that age, I told my parents and my uncles/aunts, I want to go to see this thing. They told me you really don’t want to go there, it’s not good, too many people, nothing to see there, etc. I finally went in 2019 and all I can say is the person that went in was not the person that came out. Incredible experience and I would recommend anyone to go. I think on the most auspicious day, there were 50 million people! If I continue writing about this, I probably won’t stop writing. We’ll have to have this conversation at some point though! The next one is in January 2025, which is the big one. The one in 2019, 6 years ago was the half one.

God Candle

This brings me to my last and most important point, when you go to India, you will see religion/God rooted everywhere, whether it is in the workplace, at home or simply in the rickshaw ride. I remember being in a bar in Mumbai, all of a sudden they stopped all the music, all the dancing stopped and then they did the evening Aarti (prayers). It’s not like this everywhere in India but you get my point. It’s interwoven with society, economy and the country as a whole. You will see many temples and mystical things in India. Things you just can’t really even imagine outside of India. Secularism in India is taken as including all religions into the equation rather than excluding all religions from the equation now