India could become the world’s second largest economy by 2075. And international businesses and investors alike are keeping their eyes on the country.
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Veteran investor David Roche said India “is a slow trundling elephant” that still has many hurdles, but is now a viable alternative to China.
“I think India stands to benefit from the decline in terms of the attractiveness of foreign direct investment and portfolio flows of China,” Roche told CNBC’s “Street Signs Asia” on Friday.
India has been aligning itself with the “democratic alliances” of the “richest and most vibrant economies” in the world, he said.
After overtaking China to become the world’s most populous nation, India could also leapfrog its neighbor to also become the world’s second-largest economy by 2075.
“So I think we’re looking at a transfer of not only fixed investment by corporations, but portfolio investments out of China and into India,” Roche said.
However, he also warned that the perception of how much money flows into India often exceeds reality.
“I think one has to look to sound the current levels and a note of caution about that,” Roche warned.
Investors and economists have been increasingly optimistic about India’s growth story. According to the IMF’s October update of its World Economic Outlook, India’s economy is expected to grow 6.3% in 2023.
Alicia Garcia-Herrero, chief economist for Asia-Pacific at Natixis said, told CNBC last week that India is “a bright spot in the global economic picture.” She explained that the optimism surrounding the country has enticed global companies to move some of their manufacturing facilities to the country.
Google announced Thursday it would begin manufacturing in India, starting with its Pixel 8 phone that was launched earlier this month. Similarly, Apple supplier Foxconn has begun production of the iPhone 15 in India as the company diversifies its manufacturing from China.
India is the second largest smartphone market worldwide for annual shipments and sales, accounting for almost 12% of the global market, according to data from IDC.
Still, Roche said companies won’t entirely exit China any time soon.
“Put yourself in the position of the head of Apple. You don’t go along to Beijing and go “knock knock, by the way, I’m leaving. I enjoyed being here, goodbye!”
“So I actually think the reality of moving from China is much further down the road,” he added.