China has faced an unprecedented global backlash during the past two years. With the widely accepted conspiracy theory of China willingly synthesizing the virus as a biological weapon, powerful and influential countries have consequently refrained from engaging in business affairs with the country.

China’s debilitated global position has enabled India to attract international investment. With a huge landmass, sound governance and a pool of skilled technicians, China’s worsened influence has proved to be a “blessing in disguise” for India. As a result, India is now focused to woo foreign professionals and investors and therefore, has set its foot on the outreach advertisement.

Can India become a substitute for China

With US former president Donald Trump being extremely vocal about his reservations with business affairs with China and weighing punitive action against the country, Japan paying its companies and corporations to move out of China, UK revising its laws to furnish its intention to stop Huawei from building country’s 5G data network, anti-China sentiment is as blatant as it can get. Therefore, India does find itself as one of the strong contenders alongside South Korea, Bangladesh and Vietnam, in becoming the alternate option to the China market.

USA’s endorsement of the idea of India becoming China’s replacement is evident in the current juncture of US-India bilateral relations. US-India Business Council (USIBC), a body that ensures easier, smoother and profitable business between the two largest democracies in the world, has praised and encouraged India on its skill and potential to outdo China. USIBC’s president Nisha Biswal has remarked that India is working and putting in grave efforts in furtherance of attracting global supply chains, both at the central and state levels. In addition, India is already developing a land pool that is almost double the size of Luxembourg, Europe in order to lure foreign investors to move out from China. As foreign investors and global business corporations seek to reduce their involvement with China after the Coronavirus outbreak, infrastructural advancement of this stature would significantly attract investors in India.

Moreover, India’s sound demography is one of the biggest assets in enticing foreign investors. While analysts believe that the dependency ratio of China would almost double from 35% to 70% by 2050 resulting in massive strains on the country’s growth, India’s dependency ratio would slide under 50% resulting in ease on the nation’s welfare. The population in India by 2050 is, therefore, speculated to be a foundational resource for the economy.

India’s vibrant democracy adds another feather to the cap. While China remains a one-party state, the scope of arbitrary and whimsical use of powers is more than India, which strictly embodies the sentiment of justice and equality. The passion for public debate and participation in public discourse can surely work as a boon for the foreign investors as generating dialogue and debating their products on a grander stage would result in much-warranted publicity, stemming huge monetary benefits.  

A huge bank of natural resources and raw materials which India homes, exceedingly acts a cherry on the cake. Rather than collecting and importing raw materials from different parts of the world, domestic cheaper and qualitative resources present in India extends to a great deed to the foreign investors.

India’s limitations

The notion of India being an alternative substitute to China is surely compelling. In contemporary times, both countries may appear to be in contrasting differences. For instance, India and China couldn’t be more different in terms of politics, cultures, traditions, demography etc. However, the inception phases of both these countries are almost the same. India and China, both share their individual story of rags to riches to some extent. Both these countries have struggled and put valiant efforts to lift their people out of poverty. The two countries also home a gigantic body of technical professionals, skilled scientists & engineers, vast domestic markets, deep IT potentials, multilingual students etc. that contribute to the all-around development of the nation.

The question therefore arises, that if both these countries are so similar innumerable aspects, why is it that only one of them has witnessed such exponential success and the other is still in its ever-developing stage?

The answer is manifold. While India is enriched inland and demographic assets, it lacks the basic investment in Human Resources (investment in the people). Human Resource Development is a much larger spectrum than it appears to be. While it is responsible for providing skills to IT and Tech professionals, it is also accountable for India putting up an average stint in the Olympics!

Secondly, China offers an extensive and integrated infrastructure to investors. The huge ports and highways, quality labour force, advanced logistics, fluidity of consumer acceptance, are some of the things which put China on a higher pedestal.

Another reason which limits India’s possibility of becoming a substitute for China is its disorganization and disintegration with major global supply chains.  In 2019, India backed out of a crucial multilateral trade agreement with 12 other Asian Countries, despite undergoing seven years of negotiations. The failure of institutionalizing Regional Comprehensive Economic Partnership (RCEP), created difficulties for Indian exporters to benefit from the destination markets. India’s lukewarm participation in trade agreements becomes a worrisome reason for foreign investors as it discourages them from setting up manufacturing industries in the country. The emotion of investors in such a case stands extremely valid. Suppose, if a foreign company, set up in India, wants to manufacture and export products to other countries like Hongkong. In this case, India’s then present relations with Hongkong gains precedence over the emotions of investors, creating obstructions in the trade. Therefore, the lack of ratified trade agreements between India and other countries, makes the investors unsure of what they’re getting into, as trade agreements are equally as important as offering competitive prices.

Moreover, India’s uncertain and volatile relations with FDI and uneven domestic regulations also bother the global companies to pitch in India. With ‘vocal for local’ gaining momentum and prohibitions on e-commerce companies to sell non-essential items, India seems to have created a protectionist wall around its territory which is simply impenetrable. India, along with promoting domestic manufacturers, must also improve its regulatory stability and start endorsing trade agreements to create trust and attract more global businesses in setting up their hubs in India.


The outreach process is still in its initial evaluation stage and therefore, a huge outpour of foreign investment on the Indian soil is still a far-fetched dream. India needs to ease the regulations and adhere to the FDI rules rather than twisting them. The taxation reforms such as GST that have generated humongous revenues, are yet to be translated into micro-level changes on the ground.

India is contrastingly different from China, especially in the frame of politics and culture. But that does not mean that India won’t be able to ped up the pedal of economic growth, the way China has. The country is a goldmine of talent, skill and resources. The government just needs to catalyze it for the nation’s growth.