India’s position on the global value chain is transforming due to government incentives and a digitally smart economy
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DAVOS, SWITZERLAND — Along the Davos Promenade, World Economic Forum attendees encounter WeLead Lounge, a redesigned storefront showcasing women’s leadership and talent in India. There is also the India Engagement Centre, a space that promotes India’s growth story, digital infrastructure, and its thriving startup ecosystem.
Elsewhere at the forum, Indian technology and consulting giants Wipro, Infosys, Tata and HCLTech came out in full force to showcase the country’s prowess in key technologies such as artificial intelligence, Theme This is on everyone’s lips.
The massive promotions in Davos come after India surpassed China last year as the world’s most populous country. Now India is touting its growing power as a nation of innovation and a global business hub to some of the world’s richest and most powerful people.
“India’s presence is certainly large — it has some of the most sought-after locations on the main promenade for tech companies,” Ravi Agrawal, editor-in-chief of Foreign Policy and former CNN India bureau chief, told CNBC in Davos. As China’s economy slows, India’s relatively fast growth stands out as a clear opportunity for investors in Davos looking for bright spots.
China’s GDP rose 5.2% last year, up from 3% in 2022 but down from 8.1% the year before. India grew by 7.2% in the last fiscal year, down from just over 9% the previous year.
India is increasingly looking to promote itself as a more dominant figure on the global stage when it comes to technology and business. States like Maharashtra, Tamil Nadu, Telangana and Karnataka have their own presence in Davos, positioning themselves as technology hubs for manufacturing and artificial intelligence.
“In this sense, separate state pavilions send a message that different regions in India are competing with each other to offer global companies the best access,” said Agrawal, who has been attending Davos for more than a decade and is the author of the book. “India Connected”, which tells how the smartphone led to a more connected and democratic India.
India still faces many challenges.
In most years, India sees more people migrating out of the country than immigrating into it, according to World Bank. In 2021, net migration exceeded 300,000. The rupee, meanwhile, has Weakened significantly against the dollar, under pressure from rising US interest rates and volatile oil prices.
one of Main risks Doing business in India, according to the International Trade Administration, is “price sensitive” between consumers and businesses.
“The challenge, as always, is whether India can actually make it easier to do business there, and whether India’s domestic consumers can spend enough to make the continued global investment worthwhile,” Agrawal said.
Searching for foreign investment
However, foreign direct investment has soared in the past few years, rising from $36 billion in 2014, when Prime Minister Narendra Modi was first elected, to $70.9 billion in 2023, according to figures compiled by the digital media publisher. Visual capitalistwhich used data from the Reserve Bank of India and S&P Global.
Dale, HPLenovo and other major manufacturers are committed to manufacturing their products locally in India as part of the country’s portfolio Production-linked incentive system.
apple It is one of the biggest examples of a US company looking to shift its production from China and source manufacturing from India to avoid facing supply issues with the iPhone and other key products.
Last year, Apple opened its first store in India, highlighting the importance of the market to the iPhone maker’s future. The store, called Apple BKC, is located in the densely populated city of Mumbai.
“We had an all-time revenue record in India,” Apple CEO Tim Cook said on the company’s last earnings call in November, in response to an analyst’s question about the company’s momentum there. “It’s a very exciting market for us and it’s mainly focused on us. We have a low share of a big market. So it looks like there’s a lot of upside.”
Apple CEO Tim Cook gestures while opening Apple’s first retail store in India, in Mumbai on April 18, 2023.
Puneet Paranjpe | AFP | Getty Images
India is also making a big push to encourage investment from US chipmakers. The country hosted a major semiconductor industry event last year, SemiconIndia, where chip producers from the US were invited to promote their investments in India and announce new ones.
AMDwho is chasing Nvidia In the AI chip market, Samsung said it plans to invest about $400 million in India over the next five years, including a new campus in Bangalore that will be the company’s largest design center. And Micron It announced plans to invest up to $825 million to set up a semiconductor assembly and testing facility in Gujarat.
India is seeing an acceleration in technology adoption due to inefficiencies in healthcare and other essential public services, said Jack Hydari, CEO of SandboxAQ, which applies artificial intelligence and quantum computing technology in areas such as cybersecurity and drug discovery.
Artificial intelligence, in particular, provides an opportunity for India to stand out from the crowd, Hydari said.
“This is a transformation that goes beyond even the mobile phone,” Haidari said. After the United States and China began investing in mobile infrastructure two decades ago, “quickly everyone in those countries had a smartphone and had access to the Internet and apps,” he said.
However, he said, “600 million people in India out of 1.3 billion still do not have a smartphone,” adding that “this is about to change.”
Hydari said that the smartphone company Jio, owned by Indian billionaire Mukesh Ambani, will serve about 600 million people in India through… $12 device. Ambani, Asia’s richest person, is also in Davos for the World Economic Forum.
“It and a few other services in India will literally bridge this digital divide in the next three years,” Hydari said. India is making a big push for the event overall because its leaders “know that this is a moment of great transformation,” Hydari said.
Big year for India
This year is set to be a pivotal year for India in other ways. General elections are scheduled to be held between April and May, with Modi seeking re-election.
During Modi’s tenure, major US technology companies, including the alphabet, deadAnd Amazon They have bet big on India. Amazon invested $2 billion in the country in 2014, and another $3 billion in 2016. Walmart It acquired e-commerce company Flipkart for $16 billion in 2018.
In 2020, Meta invested $5.7 billion in Jio, the digital arm of Ambani’s Reliance Industries. Google followed that up by pumping $4.5 billion into the company.
With India’s rise, China has faced increasing troubles on the global stage, with the United States leading a campaign to isolate the world’s second-largest economy when it comes to access to basic technology.
For months, Beijing has been unable to import some of the most advanced chips from American companies such as Nvidia. Intel Corporationand AMD.
Ian Bremmer, president and founder of Eurasia Group, told CNBC that India has a good chance of further consolidation largely because it is a democracy.
“The good thing about India is that it is a stable country and has a very popular leader,” Bremer said. “They are on the cusp of having an election that will be completely uncontroversial, free and fair. Their growth is very strong.”
Bremer compared India to the United States, noting that it is a “highly decentralized country,” with many states almost competing against each other for investment. He said he could imagine that US states would eventually follow a similar approach.
He said, “It is not unlikely for me that within five years in Davos, we will witness individual American states deciding to do the same thing.” “Texas would be divesting from fossil fuels and sustainable energy if it had a storefront in Davos this year. And, you know, California, frankly, would too.”
— CNBC’s Arjun Kharpal contributed to this report
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