Can India Replace China as the World’s Factory?

People in India’s Karnataka state were rejoicing at Tim Cook’s decision in opening two major Apple stores. They had all the bells and whistles, signature Apple design, modern aesthetics, and the very CEO of the nearly $3 trillion himself on the site on the day of inauguration.

But there was more as Tim Cook announced setting up a large factory in the Indian Karnataka state, and hinted at opening more stores in the upcoming years, a total investment amounting up to $ 1 billion +.

In a recent turn of events, Boeing has announced to invest $100 million in India for training its pilots and setting up educational and aviation centers. And honestly, why won’t it?

In February 2023, Boeing CEO Dave Calhoun must have gone bonkers when India announced its massive deal with the airplane giant: A purchase of $46 billion worth of jets.

These are just some of many foreign investments from the West pumping or planned to be pumped into India.

They all carry one objective, to deviate from China and to stop their reliance on it as the preferred manufacturing hub of the world. All comes in a much-accelerated form as the USA goes on in its initiative of de-risking from China.

But the question is, can India supersede China with all its resources and infrastructure?

The question is derived from the state of the weak and rudimentary supply lines and logistics of India. Unlike China, India requires massive improvements in its infrastructure to welcome and maintain all that foreign factories.

This has more to do with geopolitical tensions than economic ones. The world seems to be bifurcating into two orders rapidly.

One is being glorified and professed by the West while the other is being hailed by countries like Russia and China.

Furthermore, the ongoing US tensions with China over Taiwan and the Ukraine war have created skepticism among Western corporations as they strive to diversify and gradually move away from China.

India easily seems to be falling on the Western side, but can it take bear all the ambitions and hopes that are being planned and dreamt about it?

The Modi government has extensively been occupied in luring the West into considering it above all. And while it has been achieved to an extent, a lot more convincing is required.

India’s current labor quality ranks far lower than China’s. Its literacy rates and the efficiency of workers lack in decades behind China.  The average worker’s wage in India is also quite low and is likely to trigger an increase in labor abuse once these Western company factories start operating.

India may have a surging young population, but it would be of no use if the country fails to educate them adequately.

India is a diverse country. Too diverse actually. Many states are starkly distinguished from one another such as the Northern and Southern states. Conflicts among people about caste, culture, and religion have been a challenge since the inception of India.

What the West fails to analyze is the side effects of these challenges that can hamper foreign businesses unlike in China where a sweeping majority of its population is homogenous in terms of religion and culture.

India is investing hardcore in its capability to host such provisions, but it still requires time to become as efficient and effective as China.