When Tim Cook arrived in India earlier this month to open Apple’s first physical store in the country, he was welcomed like a hero.
The CEO was greeted with cheers and applause, presented with a vintage Macintosh and held court with the country’s officials, including Prime Minister Narendra Modi.
Cook’s visit, the latest by a top global executive, exemplifies the rising tide of interest that corporations and governments are showing in doing business with India. Just days after his landmark trip, Pret A Manger, a trendy British sandwich chain, set up its first outlet in the commercial capital of Mumbai, as it bet on the country’s growing middle class.
India will surpass China to become the world’s most populous nation this weekend, according to calculations from the United Nations, in a milestone that will only cement its growing image as darling of the global economy.
Its new status has cast attention on whether its economy will harness that demographic strength to displace China in other ways.
The case for investing in India — a nation of 1.4 billion — is clear, and only bolstered by recent geopolitical shifts. As Western leaders look to boost economic cooperation with countries that share similar values, India, the world’s largest democracy, stands to gain.
Until recently, many countries and companies “had put all their eggs in the China basket,” said Partha Sen, professor emeritus at the Delhi School of Economics. As tensions continue to flare between the West and Beijing, there is “a move to diversify away, and India fits right into it,” he added.
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India’s so-called “demographic dividend,” the potential economic growth arising from a large working-age population, represents a major opportunity. Its vast consumer market and pool of affordable labor is also drawing more attention from global brands and trading partners.
Cozying up
In a bid to boost the industrial sector and lift exports, the Indian government has sought to sign free trade deals, a move that’s been warmly received around the world.
Since 2021, India has struck agreements with Australia, the United Arab Emirates and Mauritius. It is also negotiating deals with the European Union, the United Kingdom and Canada.
Russia, whose trade with the West has slumped since its invasion of Ukraine last year, is also interested in increasing ties with India. The move is seen as risky, as it requires a tricky balancing act for New Delhi of keeping Washington happy while warming up to Moscow, according to Shilan Shah, deputy chief emerging markets economist for Capital Economics.
The United States and India have taken steps in recent months to strengthen their ties, particularly in defense and technology, as they attempt to counter the rise of an increasingly assertive China.
In January, the White House launched a partnership with India that Washington hoped would help the countries compete against China on artificial intelligence, military equipment and semiconductors.
The United States touted the deal as reinforcing “our democratic values and democratic institutions,” even as those ideals have been undermined by India’s recent crackdown on opposition politicians and the media.
In February, Air India bought more than 200 aircraft from Boeing (BA) in the American planemaker’s third-biggest sale ever. President Joe Biden hailed “the strength of the US-India economic partnership.”
“Together with Prime Minister Modi, I look forward to deepening our partnership even further as we continue to confront shared global challenges,” he said.
A month later, US Secretary of Commerce Gina Raimondo visited New Delhi along with a group of senior executives from US companies. There, she signed an agreement with Indian leaders to discuss coordination of investment in each other’s semiconductor industries.
Speaking at the Indian embassy in Washington last week, Raimondo said: “In the years to come there will be two ecosystems of technology. One consistent with our democratic values, and another not.”