PM Modi on India-China competition: Our unique cultural, social ethos gives us edge over others

While discussing India’s booming economy and growing competition with China in the manufacturing sector, Prime Minister Narendra Modi elucidated that India has a unique cultural and social ethos that gives the country an edge in comparison to its Asian counterparts.

The Prime Minister gave his take on the India-China economic competition during an exclusive interview with Newsweek.

PM Modi was featured on the cover of the American magazine, making him the first Indian prime minister after Indira Gandhi to achieve the feat.

The India-China competition 

Last year, India overtook China to become the world’s most populous country. A year before that it surpassed the United Kingdom to become the fifth-largest economy in the world. This begs the question will India be able to sustain its economic growth with a massive population.

When asked about the matter, PM Modi highlighted what gives the country an edge when being pitted against China which is currently engulfed in economic woes.

He insisted that what makes the Indian economy different from the economies of China and Japan is its “unique culture and social ethos”.

“India has a unique cultural and social ethos. We have a culture of savings. There is also a unique model of a family-oriented lifestyle which puts values at the centre. In such a set-up, no family member is unproductive,” the Prime Minister explained.

However, he distanced himself from drawing comparisons with the Asian nations insisting that each country faces “unique challenges and unique development models”.

“We are also focused on developing the full potential of our youth and also making them resilient and adaptive to future disruptions. We are allocating a huge amount of money to facilitate long-term research in the sunrise sectors,” he added.

PM Modi also pointed out that “India’s democratic polity” and “global economic growth engine” make it a natural choice for foreign investors who are looking to diversify their supply chains.

“We believe that when a country with one-sixth of the world’s population adopts global standards in these sectors, it will have a big positive impact on the world,” PM Modi averred.

“Our policies that encourage businesses and entrepreneurship, coupled with world-class infrastructure and availability of skilled talent have yielded results. We have major global manufacturing entities setting up shops in India,” he added.

How India is gaining an edge 

Over the years, India’s growing manufacturing sector has provided foreign investors with a strong alternative to the decades-long Chinese monopoly.

When it comes to the technology sector, for years China was touted as Asia’s technology powerhouse. However, India has emerged as one of the top contenders to steal China’s crown.

India’s tryst to woo foreign tech companies has been a major success with multinational giants like Apple increasing their presence in the country.

Earlier this week a Bloomberg report revealed that Apple is now manufacturing approximately 14 per cent of its flagship devices in India. This means that about 1 in 7 iPhones are built in the country.

The tech giant has been looking to diversify its supply chain beyond China as geopolitical tensions between Beijing and Washington are on the rise. This has given India an opportunity to emerge as a strong alternative.

Taiwanese manufacturing giants like Foxconn and Pegatron are also shifting from China and playing an important role in boosting the production of Apple devices in India.

Not just Apple, the state of Tamil Nadu is home to more than 130 Fortune Global 500 companies. Global interest in India grew after the PM Modi administration launched production-linked incentives for sectors such as electronics and renewable-energy equipment, while China was struggling with stringent lockdowns due to the COVID-19 pandemic.

The birth of India’s semiconductor era

Last year, countries like the United States, Japan and the Netherlands announced tightening restrictions on the export of chip manufacturing technology to Chinese companies.

In October 2023, the United States imposed strict controls on the sale to China of both semiconductors and the machines used to make them. Washington argued that Beijing could use the technology for “military purposes”.

The controls limited China’s ability to ramp up its own domestic chip production, leaving Beijing high and dry.

While China was bashing the three nations over the matter, India started its own endeavours.

Last month, Prime Minister Modi laid the foundation stone of three semiconductor plants worth Rs. 1.25 lakh crore. While inaugurating the plant, PM Modi insisted that chip manufacturing will take India “towards self-reliance and modernity”.

In 2021, New Delhi unveiled the India Semiconductor Mission (ISM). The Tata-Powerchip Semiconductor Corp’s semiconductor fabrication unit (fab) at Dholera, the Tata group’s outsourced semiconductor assembly and test (OSAT) unit in Assam, and the CG Power-Renesas Group combine OSAT unit, make India stand at two crucial points of the semiconductor supply value chain, i.e. fabrication and OSAT.

Other than this, American chip giants like Micron are also building OSAT plants in Gujarat. The big and celebrated start of India’s chip-making journey indicates that it is ready to take leverage of the supply chains that are shifting from China and Taiwan due to the ongoing geopolitical turbulence in the region.

Two decades ago, while the Chinese and the Indian economies were neck and neck, investors used to refer to it as a tussle between Dragon and Elephant. Companies used to dwell on the two nation’s relative merits. While China initially used to take the cake, things have drastically changed since then.