Nokia. Konecranes. Lindstrom.
Many Finnish companies have reported news related to India during this fall.
Network equipment manufacturer Nokia has signed a multi-year contract with India’s largest telecom operator. The textile service company Lindström, on the other hand, opened a new center in India, and the engineering company Konecranes announced a large order in India at the beginning of December.
So India seems to be on the rise.
The same observation has been made by Finland’s ambassador to India Ritva Koukku-Ronde as well as following the Indian economy Risto Herrala. He works as an advisor at the Bank of Finland’s research institute for emerging economies.
– In many ways, attention is turning to India. Its importance is constantly increasing, says Herrala.
In this article, we collected four things that tell why India is now an even more important player in the world economy.
1. Indian economy is becoming the third largest in the world
The global economy is not doing particularly well at the moment.
Growth forecasts have been revised downwards throughout the year due to rapid inflation, i.e. a general rise in prices and uncertainty. Economic organization The OECD’s forecast in its November review (you will switch to another service), that next year the economy will grow only slightly in the United States and the euro area. China’s economic growth is also expected to slow down clearly next year.
India, on the other hand, is doing relatively well. The country’s economy is clearly growing faster than the reference countries. India is also predicted to overtake Japan and Germany and the emerging world to the third largest national economy already by 2030 (you will switch to another service).
India is now trying to benefit especially from the fact that China’s economy is faltering.
China has traditionally been considered a kind of star of Asia and a major growth engine of the world economy. However, China has encountered many kinds of difficulties, for example in its trade relations. At the same time, political power has been concentrated and Beijing’s grip on the country’s business sector has tightened.
According to adviser Risto Herrala and ambassador Ritva Koukku-Ronde, companies have started looking for alternatives to operating in China and have turned their eyes to India.
– This can also be seen in Finnish companies. A number of companies are currently looking at India in a completely new way than, for example, three or five years ago, Koukku-Ronde says by phone from New Delhi.
One international example is the technology giant Apple. It is moving production of its latest phones from China to India and also plans to manufacture iPad tablet computers (you will switch to another service) Instead of China in India.
2. India will soon be the most populous country in the world
Population forecasts also indicate the growing importance of India.
According to the UN’s latest population growth forecasts, India will overtake China and become the country with the largest population already next year. About 1.4 billion people live in India, or almost a fifth of the world’s population.
The fact that there are so many people in India also largely explains the large size of the country’s economy.
According to the World Bank, India’s gross domestic product (GDP) per capita was around 2,300 dollars last year. The figure is many times higher than in 1990, when the country’s GDP per capita was around 370 dollars.
Yet Indians are still relatively poor. For example, GDP per capita in Finland last year was around 54,000 dollars.
From the perspective of Western countries, India’s population growth is worrying from the point of view of environmental and climate issues, says Risto Herrala.
– Western countries do not want India to follow the same path as China in becoming prosperous, as it would be a disaster in terms of global climate development. It is important that India gets access to clean technology and that prosperity happens in a sustainable way.
3. The Russian war of aggression complicates India’s position
Russia’s war of aggression has brought the spotlight to India, as it has not clearly condemned Russia’s attack on Ukraine.
Since the start of the war, India has only strengthened its trade with Russia. Before the war, India hardly bought any Russian oil, but during the autumn about a fifth of its crude oil has come from Russia.
Minister of Petroleum Affairs of India Hardeep Singh Puri Has said, that he doesn’t see a moral problem (you move to another service) in buying Russian oil.
– India has emphasized that it makes independent decisions in accordance with its own national interests, and now the national interest is that they buy cheap oil from Russia, says Ritva Koukku-Ronde.
India’s actions have been criticized in Western countries. However, it seems that India’s relationship with Russia has not significantly affected trade relations between Western countries and India, say Koukku-Ronde and Herrala.
On the other hand, the collapse of the Russian economy and the country’s hostilities may bring more and more opportunities for Western players in India. This is especially the case with the defense industry.
– India has relied on Russian technology in its defense capability. Now, as a result of the war, even in India it is noticed that they need better western degrees. Western defense equipment may be very popular in India in the next few years, Risto Herrala estimates.
4. The EU is negotiating a new trade agreement with India
Trade relations are a hot topic between the European Union and India anyway. The EU and India have been trying to negotiate a new trade agreement since 2006.
Trade between the EU and India has strengthened throughout the 21st century, but trade is still conducted on the basis of the rules of the World Trade Organization WTO – not its own trade agreement. Last year, the trade negotiations, which had been frozen for several years, were restarted.
What is the fuss about in trade negotiations?
According to Risto Herrala, India has not been ready to make the reforms the EU wants. European companies have not wanted to be given free access to the country’s market, says Herrala.
But now we are more optimistic about the trade agreement. The goal is for the negotiations to be concluded within the next year.
– India is more positive about concluding free trade agreements than before, says Ambassador Koukku-Ronde.
What thoughts did the story evoke? The topic can be discussed until Saturday, December 17, at 11 p.m.
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India will soon overtake China as the world’s most populous country – this is how the world’s population is predicted to grow