India's Economic Position
India has ascended to become the world’s 5th-largest economy, surpassing former economic leaders like Britain. Projections suggest that within 1-2 years, India may overtake Japan to become the 4th-largest economy. This growth follows a period of significant economic expansion post-pandemic, making India the world’s fastest-growing major economy.
GDP Growth
- India’s GDP has grown at nearly 8% annually over the past three years.
- Despite the economic surge, India remains a low middle-income country in per-capita terms, ranked 143rd in nominal GDP and 125th in PPP per-capita GDP.
Comparison with Other Economies
India's economic influence, like China's, is determined more by overall GDP rather than per-capita income. Despite a lower per-capita GDP, China exerts substantial global influence.
- The US economy stands at $30 trillion, China's at $19 trillion, whereas India’s is at $3.9 trillion.
Economic Targets and Challenges
- In 2018, the Government of India aimed for India to be a $5 trillion economy by 2025, a goal postponed to 2029 due to pandemic setbacks.
- By 2024-25, India’s GDP is projected to be $1.1 trillion short of this target.
Sectoral Analysis
Artificial Intelligence (AI)
- India is the largest user of ChatGPT and hosts 16% of the world’s AI talent.
- India lacks an indigenous foundational language model and is 3-5 years from developing domestic AI chips.
- India attracted only $1.2 billion in private AI investment compared to the US’s $109 billion and China’s sevenfold investment over India.
Manufacturing
- Apple is assembling 20% of its smartphones in India, with plans to expand.
- Most components continue to be manufactured in China and Southeast Asia.
Research and Development (R&D)
- India's R&D spending is only 0.64% of GDP, compared to China’s 2.4% and the US’s 3.5%.
- In pharmaceuticals, despite being a key supplier of generics, India imports 70% of drug ingredients from China.
