India and Vietnam: Leading the Charge in Global Trade Expansion

"Opportunities don't happen. You create them." - Chris Grosser

 

 The Future of International Trade: India and Vietnam Rising

 


In the ever-changing world of international trade, two countries stand out: India and Vietnam. According to Nomura, these nations are set to gain the most from the China plus one strategy. This shift is expected to bring new growth opportunities for many Asian economies. Let’s explore how India, in particular, is gearing up for a big leap in exports and economic growth.

 

 India’s Export Boom

 

Nomura’s report reveals that India’s exports are projected to soar to $835 billion by 2030, up from $431 billion in 2023. This significant rise is driven by India’s large domestic market, which attracts firms looking for supply chain alternatives to China. This means more companies are eyeing India as a new hub for their production needs.

 

 Key Sectors on the Rise

 

Several industries are at the forefront of this growth. Electronics, apparel and toys, automobile components, capital goods, and semiconductor manufacturing are the main sectors drawing investments. Companies find India attractive not just for its domestic market but also for its export potential.

 

Electronics: The Fastest-Growing Sector

 

Electronics is set to be the fastest-growing sector, with exports expected to grow at a compound annual growth rate of 24%. By 2030, the value of electronics exports could nearly triple to $83 billion. This growth is a clear sign that India is becoming a key player in the global electronics market.

 

Machinery and Capital Goods

 

Machinery exports are also set to more than double, reaching $61 billion by 2030 from $28 billion in 2023. This growth is driven by the demand for capital goods and machinery, both domestically and internationally.

 

The Role of Production Linked Incentive (PLI) Scheme

 

Nomura notes that low PLI disbursements don’t reflect India’s true potential. India’s large market, rapid growth, lower labor costs, and stable political and economic environment make it an appealing destination for investment. This environment benefits consumer goods production, both for domestic consumption and export.

 

Improving Trade Balance and Currency Appreciation

 

The competitiveness of Indian production is expected to boost exports and improve the country’s trade balance. This improvement in trade could also lead to currency appreciation, strengthening India’s position in the global market.

 

Investment Interest from Global Companies

 

Nomura’s survey of 130 enterprises shows a growing interest in India and Vietnam. Most of the investment in India comes from US-based companies, especially in the electronics sector. Japan and Korea are also investing in India’s auto, consumer durable, and electronics sectors. These investments aim to tap into the growing domestic demand and use India as a manufacturing base.

 

Sustaining Earnings Growth

 

The strengthening of India’s manufacturing sector and its increasing share in exports are expected to help the corporate sector maintain a steady earnings growth of 12-17% over the medium term. This growth will be crucial for India’s economy as it continues to expand its footprint in international trade.

 

Conclusion

 

The rise of India and Vietnam in the international trade landscape is a testament to their growing economic strength and potential. For businesses looking to expand their operations, these countries offer promising opportunities. With the right strategies and investments, India, in particular, is poised to become a significant player in global trade by 2030.

the credit for the information in this blog goes to this article 

https://www.moneycontrol.com/news/world/imf-raises-china-2024-growth-forecast-to-5-12735068.html


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