It's dangerous for China to simply dismiss India as a potent...
It's dangerous for China to simply dismiss India as a potential key competitor in manufacturing. India has a vast pool of young laborers, abundant raw materials sourced locally, one of the largest English-speaking populations in the world, and close ties to Western nations that it's able to use to its advantage.
It's also dangerous for India to simply assume it can replace China as the global manufacturing center because it has all of the above. It needs to overcome major hurdles relating to basic infrastructure that's required to prepare it to capture opportunities as the West de-risks away from China.
Just because India is starting out on a similar path as China did 25 years ago, it doesn't mean India will get to replicate the economic miracle that took place in China, which saw its GDP grow 5-fold since 15 years ago (where India was in 2022) and 42-fold in 30 years.
In the last 15 years, China expanded its power generation capacity 260% from 710GW to 2,564GW. India's power generation capacity last year stood at just 482GW, also up 260% over the last 15 years. But it's expected to grow by just 6.2% a year for the next 8 years.
At a cost of $540k to $1 million per MW of new generating capacity in India, it will cost the country anywhere between $160B and $300B to build out this additional capacity. And that's to get to where China's power sector was 15 years ago. In order to take on more energy-intensive, high-value manufacturing processes, India will need a power capacity expansion on a much grander scale.
To me, this is the biggest challenge and also the biggest opportunity in India. The need to grow power-generating capacity should and will probably trump just about anything else on the economic agenda if the country hopes to have even a chance at growth that changes the lives of its people the way it did for the Chinese.
Maybe someone should come up with an Indian-focused power utility ETF?
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
