MIGA (Make India Great Again) (1/3)

Published: 17th March 2025

Category: Current Affairs

“I don’t want you to come home now onwards” said my 10-year-old daughter to her six-year-old cousin. “Because of you, I suffer. You get all these marks and medals and then my dad compares your marks with mine. You get the Ice cream and I get nothing”

While Roosevelt’s quote sounds great and feels good does it work in society or in real life? Don’t we compare celebrities, cricketing legends and even countries?

India like my daughter, has been suffering from comparison with China. All the countries in the world compare us with China based on the population size. They are on the lookout for the next ‘big’ market. So, is it the right comparison? The current government certainly seems to think so. It’s been trying to convince everyone on various world forums that India is the only alternative to China.

I am not among the optimists. Let’s look at the data.

China’s GDP per capita in 2024 is USD 13,306- vs India’s USD 2,698. They are roughly 5 times our size. With a population of 1.4 billion this makes China a very attractive domestic market, albeit behind US in value. But in sheer number of people with good purchasing power - they are second to none.

That’s great news for multinational companies who want to sell their products. (For those who have not understood the importance of volume, I will elaborate a bit. MNCs evaluate a region based on the number of consumers who own white goods eg: TV, Refrigerators, Washing Machine etc). US might be the top country in value (read smart washing machine or larger TV screen), but in terms of sheer volume of units sold China is way bigger.

The picture becomes much more clear when we see the income disparities in both countries.

Income distribution among population

*China thrives on a closed economy system. Data is hard to get. The above numbers are compiled from a number of sources. While these are rough estimates, they weaken “big market” argument of India. Inequality in India has grown considerably since Covid 19.

The actual purchasing power in India (2024) rests with about 30 mn. households, approx. 130 mn. people. The remaining population lives hand to mouth / focused on necessities in life trying desperately to cope with the rampant inflation. There have been only two sectors historically, where India beats China globally
– Software including ITES
– Pharmaceuticals.

As of 2025 we have lost the edge in Software. China has thrashed almost every country in the world with its progress in Artificial Intelligence models. India is playing catch up with Krutrim and Astrotalk.

So where is the issue?

A large part of the problem lies in governance and planning.

35 years ago, China got two things right. They spotted the next sunrise sector – Electronics. They also understood that hardware rather than IP/innovation would be the area where they could compete globally. Peoples Republic of China (PRC) started pushing manufacturing, and open standards like nobody’s business. They built world class infrastructure in logistics, cost and did this at scale which was earlier unimaginable. For context the electronics industry till then was dominated by Japan, US, Korea and Taiwan. Over the period that followed, brands had to shift their production contracts to China due to the significant advantages built by them. Those countries which dominated the electronic and auto sectors now own only the brands. More than 76% of all manufacturing including those at a component level have shifted into PRC over the last 30-year period.

Trump has a very good reason to be worried. Despite all his posturing, he is afraid of China. He knows that US can’t get anything done on its own. A reasonable estimate as of 2024 is that less than 20% of US manufactured products can be made entirely without Chinese components and while Trump continues his MAGA campaign, self-sufficiency is unlikely to happen in his term or in the term after that.

Where does that leave us?
India has not understood world-class scale, in the manner it should, neither has it understood the factors needed to achieve such scale.

World class scale begins with
- a mindset to completely dominate an industry with either a high volume and low cost approach or monopolize an expertise by innovation / by law.
- an understanding of sectors to be dominated of which will have world-wide implications in future.
- access to resources to execute these plans and its allocation.
- zero distinction between domestic and global success in terms of cost, quality or growth.
- manufacturing to occupy a significant position in share of mind and resources.
- a regulatory environment to facilitate growth or motivate such ideas.

India lacks all of the above.

This has been a short post. Part-2 of this three-part article delves into one of the above factors and shows how successive governments in India have created an environment which inhibits progress and growth.

In the meantime, I need to convince my daughter to move from Roosevelt’s philosophy to Drucker’s, and hope that the current government also follows suit.