Comparison India:Indian economy vs US,
EU, Canada, China and world
India is an emerging economy and comparison of Indian economy with other countries such as
the US, European Union , Canada, Japan and China is needed to study international economy
and business. People want to compare economies to make strategies. This article will help you
understand better Indian markets, consumers, industries and overall growth picture of India in
Comparison with US, EU, Canada, Japan, China and rest of the world.
India is a large country having population of more than a billion, second highest in the world. It
is also the largest democracy in the globe. GDP India is fourth highest in the world in PPP terms.
Here is a comparison of Indian economy vs. the US, EU, Canada, Japan, China and rest of the
Indian GDP ranks to No.12 in nominal term of world GDP after US, Japan, UK, Germany,
China, France, Italy, Spain, Canada, Brazil and Russia. However, India ($3000B) comes to No.4
after US (America) (($13800B), China ($7000B) and Japan ($4300B) in PPP terms .
India is a large economy. It has GDP of $1100 B (2007) or RS.55000 B. It is approximately two
percent of the GDP of the world i.e. $55000 B. It does not tell the real story because world GDP
is calculated based on US dollars. However, Indians have to buy, sell and spend in Indian rupee.
Price parity parameter shows comparatively better picture. In PPP method, Indian GDP is
calculated to $3000B that is approximately 4.7 percent of world GDP of $64000B in PPP.
Bond issue: Reserve Bank of India
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Highest growth in stock market
More over India is growing at the rate of eight to nine percent per annum where as most of the
developed countries including US, Canada, Japan and countries of EU and UK are growing at
a very slow speed until last year. Only China has shown greater growth rate than India.
Picture is little different this year. Most of the developed countries have started showing
tendency of negative growth. This will surely affect India and China but they can manage their
growth in a positive range. It is expected that China will manage a growth rate of eight to nine
percent where as India will anywhere between seven to eight percent.
India has achieved highest growth rate in stock market in the world. If we compare the stock
markets of India and America since 9/11, we find fascinating facts. Dow Jones fell after 9/11
to 8235 on 21st September 2001. The BSE (India) also fell during those days to reach a low of
2595. Particular data for Shanghai (China) and Hangseng (Hong Kong) are not available to me
(If anyone has the data, please inform me) but those were around 1400 and 11000 respectively.
Dow Jones is trading at 8787 (While writing this hub Dec. 09, 2008). If we compare it with the
previous Dow Jones data (21st
sept.2001), it has gained mere 550 points over the period of more
than seven years. Where as BSE India has traded at (on eighth Dec.2008, 9th
market closed) 9162
level. It has jumped from 2595 to 9162, that is a gain of 6567 points or approximately 250
percent! Hangseng is 14753 and Shanghai is 2037 today. As I do not have actual data of 21st
Sept. of both these indexes it is not justified to calculate the gain but it is some thing around
thirty to fifty percent.
Dow has increased mere six percent in more than seven years and China and Hong Kong index
has raised by thirty to fifty percent (roughly estimated) but Indian stock exchange index BSE
has shown an amazing growth of more than two hundred fifty percent.
I have deliberately taken bear market data for a real comparison.
Collapsing Dow Jones
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Fifth highest foreign currency reserve in the world
India has fifth highest foreign currency reserve in the world.
Foreign currency reserves of China, Japan, Russia,Taiwan and India were $ 1905, $997B,
$485B, $282 B and $247 B respectively in 2007. This shows that Foreign currency reserve of
India was the fifth highest in the world after that of China, Japan, Taiwan and Russia. The
most interesting fact is that Indian foreign currency reserve had been increased 64 percent in
comparison to 32 percent of China and 57 of Russia, 9 of Japan and below 3 percent of
Taiwan on year-to-year basis.
It is worth mention that so called rich countries likes of the US, Canada, France and the UK are
not in this list.
Composite economic scenario of India:
GDP India is twelfth largest economy in the world in nominal parameter but that does not show
the real picture.
GDP India represents the fourth largest economy in the world in price parity parameter (PPP).
India has the second highest growth rate in the world after China.
BSE stock index of India has grown at the fastest pace beating all stock indexes in the world
including America, Canada, China, Japan and of course, all stock markets in European
Union. India has no.1 growth rate among stock markets in the world.
Bombay stock Exchange
Updates: Indian economy
N.B. Global recession also hit Indian economy during the last quarter of 2008. However, It has
started regaining its ground. India has successfully controlled its inflation problem. Indian auto
sales up by 10 percent during the first quarter of 2009. It is continuing with its GDP growth.
BSE sensex, that has tasted below 8000 during recession has crossed 12000 marks on 7th May
The Sensex had crossed 18000 marks at the end of 2009 before com,ing down to 16K at present.
Indian economy triumph over US
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India in Green Job sector
India has announced carbon emissions cut voluntarily at Climate change conference in
Copenhagen. This will be proved a major step towards clean energy sector. India is already
generating wind power and hydro-electicity. Announcement of carbon emissions cut will push
forward India in these sectors.
Some of the major Indian industrialists have started making their industries green. Tata is one of
them. This initiative will help growing environment friendly and energy efficient industries
and businesses. India has started moving towards renewable sources of energy especially in solar
energy and wind energy. Vast desert land in Thar area is ideal place to produce solar energy.
Long coastal area viz a viz to desert are ideal places for producing wind energy.
India is pioneer in recycling industry. Large numbers of Indian people are involved in recycling
waste materials in unorganized sector. Some organized sector businesses have recently entered in
to this business. Government incentives can boost this industry to sky height.
India is growing organic food and other agricultural products in huge quantity. The country is
also creating green forests and urban forests to fight global warming and climate change.
Several urban cities authorities made water harvesting compulsory for new buildings. This
government initiative is boosting water harvesting projects in urban areas. Government
initiatives in rural areas will enhance these projects many folds.
All these will make India pioneer in green industries. It will create large numbers of green collar
jobs in India.
Salary hike in India and other countries
Salary hike in India is the highest in the world. Recent survey reports suggest that salary hikes
in different countries are different. Comparison of salary hikes in India and other countries in the
world are mentioned below.
Japan remains the lowest with just half percent hike in salary. it is approximately one percent in
Canada and two percent in New Zealand, Australia. Hong Kong and Singapore. The US, of
course, have achieved up to 2.8 percent. Indonesia have achieved a salary hike up to nine percent
and Vietnam is at the level of ten percent growth.
However, India beats all countries in the world with eleven percent hike in salary. India is
leading even in the recession period.
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Where most of the countries facing bank failures, India has not that much affected. Though some
small banks also failed here no major bank is in crisis. Job loss ratio in India is also very low
in comparison to other countries. It has growth rate over five percent so far.
It is worth mention that India has achieved almost zero percent inflation rate (Year to year
basis) where as most of the countries are either facing or in the brink of high inflation.
(Updated on eleventh April 2009).
(This hub is published on December 9, 2008.)
India will lead internet and telecommunication
India is showing amazing growth in internet connections and mobile phones. India is number
two in mobile phone users in the world after China. It has surpassed the US long back. There are
more than 650 million mobile users in India presently. More over, it is still increasing.
India is showing tremendous growth in internet connections. India is adding more than five
million users every month or more than sixty five million internet users every year. It is the
highest growth rate in the world. It is expected that India will cross America, the US in number
of internet connections by the year 2013. Any of the European Union countries, Japan and
Canada can not stand with India while it comes to numbers.
It is well known fact that Indian IT professionals are the back bone of silicon valley. Number of
websites are also increasing in India with the growth of internet connections. Indian IT
companies are coming forward in web designing and software development.
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(Updates: December 6, 2011)
India-america economic tie
INDIA AND CHINA -
LOOKING BELOW THE SURFACE TO COMPARE THESE TWO
RISING ASIAN BUSINESS GIANTS
(Picture left) Infosys campus in India, and (picture right) A street in New Delhi
India has emerged as a trading superpower and as an increasing magnet for FDI. Its role in the
international economy to this point has been less remarked than the rise and dominance of China
but increasingly India will be appreciated for the opportunities it is creating for its citizens,
employers and foreign and domestic firms. At first glance, India doesn’t look like a major
trading superpower or a place where your company should be considering siting a factory.
Major complaints heard by visit execs often involve the poor state of infrastructure, the chaotic
traffic, that the democratic process hinders development, that corruption is endemic and that
bureaucracy is rampant. To this, many manufacturers must factor in that relations between
China and India are formal but not warm and that apparently neither side trusts the other, which
to this point has limited either location from generally serving the other for exports.
An interview with Chris Runckel,
the author, on the content of this
article. Listen to the show - From
Business Now Asia Pacific Radio, a
weekly 30 min online program
featuring reports and original
analysis on the Asia Pacific region
You only have to drive the roads from
Bangalore out to Infosys or to some of the
major biotech companies located in the South
to appreciate that roads are in fact
overcrowded and need expansion. Also, ports
are a problem. According to several sources,
Shanghai can turn around a ship in eight
hours. In Bombay, it takes three days.
Competitiveness studies (please see this
website for more on this) also make the case
that India needs to reform procedures and
lessen red tape. Despite this, India shouldn’t
be neglected - things are changing here and
India should be on every businessperson’s
To better understand what India is and what it is not, lets compare it to China. First, forget the
hype about both China and India. Keep in mind that despite all the talk of China or India’s rising
status, both China and India are still desperately poor countries with large disparities in incomes
across each country. In China nearly half of the country's labor force remains in agriculture
(about 60 percent in India). Also, despite all the talk about Indian software engineers and Nobel
laureates and Chinese engineering whizzes, India has the largest number of illiterate people in
the world and China also is burdened with a large number of rural poorly educated who will
offer continued challenges for economic development. (India’s illiteracy rate is nearly 40 percent
and China’s is nearly 10 percent according to World Bank statistics.) Of the total of 2.3 billion
people in these two countries, nearly 1.5 billion earn less than US$2 a day, according to World
Bank calculations. The opportunities in both countries are substantial; the challenges are also
With this in mind, lets compare the two countries by size: China is the world’s third-largest
country after Russia and Canada and is the second largest country by land area. India is about a
third of China’s size. In terms of population, China tops India at 1.3 billion people compared to
India at just over 1 billion but India is growing at a faster rate and has a younger population. In
terms of political systems, China is a communist country which economically is following
market reforms that encourage free trade and capitalist-based business models. India, by
comparison, is the world’s largest democracy, but with a system of commerce that until the
1980s was based on the Soviet model and has since been reforming itself to follow more free
trade and capitalist-based models. China has been reforming its economy since 1978; India has
been working since 1991 but at a faster rate of speed.
Further, in terms of manufacturing China’s
lead over India in terms of manufacturing is
considerable. China is the world’s third
largest nation in terms of manufacturing
after the U.S. and Japan. India is a still
impressive, but much further back 12th
place in the same list according to Global
Insight and the Financial Times. This
points out the fact that to this point, India’s
success in expanding its service industry has
yet to be as firmly demonstrated in the
In terms of performance, here are some
charts comparing and contrasting the two
economies in terms of first GDP, then
exports and finally imports:
Top 15 Manufactuing Nations
1 US 1 China
2 Japan 2 US
3 China 3 Japan
4 Germany 4 Germany
5 France 5 South Korea
6 UK 6 France
7 South Korea 7 India
8 Italy 8 UK
9 Brazil 9 Italy
10 Canada 10 Brazil
11 Russia 11 Russia
12 India 12 Indonesia
13 Spain 13 Mexico
14 Mexico 14 Taiwan
15 Indonedia 15 Canada
As can be seen, China is by far the bigger economy, the bigger exporter and the bigger importer
but don’t assume that all the advantages go to China. Here are some differences to consider:
• Corporate Income Tax: 24%
• Tax-Incentives for high-tech
• Tax Holidays for manufacturing
• Initial two years of profitability: 0
• Next three years of profitability: 50%
of tax rate (This is assumed to be
• India’s tax system is being reformed
as we write this. Following is the tax
system for India’s “Special Economic
• Corporate Income Tax: 15%
• First five years of profitability: 0%
• Second five years of profitability:
50% tax (This is assumed to be 7.5%.)
• Third five years of profitability: 50%
of tax rate for any invested dividends
that are invested back into India
As can be seen, India has introduced a tax regime that is vastly more advantageous in the Special
Economic Zones than China. Another benefit of India over China with respect to locating in the
Special Economic Zones is that India does not discriminate between manufacturing and services
and either can offer the above incentives, which is not the case in China. (Service companies are
treated less favorably in China for incentives.)
Tax incentives are not the only area that India is ahead of China in. Generally, Indian capital
markets far exceed their Chinese counterparts in terms of transparency and predictability. Indian
companies can list domestically on the Bombay Stock Exchange, Asia’s oldest exchange. China
has both the Shanghai and Shenzhen stock exchanges. Shanghai is larger than Bombay in terms
of capitalization (Bombay has US$1 trillion with 4,833 companies and Shanghai has US$1.7
trillion with 849 companies) but what differs the two exchanges is not just their size but that
Bombay is run to international standards and has tremendous stability in the quality of its
companies. On the other hand, China’s Securities Commission has no powers to impose
punishments, which must be imposed by the courts. Further as the government is the major
stockholder of its State-owned enterprises all these firms are not subject to independent policing
and true financial analysis meaning that the value of many of these firms is suspect. This means
that generally India has the more transparent economy.
Company Management Capabilities
India, however, is not only ahead in financial transparency. Although there are many excellent
Chinese companies, generally the management abilities of many Chinese businesses is not as
strong as their Indian counterparts. Part of this is due to the fact that reform in China started
barely 30 years ago and that management training has not become of interest till recently. Also,
it is a factor that in many respects it is the rest of the world that came to China to produce in the
last decade and not China’s homegrown export industry that has driven exports. In fact, if one
looks at cross-border activity, China has yet to become active in acquisitions to-date, although
there is indications this is starting to change. Big acquisitions by Chinese businesses include
Lenovo’s takeover of IBM’s PC business and more recently the Chinese acquisition of an
interest in Blackstone, which is a different twist on things.
On the other hand, Indian companies have been on a tear building up international assets and
expanding throughout the world. Recent examples:
• Tata Steel’s $13.6 Billion Acquisition of Corus
• Mittal Steel’s even larger $31 billion purchase of Arcelor
• Tata Group’s acquisition of U.S.-based Glaceau, a health drinks and water manufacturer,
for US$677 million
• Tata Tea’s purchase of a controlling stake in Britain’s Tetley for US$407 million
• India’s wind energy firm Suzlon’s acquisition of Hansent Transmission for $324 million
• Infosys’s $28 million acquisition from Phillips of BPO centers in Chennai; Lodz, Poland
and Bangkok, Thailand.
• Indian Phamaceutical giant Ranbaxy’s acquisition of Romania’s Terapia
• Ballarpur Industries (an Indian Paper and Pulp company) and JP Morgan’s acquisition of
Malaysia’s Sabah Forest Industries
As can be seen from the above examples, Indian companies are actively becoming world
players. Chinese companies really can’t match the breadth or the depth of acquisitions and this
is giving Indian companies a lead over their Chinese counterparts.
Despite what some Europeans, and especially the French, have come to think; English is the
international language of business and one of the further reasons for India’s success is the fact
that Indian businesses generally speak it at all levels and with a high degree of precision, while
Chinese businesses do not. Although Mandarin is the world’s most spoken native language, with
some 874,000,000 native speakers, it is also spoken in only 16 countries in any substantial
proportion of the population and those are all in Asia. English is the world’s third largest spoken
language with over 380 million people speaking it natively. Despite the fact the absolute total is
much less, the spread of countries – 104 speaking English in a high proportion of the population
and 71 as an official language – is six and a half times greater than Mandarin and over 600
million people speak English as a second language, including 89% of current students in the
world’s other developed powerhouse, the EU. The fact is that Mandarin is still a regional Asian
language and not a world language in the same way as English is. On the Internet, the difference
is even more striking:
Native language: English
Number who has Internet access: 287.5 million
Percentage of World’s online population: 35.2 %
Native language: Other European
Number who has Internet access: 276 million
Percentage of World’s online population: 37.9%
Native language: All Asian languages (including Mandarin)
Number of world online population 240 million
Percentage of World online population: 33%
Source: Global Reach (global-reach.biz/globstats)
Global Internet Statistics
Percentage of world
Arabic 10.5 1.4%
Chinese 102.6 14.1%
Japanese 69.7 9.6%
Korean 29.9 4.1%
Malay 13.6 1.9%
Total World 729.2 100%
As can be seen from the above, Chinese (including Mandarin and Cantonese) is only 13.7% of
the online population while English is 35.2%. Finally, over 80% of scientific articles are
published in English, up from only 60% fifty years ago. Indian managers’ ability to
communicate easily in English gives them a tremendous advantage and India is making skilled
use of that advantage.
As can be seen from the above, on the surface, China looks like the stronger player but some of
that difference is veneer only. India does have advantages in many areas and these areas are
generally the sorts – finance, management, and communications - that have effects throughout
the system. For these reasons, we believe India cannot be ignored.
Here are our projections and our recommendations:
a. India’s economic growth will move roughly equal to Chinas at 10 % by 2008 but will then
exceed China’s as China’s economy slows to less than double digit figures
b. India will increasingly start to replace China as a site for lower-end export manufacturing
and for projects that have higher content of labor
c. Indian companies will continue to globalize at a faster rate than their Chinese counterparts.
d. Every company needs an India strategy – both for sourcing, review for potential factory
relocation and long-term as a sales base.