China as a location is suffering from rising costs and geopolitical risks. Economists at Commerzbank investigate whether India could be an alternative.

The two countries differ in many aspects

In the coming years, India will certainly attract a larger share of global foreign direct investment. The positive factors are the trend toward diversification of supply chains, the development of alternative production locations, and the political risk of concentrating on China. This is all the more true if the government continuously improves the country's infrastructure and makes it easier for foreign companies to do business in the coming years.

However, it will probably not catch up with China for a long time. After all, apart from the similar population size, the two countries differ in many aspects, including the homogeneity of the population, the political system, and the decision-making process. In addition, China benefited from the fact that its rise coincided with a period of increasing globalization, which made the country's development much easier. India, on the other hand, now faces increasing protectionism, which will at least make its rise more difficult.