Apr 18, 2023 - Economy

India commands global corporate limelight

Illustration of eyes emoji with Ashoka Chakra wheels as the pupils.

Illustration: Allie Carl/Axios

Apple opened its first retail store in Mumbai on Tuesday with roughly 200 people gathered in wait and CEO Tim Cook taking selfies, including with Bollywood celebrities earlier in the week.

Why it matters: The most profitable Fortune 500 company is deepening its commitment to India as it expands manufacturing in the country and develops greater ties to Indian consumers. And it isn't alone.

  • Fashion house Dior just hosted its first official show in the country.
  • Paris' iconic Galeries Lafayette department stores are set to land in India starting in 2024 and Boeing just struck a deal with Air India to supply at least 220 aircraft.

Context: India's economic development had been hindered by bureaucracy, but has recently benefitted from internal reform as well as external forces.

  • Namely, companies have been moving manufacturing out of China amid substantial wage growth as well as supply chain breakdowns throughout the pandemic.
  • Escalating tensions between the U.S. government and Chinese policymakers have further prompted companies including apparel and furniture makers to reduce their reliance on operations in the country.

What they're saying: "We see a reconfiguration, or at least an attempt at a reconfiguration of global value chains ... and given the size of India's market, it is natural that India would be a big, big, big draw for many multinationals," Anusha Chari, professor of economics and finance at the University of North Carolina, tells Axios.

Zoom in: Apple CEO Tim Cook told investors in February that "India is a hugely exciting market ... and a major focus."

  • The company generated nearly $6 billion in revenue from the country over the past year (a new high), Bloomberg reports.
  • Apple's retail debut in India, which will also involve a second store opening on Thursday in New Delhi, was reportedly delayed twice.

Zoom out: Name brand interest in India is the latest sign of the country's rise in the global economy.

  • India's population exceeded China's earlier this year, according to the World Population Review. And its economy could become the fastest-growing in the world in 2023, according to Bloomberg — thanks in part to Prime Minister Narendra Modi's ambitions.
  • In a speech last summer commemorating 75 years since India's independence, Modi told the country to settle for nothing less than to "dominate the world."

Be smart: While India's middle class is much smaller than China's, India's wealthiest is expected to grow at a faster pace than any other country.

  • "India is a country which is a multitude of countries ... [with] pockets of affluence [like] the United States and Western Europe ... [and] pockets of it, which are like Sub-Saharan Africa. ... It's a very complex country," Gayatri Rangachari Shah, a former management consultant in New York turned Mumbai-based journalist, tells Axios.

What to watch: The G20 presidency is in the hands of India this year, and the country is using its position to serve "as a bridge between east and west, and north and south," former US ambassador to India Kenneth Juster told Bloomberg.

  • U.S. Commerce Secretary Gina Raimondo traveled to India last month to meet with leaders and sign an agreement for the countries to work more closely on semiconductor supply chains.
  • And while India has been more aligned with the U.S. culturally — being an English speaking democracy — there are "serious issues" in the rollback of press freedoms, Chari says, as well as other pressure on democratic foundations.

Our thought bubble: More companies targeting consumers in India or building manufacturing outposts will create new local jobs and potentially increase wages. That, in turn, could make consumers wealthier and attract other companies' attention, creating a new growth cycle.

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