India's political and economic ranking in the world order has risen and has unlocked potential investment opportunities for the country, said Ridham Desai, managing director of Morgan Stanley.
It was the first time that India bought crude from a sanctioned country like Russia, and the White House (U.S.) looked the other way, Desai said while speaking at the Indian Merchants Chamber's 115th Annual General Meeting. This has not happened in the country's history before, and this is a very different India in terms of its political position in the world, he said.
"Every country wants to engage with India, be it Russia, the U.S., Australia, or, to some extent, even China. And India has engaged with them from a position of strength," Desai said.
It was evident from Prime Minister Narendra Modi's recent U.S. visit, which unlocked defence potential and will probably lead to major investments by multinationals in India, he said.
World's 4D Challenge
The world is challenged by the 4 Ds—demographics, decarbonisation, digitalisation and deglobalisation. India, on the other hand, is benefiting from each of them.
While the world is ageing fast, especially with the average population in the U.S. now touching 39 years, Europe and Japan's standing at 50, and China's population on the decline, that of India is not expected to drop till the end of this century, he said. "So, India is the only country with a young population and is positioned uniquely to grow," Desai said.
According to him, demographics are the bedrock for growth. A young population is needed for growth and will not be available outside of India and Africa, though they are not comparable, he said.
Regarding decarbonisation, Desai said that compared with the U.S.' average daily energy consumption of 9,500 watts, India's stood at just 800 watts. However, given the focus on energy, India's demand will grow exponentially. But, unlike the U.S. and Europe, India will not have to shut down fossil fuel consumption but just add renewables.
It is an additional cost for the developed countries as they will have to shut down their large fossil fuel-based operations, and shutting down operating capacities is very disruptive, he said.
Digitisation is going to be the next big disruption, he said. But India has had a head start with the Aadhaar stack. It is a technology platform that is not available anywhere else and has opened up possibilities on the finance side that were not available earlier, Desai said.
Its impact was visible during Covid-19, when QR code-based embedded transfer of fees for education and services ensured that India did not face the trouble that other countries did, he said.
According to Desai, with strained relations between the U.S. and China, the world has turned from bipolar to multipolar, where consumption and production centres are spread across other countries, and that is leading to deglobalisation.
India has emerged as a natural beneficiary because production has started to shift to India. Since 2019, the Indian government has started incentivising MNCs and domestic companies and has rolled out production-linked incentives. "In fact, now corporations pay lower taxes than CEOs," he said.
"If companies make money, they will invest. If they invest, it will create jobs, and with jobs, there will be overall prosperity," he said.
India is at the crossroads of a social, political, and economic disruption that will help drive growth in the country, he said.
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