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General Investing

Is India the Newest Global Superpower?

India has surpassed China as the most populated nation in the world and appears ready to flex its muscles as a global force in consumption and spending.

By Bernard Chua, CFA,Jim Shore, CFA
Man in warehouse.

Key Takeaways

India’s demographic milestone should significantly impact consumer behavior, international trade and politics.

Challenges to China's recovery have improved the outlook for India-based information technology, health care, defense and consumer-oriented companies.

India's rise to power will have geopolitical impacts and create investment opportunities.

India Is Poised to Become an Economic Powerhouse

India recently overtook China to become the world's most populous nation. Its growth makes the country a global force in consumption, spending, trade and diplomacy.

India capitalized on the economic challenges China faced during the pandemic. Its ability to grow global trade during China’s lockdowns and the resulting supply chain snarls has improved India’s competitive standing compared with its regional rival.

We highlight some of India’s strengths below.


In our view, India may be poised to dominate IT services and logistics software for decades.

Thousands of engineering schools in India graduate about 1 million new engineers annually. As a result, a large, young and English-speaking workforce provides a tailwind for the nation’s tech advances. Apple’s intention to move a sizable portion of iPhone 14 production from China to India underscores this trend.

Health Care

We believe that growing per capita wealth and technological advances will increase Indian citizens’ demand for a better quality of life. In our view, this would benefit health care companies as people seek greater access to world-class care. Increased demand for various medical procedures would likely benefit private hospitals, health care facilities, and medical device and equipment makers.


India is now the world’s most populous nuclear power. But standing shoulder to shoulder with the U.S., China and Russia is expensive.

Having already upped its defense spending following Russia’s invasion of Ukraine, India has indicated it will increase defense spending anew. The country will allocate more than $76 billion to defense (approximately 15% of the government’s budget, or 2.5% of GDP) for fiscal 2023-2024. This is up from $15 billion in 2000, according to Reuters.

India’s defense budget will remain small compared with the U.S. and other military powers even after these increases. But we believe this trend should benefit companies across many industries, including aerospace, technology (testing and systems monitoring) and traditional defense contractors.


India is also benefiting from reshoring. Tesla has proposed a new factory, Cisco plans to build manufacturing capabilities and Foxconn will increase the assembly of Apple products there.


China continues to dominate the emerging markets consumer landscape. The portion of its middle class that can afford goods and services beyond basic necessities and staples is nearly double the size of India’s. However, India’s consumer class is growing faster, at about 6.5% per year compared with China’s 4%. See Figure 1.

We expect India’s consumer spending to increase as interest rates moderate and to outpace China’s over the next decade. This acceleration in spending should have a notable impact on consumer goods, including staples, as well as discretionary and durable items, such as automobiles, luxury items, education and health care.

Figure 1 | China’s Consumers Dominate, but India’s Consumer Class Is Growing Faster

Population Growth – India vs. China
China’s Consumers Dominate, but India’s Consumer Class Is Growing Faster.

Data from 6/30/1993 – 5/31/2023. Source: FactSet, IMF World Economic Outlook, World Bank World Development Indicators. Forecasts are not a reliable indicator of future performance. Past performance is not indicative of future results.

India’s New Role on the Global Stage Shifts Geopolitical Balance

India sits at the nexus of global trade and commerce. It has taken advantage of the unpopularity of China’s diplomatic support of Russia in the war with Ukraine to cultivate solid and positive relationships around the globe.

According to the World Bank, the U.S., China and Russia are among its top five trading partners. It shares other prominent trading partners with the U.S., including Saudi Arabia, Hong Kong, South Korea and Germany.

We also note its strong ties with some of the U.S.’s more contentious associates, including Russia, Iraq and Afghanistan. This new positioning means India will be included in all discussions about high-level geopolitical issues in the future.

In addition, the U.S., Russia and China will likely vie for more favorable trade relationships with India, setting the stage for heightened geopolitical wrangling among these powerful nations.

India’s Rising Power: Opportunities in Trade, Health Care and Consumer Goods

India’s ascension has solidified its position as a new global power. Coinciding with China’s moderating post-COVID recovery, it presents the opportunity for this South Asian nation to excel across multiple economic and political arenas.

Having already established itself as a notable supplier of skilled labor and manufacturing prowess in technology, we believe India is poised to make similar advances in trade, health care and consumer goods. We will watch closely as other areas of opportunity in India evolve.

Bernard Chua, CFA
Bernard Chua, CFA

Vice President

Senior Client Portfolio Manager

Jim Shore, CFA
Jim Shore, CFA

Vice President

Senior Client Portfolio Manager

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References to specific securities are for illustrative purposes only and are not intended as recommendations to purchase or sell securities. Opinions and estimates offered constitute our judgment and, along with other portfolio data, are subject to change without notice.

The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.