India's Economy Is Fast-Growing:
At $3.3 trillion, India is the world's fifth largest economy, after the
EU, U.S.,
China,
Japan, but ahead of
Germany. India's economy grew 8.5% in 2006, 9.0% in 2007, and 7.3% in 2008. it's economy is diverse, with services contributing half of India's output with less than one third of its labor force. Slightly more than half of the work force is still in agriculture, but economic growth has reduced poverty by 10% in the last decade.However,
GDP per capita is still only $2,900, giving India a lower standard of living than Vietnam.
India as a Nuclear Ally:
In 2006, the U.S. agreed to overturn decades of American law and defy the Nuclear Non-Proliferation Treaty by allowing full civil nuclear cooperation with India. This is despite the fact that India had violated the treaty by exploding nuclear devices and not putting their program under the IAEA’s safeguards.
India wants to be treated like the official five nuclear powers: U.S., Russia, Britain, France and China. The U.S. wants India to cap its production of fissile material (highly-enriched uranium and plutonium) - but India has refused. India plans to increase its warheads from 50 to 300 by 2010.
This winking at the rules for India looks bad to ally countries that the U.S. has convinced to refrain from building nuclear capacity: South Korea, Taiwan, Brazil, Argentina, South Africa, Ukraine, Kazakhstan and Japan.
The agreement was part of an overall increase in the business relationship between American companies and India.
India's Tata Motors Announces $3,000 Car:
In January, 2008, India’s Tata Motor Corp. announced the launch of the Nano, priced to sell at less than $3,000. This price is less than half that of the least expensive car on the market today, the Romanian built Renault Logan. Many experts are skeptical that Tata, which has only been making cars for the last 10 years, can manufacture a $3,000 car that meets emission and safety standards. However, the market for a low-priced car is huge...90% of China's and India’s adult population do not own a car. In the U.S., sales of cars priced under $10,000 could grow by 65% by 2012, according to industry expert Roland Berger.
Chindia:
Chindia is the term used to describe a tight partnership between China and India -- two of the world’s largest and fastest growing economies. With one-third of the world’s people, Chindia could be a tremendous economic powerhouse in the global economy.
Chinese President Hu Jintao first met with Indian Prime Minister Manmohan Singh, and other high ranking Indian officials including Sonia Gandhi, in 2006. This was the first visit to India by a Chinese head-of-state in ten years.
China and India signed a trade agreement that has strengthened cooperation in the areas of information technology, energy, and agriculture. They set a target of doubling their total bilateral trade to $40 billion by 2010.
In addition, they reopened border trade across the Nathu La pass, which links China's Tibet and India's Sikkim areas, and had been closed for 44 years.
China and India have complementary economies:
- India has raw materials, China has manufacturing.
- India has high tech, China has the businesses and consumers to use them.
However, they also have long-standing trade disputes stemming from their common borders, and China’s friendliness with India’s enemy, Pakistan. There are few airline routes and visa delay. These disputes will not be solved by one friendly trade agreement. Fortunately, both realize the potential advantages of a partnership, and the trade agreement is a good first step towards a “Chindia” of some sort.
