India is poised to become a 21st-century economic powerhouse, offering an alternative to China for investors seeking growth and reducing supply chain risks, according to a CNN report.
Prime Minister Narendra Modi and industrialists Mukesh Ambani and Gautam Adani are playing a fundamental role in shaping the economic superpower India will become in the coming decades.
To spur growth, the Modi government has initiated a massive infrastructure transformation by investing heavily in building roads, ports, airports, and railways. It is also actively promoting digital connectivity, which enhances both business and daily life.
Both Ambani and Adani have become key allies as India undertakes this revolution.
Worth USD 3.7 trillion in 2023, India is the world’s fifth largest economy, having jumped four spots during PM Modi’s decade in office, overtaking the United Kingdom.
Analysts anticipate that India can comfortably expand at an annual rate of at least 6% in the coming years. However, to become an economic superpower, the country should target growth of 8% or more. Sustained expansion will elevate India’s ranking among the world’s largest economies, with some experts predicting it could become number three behind only the US and China by 2027.
Reliance Industries and the Adani Group – the two sprawling conglomerates having valuations worth over USD 200 billion each, have enterprises in sectors ranging from fossil fuels and clean energy to media and technology.
Investors have been cheering the duo’s ability to adroitly bet on sectors prioritized for development by Prime Minister Narendra Modi, currently campaigning for his third consecutive term to lead India.
“As a result, these three men — Modi, Ambani and Adani — are playing a fundamental role in shaping the economic superpower India will become in the coming decades,” the report added.
The report also highlighted that the level of power and influence wielded by the two Indian tycoons has been observed in other countries experiencing periods of rapid industrialization.
According to James Crabtree, author of The Billionaire Raj, a book about India’s wealthy, it is “normal” for developing nations to undergo a period of rapid growth, which includes “income accumulation at the very top, rising inequality and lots of crony capitalism.”
Mumbai, India’s financial capital, bears the imprint of the two tycoons everywhere. From Adani Realty-branded high-rise apartment buildings to cultural institutions named after the Ambani clan, even the international airport is operated by Adani.
The CNN report also mentions the grand pre-wedding celebration of Mukesh Ambani’s son Anant Ambani in March this year, which saw billionaires and movie stars from around the world jetting to Jamnagar. Mark Zuckerberg, Bill Gates, and Ivanka Trump were among the many high-profile celebrities in attendance. The three-day celebration, which featured performances by popstar Rihanna and magician David Blaine, captivated India and further highlighted Ambani’s growing global clout.
Guido Cozzi, professor of macroeconomics at the University of St Gallen in Switzerland, emphasized the significance of these conglomerates, noting that both the Adani Group and Reliance Industries were established before Modi came to power.
“They are not typical stagnant monopolistic conglomerates. They are pretty dynamic,” Cozzi said.
They play an important role in building infrastructure, which directly contributes to growth, and also help the country expand indirectly by enhancing connectivity through digital innovation.
Reliance was founded by Ambani’s father, Dhirubhai, as a small yarn trading firm in Mumbai in 1957. Over the next few decades, it grew into a colossal conglomerate spanning energy, petrochemicals, and telecommunications.
Mukesh Ambani has revolutionized India’s telecom sector in less than a decade and has become a major player in sectors ranging from media to retail.
The report suggests that Ambani’s ambition and rapid expansion are matched by Adani, “a college drop-out who now helms businesses ranging from ports and power to defence and aerospace”.
A first-generation entrepreneur, the 62-year-old began his career with diamond trading, before establishing a commodity trading business in 1988, which later evolved into Limited (AEL).
According to a January note by American brokerage firm Cantor Fitzgerald, AEL “is at the core of everything India wants to accomplish.” The company serves as an incubator for Adani’s businesses. Many have been spun out and have become leaders in their respective sectors.
Cantor believes the firm’s current focus on airports, roads, and energy makes it “a unique long-term investment opportunity.”
The report acknowledges that while both barons built much of their fortune from fossil fuels, they are now investing billions in clean energy, aligning with India’s ambitious climate goals.
However, despite India’s growth rate, youth unemployment and inequality remain persistent problems. In 2022, India ranked a low 147 on gross domestic product (GDP) per person, a measure of living standards, according to the World Bank.
Opposition parties in India have targeted the BJP-led government, alleging ties with the country’s super-rich and the meteoric rise of Adani.
In January 2023, American short-seller Hindenburg Research accused the Adani Group of “engaging in fraud” over decades. Adani denounced Hindenburg’s report as “baseless” and “malicious.” The report resulted in a stock market meltdown wiping over USD 100 billion off the value of its listed companies.
But, since then, Adani has made a remarkable comeback, with shares in some of his companies touching record highs and the group attracting billions from new foreign investors.
The report highlights that PM Modi’s “perceived relationship with the billionaires” is once again being questioned by political rivals during the Lok Sabha polls.
Prasanna Tantri, associate professor of finance at the Indian School of Business, believes there is no evidence to suggest that crony capitalism in India has worsened under Modi’s leadership.
He acknowledges that some processes, such as the allocation of India’s natural resources and the bankruptcy laws, have undergone significant reforms during Modi’s tenure.
Some experts argue that “some amount of closeness” between politicians and business leaders can contribute to the nation’s growth.
However, the report emphasizes that India needs to foster entrepreneurship and innovation to bring more firms into the sphere, as a country where millions join the labor force monthly cannot rely solely on a few conglomerates.
“They are phenomenal … entrepreneurs, who have been able to sustain steady growth and development in a vibrant yet sometimes chaotic political and business environment that exists in India,” said Rohit Lamba, an economist at Pennsylvania State University and co-author of Breaking the Mould, a 2023 book examining India’s economic growth prospects.
“India cannot grow rich before it becomes old on the back of a few big firms like Adani or Ambani…India should make more firms,” he added.
The report acknowledges that India has other conglomerates, such as the 156-year-old Tata Group, which wields significant power in key sectors but often escapes the scrutiny faced by newer conglomerates, primarily because it is controlled by philanthropic trusts rather than run as a family dynasty.
India has been the fastest-growing large economy in the last three financial years.
