Invest In India
India is on track to become the world’s third-largest economy by
2027, surpassing
Japan and Germany, and have the third-largest stock market by 2030,
thanks to
global trends and key investments the country has made in technology
and energy.
India is already the fastest-growing economy in the world, having clocked 5.5% average gross domestic product growth over the past decade. Now, three megatrends- global offshoring, digitalization, and energy transition, are setting the scene for unprecedented economic growth in the country of more than 1 billion people. Consequently, India is gaining power in the world order, and in our opinion, these idiosyncratic changes imply a once-in-a-generation shift and an opportunity for investors.
All told, India’s GDP could more than double from $3.5 trillion today to surpass $7.5 trillion by 2031. As per World Bank, India’s share of global exports could also double over that period, while the Bombay Stock Exchange could deliver 11% annual growth, reaching a market capitalization of $10 trillion in the coming decade.
“In a world that is currently starved of growth, the opportunity set in India must be on global investors’ radar,” says Chetan Ahya, Morgan Stanley’s Chief Asia Economist. “India will be one of only three economies in the world that can generate more than $400 billion annual economic output growth from 2023 onward, and this will rise to more than $500 billion after 2028.”
Companies around the world have been outsourcing services such as software development, customer service, and business process outsourcing to India since the early days of the Internet. Now, however, tighter global labour markets and the emergence of distributed work models are bringing new momentum to the idea of India as the back office to the world.
India is also poised to become the factory to the world, as corporate tax cuts, investment incentives, and infrastructure spending help drive capital investments in manufacturing.
India began laying the foundation for the digital economy more than a decade ago with the launch of a national identification program called Aadhaar. The system creates biometric IDs to establish proof of residence and has been instrumental in digitizing financial transactions, among other benefits.
Energy is also key to economic development as it impacts education, productivity, communication, commerce, and quality of life. All of India’s 600,000-plus villages have access to electricity due to recent upgrades to transmission and distribution, among other changes. This could boost India’s daily energy consumption by 60% over the next decade.
Although India will need to tap fossil fuels to meet its growing energy needs, an estimated two-thirds of India’s new energy consumption will be supplied by renewables like biogas and ethanol, hydrogen, wind, solar and hydroelectric power.
This could reduce India’s reliance on imported energy and improve living conditions in the country. It also creates new demand for electric solutions, such as electric vehicles, bikes, and green hydrogen-powered trucks and buses.
“The rise in India’s energy consumption alongside the energy transition opens up a new segment to boost investment growth,” says Girish Achhipalia, India Utilities, and Industrials analyst. “We believe this rise in capital investments will help to unleash a virtuous cycle of investment, with more jobs and income, more savings and in turn more investment.”
Indian consumers are also likely to have more disposable income. India’s income distribution could flip over the next decade, and consequently, overall consumption in the country could more than double from $2 trillion in 2022 to $4.9 trillion by the end of the decade with the greatest gains going to non-grocery retail, including apparel and accessories, leisure and recreation, and household goods and services, among other categories.
India has attained much economic success in the past three decades. If we look at a decadal or a higher time frame, investing in Indian equity is extremely attractive. As far as the next 10-15 years are concerned, the Indian economy is likely to do much better, which also means that capital allocation to India in the context of global portfolio allocation will go up. Let’s be a part of the Indian growth story by investing in the Indian capital market.
What are the best investment options in India?
Fixed Deposits and Bonds
Mutual Funds (SIP)
Direct Equity Market
Portfolio Management Services (PMS)
National Pension Scheme (NPS)