With 1.2 billion people and the 10th largest economy in the world ($1.85 trillion in 2011 according to the World Bank) that is forecasted to double in size ($3.6 trillion) within a decade, the question is not “why” or “if” for companies seeking international growth but rather “when” and “how”.
A different opportunity India today presents an unexpectedly interesting proposition. Industrial companies can leverage India’s global workforce, domestic market size and location to expand their presence in Asia. Meanwhile, global consumer companies can think beyond “brick & mortar” to enter or expand in one of the largest and fastest growing consumer markets. In many ways, this is the perfect time to think again about India. Please feel free to contact us to arrange a conversation.
A strong government with a focus on governance
In 2014, India’s Bhartiya Janta Party (BJP) received a historic mandate for governance and development. The Narendra Modi-led cabinet seems intent on delivering against that promise. In February 2015, the Minister of Finance announced that corporate tax rates would be lowered from 30% to 25% and that spending on infrastructure would increase 25% with a focus on highways and railways. In addition, foreign ownership limits in several sectors – including defense, construction and insurance – have been liberalized with the goal of attracting more foreign investors.
Growth with strong macroeconomic fundamentals
The Indian economy is returning to the heady growth rates of the previous decade. GDP is expected to grow at 7.4% in 2015, one of the highest rates among large economies. At the same time, inflation is being tamed. Mr Raghuram Rajan, a world-renowned economist, now leads the country’s central bank and has made inflation his primary target with last year’s rate kept at 3% – the lowest in a decade. The fiscal deficit has also been contained at 4.1%. In April 2015, Moody’s upgraded its outlook on India from ‘Stable’ to ‘Positive’.
A new way of looking at India
In 2000, the world woke up to the potential of India as a back-office of the world. In the current decade, we believe there are now three trends that are renewing interest in India. One trend is the revival in manufacturing and the opportunity to develop a production hub in India for both the domestic market and the rest of Asia. The government has launched its flagship ‘Make in India’ campaign that is simplifying regulations, spending on infrastructure, and seeking foreign investors. While there is still much to be done, there is a renewed sense of purpose in the sector.
A vibrant consumer economy in India
The second trend is the emergence of a vibrant, consumer economy in India as a byproduct of a professional, middle class that has expanded significantly with India’s growth as a global technology and services hub. This large and young population has global aspirations along with increasing wallets. The Indian market has acquired the scale and potential to have an impact upon a company’s revenues. Almost 10% of Unilever’s sales now come from India.
Rapid emergence of digital consumers
A final trend that is linked to the second one is the rapid emergence of digital consumers. This trend enables new entrants to rethink the traditional challenges of distribution and marketing in a large country. Internet penetration in India has reached 300 million users, larger than the US, with 100 million added in just the past year. Usage metrics are among the best in the world in such categories such as travel, classifieds and online trading.
The growth of digital penetration has fueled an e-commerce boom, with Amazon committing a further $2 billion to join battle with Flipkart, the current market leader.
India economy is at an inflexion point
Change of guard at centre has infused new energy into the Indian economy with several macro-economic indicators showing improving trend
Several structural reforms related to regulatory policies, tax laws and infrastructure are being introduced making it easier for foreign investors and businesses to enter India.
Young demographics, rising disposable income, growing middle class and availability of skilled and plentiful manpower make India an attractive investment destination.
Several consumer product multinationals have successfully entered over the last decade and build sufficient tractio
E-commerce has emerged as an alternate entry route to Indian market both from a presence as well as investment perspective.
The India growth trajectory is at an inflexion point and marks an attractive opportunity for firms to enter India to be a part of it.
It's becoming a major FinTech player.
Please feel free to contact us to arrange a conversation about the advantages of investing in India.