Why india ?

The indian outlook

India has emerged as one of the fastest growing economy in the world and is expected to be amongst the top three global economic powers over the next 15 years, backed by fundamentals.

Market size

India’s nominal GDP growth rate is estimated at 12% cent in 2019-20. The estimate for 2018-19 was 11.5%. During Q1 of 2019-20, GDP (at constant 2011-12 prices) grew by 5%. India has retained its position as the third largest startup base in the world with over 4,750 technology startups, with about 1,400 new start-ups being founded in 2016, according to a report by NASSCOM. India’s labour force is expected to touch 160-170 million by 2020, based on rate of population growth, increased labour force participation, and higher education enrolment, among other factors, according to a study by ASSOCHAM and Thought Arbitrage Research Institute. India’s foreign exchange reserves were US$ 393.29 billion in the week up to December 21st, 2018, according to data from the Reserve Bank of India (“RBI”).

Recent Developments

With the improvement in the economic scenario, there have been investments in various sectors of the economy. The M&A activity in India increased 53.3% to US$ 77.6 billion in 2017 while Private Equity (PE) deals reached US$ 24.4 billion. Said activity in the country has reached US$ 41.6 billion in first half of 2019 (Jan-June). In the first six months of 2019, eight companies held IPOs, raising as much as Rs 5,509 crore (approx. US$ 0.79 billion).

India’s Foreign Direct Investment (“FDI”) inflows reached US$ 436.47 billion between April 2000 and June 2019, with maximum contribution into services, computer software and hardware, telecommunications, construction, trading and automobiles. India’s Index of Industrial Production (IIP) rose 2% YoY June 2019. India has improved its ranking in the World Bank’s Doing Business Report by 23 spots over its 2017 ranking and is ranked 77 among 190 countries in the 2019 edition of the report. The World Bank has stated that private investments in India is expected to grow by 8.8% in FY 2018-19 to overtake private consumption growth of 7.4%, and thereby drive the growth in India’s gross domestic product (GDP) in FY 2018-19. India is expected to retain its position as the world’s leading recipient of remittances in 2018, with total remittances touching US$ 80 billion, according to World Bank’s Migration and Development Briefings.

Numerous foreign companies are setting up their facilities in India on account of various government initiatives like Make in India and Digital India. Mr. Narendra Modi, Prime Minister of India, has launched the “Make in India” initiative with an aim to boost the manufacturing sector of Indian economy, to increase the purchasing power of an average Indian consumer, which would further boost demand, and hence spur development, in addition to benefiting investors. The Government of India, under the Make in India initiative, is trying to give boost to the contribution made by the manufacturing sector and aims to take it up to 25% of the GDP from the current 17%.

Besides, the Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services digitally and to increase the digital literacy.

Road Ahead

India’s gross domestic product (GDP) is expected to reach US$ 6 trillion by FY27 and achieve upper-middle income status on the back of digitization, globalization, favorable demographics, and reforms. India’s revenue receipts are estimated to touch Rs. 28-30 trillion (approx. US$ 385-412 billion) by 2019, owing to Government of India’s measures to strengthen infrastructure and reforms like demonetization and Goods and Services Tax (GST). India is also focusing on renewable sources to generate energy. It is planning to achieve 40% of its energy from non-fossil sources by 2030 which is currently 30 per cent and also have plans to increase its renewable energy capacity from to 175 GW by 2022. India is expected to be the third largest consumer economy as its consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer behavior and expenditure pattern, according to a Boston Consulting Group (BCG) report. Given the robust forecast and outlook at India, AGIF continues to stay invested in India investments in achieving its growth.