As world economies recover from the effects of the COVID-19 pandemic, investors all over the globe are more willing than ever to part with their cash.
When scouring countries for investment opportunities, they should look no further than India.
According to data published by NASDAQ this year, India is the world’s fifth fastest-growing economy and has already had a considerable bounce back from the pandemic. There are prime opportunities for investment that could deliver attractive returns across a huge range of sectors.
There are a number of reasons why investors should focus their capital on India. For one, in the 2021 financial year, the country received its highest ever inflow of foreign direct investment of over $81 billion. This was due to a backdrop of policy steps that have improved the ease of doing business in the country, attracting investment into projects focused on manufacturing capacity and new infrastructure developments.
The largest investors in India in the past year were Singapore, the USA, and Mauritius, but the rest of the West stands to gain a lot if they follow suit. India’s GDP is forecasted to grow by 11 per cent in the next financial year, the highest since their independence in 1947, and is estimated to become a $5 trillion economy by the same year.
This large, expanding size of the market makes India an attractive prospect for foreign investors, with easy access to other emerging markets such as Bangladesh, Nepal, Pakistan, Sri Lanka and Myanmar.
Many of the world’s most prominent investors and venture capital funds have already succumbed to the allure of investing in India. Warburg Pincus and Prosus Ventures recently backed the Good Glamm Group in a $150 million funding round, making it the latest Indian startup to become a so-called ‘unicorn’ company, with a value of over $1 billion. Similarly, last month General Catalyst led a $160m investment round in Mumbai-based Dhani Services, founded by Sameer Gehlaut.
Given the current geopolitical climate and how western nations are reacting to China’s foreign policy decisions, many investors see India as a safer alternative. Tensions in the South China Sea are scaring away the big corporates, especially those based in the US, for fear friction between the two countries could affect their bottom line.
Many companies also made moves to prevent their supply chains being so reliant on China following the coronavirus pandemic, instead focusing on domestic production. By comparison, India has relatively good relations with most of the nations in the west, and many companies have decided to shift their manufacturing bases from China and into India.
The Indian government has recently taken the policy decision to encourage digital transformation across the country. This is another reason why it is becoming increasingly attractive for investors. For a long time, many companies have chosen to outsource their IT departments and call centres to India, but with digital technology expanding across the country, it will soon become more than just that.
We are seeing a huge tech boom across India, which is revolutionising industries such as finance, e-commerce, agriculture and medicine. This leads to increased investor confidence as the economy becomes more developed on the whole, and venture capitalists who have found success in these industries in other countries will view India as an even more attractive place to invest.
It is reforms like this that increase investor confidence. India’s government is keen to get other countries doing business here. The country regularly ranks in the top 10 improvers in the World Bank’s “Ease of Doing Business” rankings, which is in part due to the actions of the government.
India is undoubtedly an attractive place to invest, and it’s time more firms and individuals in the west recognised this. The growth of the country’s already significant economy can’t be downplayed, and the emergence of more and more unicorns by the year, as well as its geopolitical benefits compared with China, all make India an ideal place to shell out capital.
