The World’s second most populous country, the World’s biggest democracy, the World’s seventh largest by area country, 10th largest by nominal GDP and 3rd largest by purchasing power parity. All very impressive, and all facts that can be used to describe India.
This is a truly fascinating country on so many levels. My Grandfather lived there in the 1930’s and said this then, and that statement still rings true today.
But amid the scale of the place, enormous diversity and rich history, India is very much a country focused on the future, rather than constrained by the past.
Demographics on a vast scale
India’s population is continuing to grow, a different scenario to that in China, where the one-child policy has started to bite and the population is reproducing at a rate below the replacement requirement.
This younger population has the capacity to provide continued robust growth – beyond that of an increasingly aged population. In fact, India has more people in the 15-24 age bracket than any other country. These are the consumers of today and tomorrow!
Further to this, since 1985, more than 431 million Indians have left poverty behind, while the middle class (read consumer class) is set to grow to around 580 million by 2030.
Value add services such as outsourcing are well bedded in, into the Indian economy (7 of the worlds top 15 IT companies outsource to India) and this has led to a large and ever growing consumer market.
To give some idea of scale, the Indian Telecoms industry is the World’s fastest growing, with an additional 227 million new subscribers during 2011 and in 2013, leapfrogged over Japan as the Worlds 3rd largest smartphone market.
Big numbers and big shifts, so where is the opportunity?
One of the big differences with India and China is infrastructure. While China has built all things new, over the past 20 years and on an incredibly vast scale, India has by comparison, barely started in regards to building.
Naturally this provides great opportunities in the resources space as, while India has raw materials, the quality or grade – take Iron ore for example – is not great. As such, this may help underwrite the tapering off of Chinese demand for the big guys and enable a soak up of production.
What about direct investment?
From a foreign investment perspective, India may well have a reputation for some corruption, but this is more than offset by the quality, education and skill level of the workforce, political direction (currently the Government enjoys a majority, a first for India since 1984) and that it is a democracy.
While there are legacies of the past – the Caste system maintained by the former British Raj – India continues to look forward, to its future.
Given a weaker global economy, finding growth will require a wider field of vision than the traditional markets
With the increased popularity of Exchange Traded Funds, getting exposure to the Indian economy and market is more readily accessible than ever before.
The sheer beauty of this, is the ability to invest or trade via the major equity exchanges. For example, EPI Exchange Traded Fund, which is actually traded on the New York Stock Exchange.
Having some exposure, within a speculative growth portfolio, seems to make a lot of sense for investors who are looking for growth opportunities within a more anemic global investing environment.
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