India is one of the world’s oldest civilizations and, at one time, was one of the wealthiest and most enigmatic countries. Despite India’s decline in the economic league table over the centuries, the rule of law and the protection of individual property rights has been preserved, thanks in large part to the country’s strong agrarian culture and trading history.
The protection of individual property rights is a rare trait among emerging markets across the globe and is a great reason to consider investing in India. As India reforms its economy and embraces the free market, the protection of individual property rights will be the biggest enabler for wealth creation and compounding.
Why Invest in India? The 3 D’s:
India is one of the largest untapped investment opportunities in the world today. The drivers of India's economic and investment performance in the coming decades will be driven by three factors:
India is one of the most populated countries in the world and is also one of its youngest.
- Population of 1.2 billion people
- 47% of the population is under the age of 25; 87% is under 54
- India will add 200 million people to its workforce in the next 10 years; that’s 33% greater than the total workforce in the United States.
India's demographics will drive a surge in its economy as populations in almost all major economies (including China) age rapidly in the coming decades.
With a per capita GDP of $1,497.5, India is one of the poorest countries in the world. Its economy is primarily domestic driven and exports contribute only 25.2% to its GDP. It runs a current account deficit and a trade deficit and is a net importer of commodities. India is a supply constrained and underinvested economy.
In the coming decades, India will see a surge in domestic demand driven by its demographics and will see a corresponding growth in savings, investments and capital formation. In an over-leveraged world that is struggling to grow demand, India stands out as a powerful engine that is only beginning to rev up.
Depth of Markets
For a relatively small emerging economy (GDP $2 trillion), India has very well developed and sophisticated financial markets.
- It has one of the oldest stock exchanges in Asia with a very well developed domestic institutional and individual investor base.
- The Indian markets are deep, liquid and 100% electronic with companies from almost every sector of the economy listed on its stock exchanges.
- The Securities and Exchange Board of India (SEBI), modeled on the SEC and FSA, and the Reserve Bank of India (RBI) are world class regulators that make the Indian markets comparable with the best in the world.
- India is the only emerging market in the world where aggregate foreign portfolio investments exceed aggregate foreign direct investment.
The depth and efficiency of India's financial markets make it a very attractive opportunity for passive minority investors.