India, the South Asian country that’s home to over 1.3 billion people, has seen heightened attention from global investors recently. Institutional capital has been pouring from Canada’s Brookfield Asset Management, Caisse de Depot et Placement du Quebec, as well as from major sovereign and pension funds from Europe and Asia, among others. They’re eyeing everything from distressed assets to property to infrastructure. Foreign banks like Singapore’s DBS and JPMorgan have also set up operations there, some relying on digital-only services, while tech giants like Amazon and Google are also setting their eyes on India. What’s drawing all this interest?
For one, India has a middle class that’s growing at a larger scale than other geographies. By 2030, nearly 550 million Indians will reach middle-class status. India will add more people to the global middle class than China after 2027, EY predicted. Its young and growing population will also be a driver of surging energy demand in the coming years, as more move to cities.
Second, the ranks of wealthy Indians are increasing. The country is the seventh largest wealth market in the world, with $5.2 trillion in assets, according to a New World Wealth report. Wealth held by high-net-worth Indians rose to $797 billion in 2015, according to Capgemini.
Third, India’s e-commerce and IT sectors are booming and continuing to grow as the country’s smartphone market grows at the fastest pace in the world, according to several estimates. A report by Nasscom and Akamai claims India will have over 730 million Internet users and 702 million smartphone users by 2020. Some estimates predict the number could reach 1 billion by that time.
Finally, recent government reforms made it easier and safer for foreign investors seeking opportunities in the country.
As a country that’s expected to see strong GDP growth (7.5% in 2017) and corporate earnings growth, India is an attractive place to invest in. However, foreign businesses and investors must also consider the risks related to its shaky relationship with neighbouring Pakistan, security threats and natural disasters, and others.
This article was originally published on ShiftCentral, now part of LAC Group.