Goldman's report stated that India needed to seize its demographic advantage, using it to build manufacturing capacity, grow its burgeoning service sector, and continue the growth of its infrastructure. It said the country had made significant progress on innovation and technology and the conditions were ripe for a boom in private sector capital spending.
There are signs that the country is seizing this momentum. In June, Indian Prime Minister Narendra Modi touched down in Washington, DC for his first state visit to the US. Defense ties, technology partnerships, and India's role as an interlocutor in Indo-Pacific relations were all on the agenda, but the visit was important symbolically as well as practically. It showcased India’s emerging might on the geopolitical and economic world stage.
Modi met Tesla chief Elon Musk to discuss whether the company could build manufacturing facilities in India. He met other technology leaders at a White House state dinner, seeking to push India's advantage as Asian countries increasingly compete to be the beneficiary of companies relocating supply chains outside China.
Self-reliance
Beyond building diplomatic relations abroad, India is also addressing some of the long-term structural imbalances that have hampered its economy. Its reliance on imported commodities, for example, has left it vulnerable to volatility from international markets and inflation. It has uneasily straddled both sides of East-West tensions, buying cheap oil from Russia while maintaining strong ties with western business – a difficult position to jockey over the long-term.
India has sought to address their energy dependence with plans to bring energy generation onshore. It aims to reach net-zero emissions by 2070, with 50% of the power generation capacity coming from non-fossil fuel sources by 2030. There are also government-led initiatives on electric vehicles and green hydrogen. In addition to green energy, India is also striving to build self-reliance in areas such as semiconductors.
The overall picture is India is a country taking charge of its own destiny, drawing capital from abroad with international and domestic companies starting to build production while building self-sustaining economic growth with ever-increasing momentum and confidence.
In practice
What does this look like in practice? One of our top conviction positions, a leading freight management and logistics firm, is a leading importer and handler of liquefied petroleum gas terminals across India's major ports, with vast storage capacity. In this respect, it helps provide greater security over energy needs.
IT services also continue to promote greater innovation as they're tapped into trends such as digitization. Disruptive companies such as an online insurance aggregator, in particular, is changing the face of online insurance. Also, healthcare companies, which are beneficiaries of improving health services across India. And lastly, private banks are also beneficiaries of better credit growth on the back of an improved economic outlook.
Overall, we believe the consumer sector is still a fertile hunting ground for investment opportunities with an expanding middle class, fueled by rising wealth levels, across India.
Final thoughts
India is in a sweet spot. The International Monetary Fund forecasts GDP growth of 5.9% for 2023 and 6.3% for 2024 – the fastest projected growth of any major economy. And finally, Indian confidence is strong with an economy that today is far more stable than at any other point in its recent history with the central bank having been prudent in closely watching inflation and raising rates.
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