Five reasons why India is a ‘must-have’ in any portfolio
India is a must-have in any investment portfolio due to its leading global economic growth, positive policy reforms, strategic geopolitical positioning, commitment to green industries, and rapid digitalisation. Read more to find out.
20th September 2024 10:12
by James Thom from abrdn
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Economy – leading global growth
India has an impressive economic track record, underpinned by a large, growing population with rising disposable income. Real GDP growth averaged 8.3% in the past three years (FY2021-FY2023)1, and is forecast to average 6.7% in the next three years (2024-26)2 - well ahead of all other major global economies, including China.
At the same time, economic stability is supported by low external debt, which has actually been declining relative to the size of GDP, and sizeable FX reserves, which have more than doubled over the past decade.
Reforms – positive policy directionality
Over the past decade, the Indian government implemented several painful, but necessary, reforms to put India on a more stable economic footing whilst also reducing the cost of doing business. Going forward, given political continuity following recent elections, the overall direction of economic policies should remain pro-business and investor-friendly.
Geopolitics – capitalising on global supply chain diversification
Geopolitically, India looks well placed to benefit from increasing US-China rivalry, which will likely drive increasing US-India alignment and co-operation in multiple spheres. India can also capitalise on global companies’ increasing efforts to reduce supply-chain reliance on China.
Green industries – powering cleaner growth
India is actively seeking to power its growth through cleaner energy sources . Globally, it already ranks as having the 4th largest wind capacity and the 5th largest solar capacity. However, there is an ambitious target of adding 500 GW of installed renewable capacity by 2030, while cutting carbon intensity by 45% over the same time3 – to achieve this will require huge outlays and create sizeable investment opportunities too.
Digitalisation – driving efficiency and growth
Arguably the single most standout area of policy-driven progress and source of growth enablement in India of late has been the rapid expansion of digital infrastructure. Built on the formidable ‘Aadhar’ national biometric ID system, increasing digitalisation is delivering notable productivity gains and opening up many exciting business opportunities.
James Thom is senior investment director, Asian equities at abrdn.
ii is an abrdn business.
abrdn is a global investment company that helps customers plan, save and invest for their future.
- Ministry of Statistics and Programme Implementation, India, June 2024
- IMF World Economic Outlook Update, July 2024, World Economic Outlook Update, July 2024: The Global Economy in a Sticky Spot (imf.org)Opens in new window
- Invest India, July 2024, Renewable Energy in India: Investment Opportunities in the Pow... (investindia.gov.in)Opens in new window
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