image credit: dalle

Since the launch of Indian Premier League (IPL) in 2008, many International cricket superstars visit India every summer and many of them have turned millionaires. Similar trend is emerging in the business and finance world. Investors, Venture capitalists and tech firms from the west are flocking to India to grow their billions dollar investment portfolio. Celebrated investors like Ray Dalio are bullish about India and have documented his thoughts on India’s growth potential at length in his book The changing world order. Big Tech giants like Google, Apple and Amazon have announced massive billion dollar projects in India in 2023. What does this mean to you as an NRI ? While some NRIs are relocating to India to build their career amidst this Indian gold rush, not all NRIs can or would want to uproot their life and move back to India. In fact, it might not make sense to do that just for financial growth. However, many NRIs have started investing from their country of residence and participating in India’s growth story. It’s worth exploring the factors influencing this shift in India’s outlook and understand if you as an NRI should take advantage of this. Here are the 5 major shifts that is happening right now in India.

1. Standing out in GDP growth among Top Nations

In the last 2 years, western economies are grappling with uncertainty, inflation, and unpredictable market trends while India’s economy shines bright, boasting a GDP growth rate of 7.6% in 2023. This robust growth, contrasted with more modest growth in other major economies like the U.S. (2.1%) and the European Union (1%), positions India as a standout investment destination. This remarkable performance, especially in challenging global economic conditions, underscores India’s resilience and potential as an investment destination. Such economic dynamism not only highlights India’s growing global influence but also presents a fertile ground for investment opportunities across various sectors. See below the GDP growth rate for major countries with top GDP numbers.

source: macrotrends.net

2. Capitalizing on China plus One Strategy

The China Plus One (C+1) strategy, formulated in response to the COVID-19 pandemic and ongoing geopolitical tensions between US and China, involves diversifying global investments away from China to reduce economic and geopolitical risks. In the first half of 2023, China lost its position as the top exporter of goods to the US for the first time in 15 years, and its FDI in the US reached its lowest point in a decade. The Biden administration’s measures, including regulating exports, imposing sanctions on Chinese businesses, reflect this changing dynamics​​. In this context, India stands out as a viable alternative for global manufacturing and investment, benefitting from its unique advantages such as the country’s cost-competitive manufacturing, bolstered by competitive labor costs for manufacturing, complemented by a skilled labor force, proficient in areas like IT, engineering, and pharmaceuticals, which is advantageous for high-tech and knowledge-based industries. As of April 2023, Apple has moved 7% of all iPhone production from China to India and has tripled its manufacturing there since 2021. Apple and its suppliers aim to produce more than 50 million iPhones annually in India within the next two to three years.

3. Indian Government Initiatives Fueling Investor Confidence

image credit: reuters

Over the past nine years, the Modi government’s approach to running India has mirrored the tactics of a strong business entrepreneur, focusing on growth, innovation, and efficiency. India’s investment environment is bolstered by its attractive demography and a steady growth trajectory, with the country drawing over US$919.63 billion in total Foreign Direct Investment (FDI) from April 2000 to March 2023. Despite global uncertainties and a slight drop in FDI inflows in FY 2023 (US$70.97 billion compared to US$84.83 billion in FY 2022), India remains a promising destination for foreign investment as India’s policy environment has been meticulously sculpted to appeal to global investors.. Significant progress has been made in infrastructure development, particularly in roads, highways, railways, and aviation, underscoring the government’s dedication to modernizing the nation’s physical framework and bolstering the economy​​. Central to the government’s strategy has been the pursuit of a $5 trillion economy, driven by initiatives like Make in India, Digital India, and the Goods and Services Tax (GST). In 2023, several top US companies announced significant investments in India. Google revealed a massive US$ 10 billion investment in India’s digitization fund, aiming to boost the country’s digital and fintech potential. Amazon has plans to more than double its investment by adding an additional US$ 15 billion over the next seven years. These investments underscore the growing confidence of American firms in India’s economic prospects and digital transformation and presents immense opportunities for investors.

4. India’s Thriving Startup Ecosystem

India’s startup ecosystem, is home to some remarkable success stories that continue to inspire confidence in India. In terms of employment, young Indians are now leaning towards startup jobs over traditional corporate jobs. Over the last decade, the 65,000 startups in India have created approximately 6.6 lakh direct jobs and more than 34.1 lakh indirect jobs. Industries that saw the most significant job creation include BFSI (Banking, Financial Services, and Insurance), EdTech, Retail and Retail Tech, FoodTech, SCM & Logistics, and Mobility. The growth of Internet commerce, freelancers, and service industries has also contributed to the recovery of indirect jobs​​. Companies like Ola, Zerodha, Zoho, Freshworks, and Paytm have emerged as icons of innovation and entrepreneurial spirit. The diversity of the Indian startups are spread across 56 different industries, with notable representation in sectors such as healthcare and life sciences (9%), education (7%), professional and commercial services (5%), agriculture (4%), and food and beverages (4%)​​. This variety indicates that while technology remains a dominant sector, non-tech areas are also making significant strides, contributing to the overall growth and dynamism of India’s startup landscape. These successes underscore the potential of the Indian startup ecosystem to produce world-class companies and offer lucrative opportunities for investors looking for dynamic markets with high growth potential.

5. The Rising Consumer Market

image credit: dalle

Traditionally, the Indian consumer has been known for a savings-oriented mindset, but this trend is shifting, especially among the younger generation who are increasingly spending on digital solutions and on experiences. Big part of this change is underpinned by India’s digital revolution, with 692 million internet users (thanks to Jio) and over 1 billion mobile connections as of early 2023. In January 2023 alone, BHIM UPI recorded a staggering 803.6 crore digital payment transactions valued at ₹12.98 lakh crore. This explosive growth in digital transactions is a testament to the country’s rapidly evolving digital landscape and its enormous potential in sectors like e-commerce, fintech, and consumer services​​. The shift towards a digital-first economy, coupled with India’s large and young population, makes the country a lucrative market for a variety of digital services and products. This trend is not only a reflection of India’s technological advancement but also signifies a major shift in consumer behavior , with an increasing preference for digital solutions in everyday transactions and interactions. This digital transformation underscores the vast potential of India’s consumer market, ripe for investments and innovation focused on Indian consumer.

As India’s growth story unfolds, NRIs have a remarkable opportunity to not only diversify their investment portfolio by investing in India but also actively participate in India’s burgeoning economic narrative. Your unique understanding of Indian culture and consumer behavior, coupled with insights from the Western trends, provides a distinct advantage. Indian firms are increasingly making it simpler for NRIs to invest in diverse avenues like the stock market, mutual funds, real estate, and startups. Moreover, the process of repatriating funds back to countries like the US, UK and 80 other countries has been streamlined, along with taxation policies designed to avoid redundancy due to NRI status. This investment-friendly environment offers NRIs a chance to capitalize on India’s potential and become part of you homeland’s success story. If you are interested, stay tuned for a detailed follow-up article that will dive deeper into how NRIs can effectively invest and manage their finances in India’s dynamic market.