The Indian economy is one of the
fastest growing in the world,
with GDP growth touching 9.4%
in 2006. The stock market has
grown about 300% from 2002 to
2007, with Private Equity, Mergers
and Acquisitions, Buyouts, and
Venture Capital investments reaching
$7.5 billion in 2006. Supported
by exponential domestic growth,
free and efficient capital markets,
India continues to attract foreign
investments, enabling it to broaden
its competitive advantage in not
only IT but many other industries
as well.
We feel India is a very attractive
destination for investment. Here
are a few reasons why:
India’s
current GDP is around $1 trillion
and with estimated future growth
rates around 8 percent annually,
the GDP is projected to reach
$2 trillion in nine years. Goldman
Sachs believes, if growth continues
at its current pace, India will
be the world’s third-largest
economy by 2050, behind only US
and China.
Analysts
estimate the market for offshore
services will grow to $160 billion
by 2014 from its current $45 billion
base in 2007. India is an off
shoring hub for most Fortune 500
companies and start-ups. It’s
not commonly known that India
is the largest manufacturer of
motorcycles, second-largest maker
of small cars, third largest of
automotive components, and has
quietly become the fourth-largest
producer of pharmaceuticals. It
is also one of the largest exporters
of steel, among the largest consumers
and producers of energy in Asia,
and it has one of the largest
forging facilities in the world.
All of these industries create
opportunities for further investments.
| Efficient Capital Markets |
There
are 9,000 listed companies in
India, making it the market with
the largest number of both small
and midcap public companies globally.
India has the second-largest Mergers
and Acquisitions (M&A) market
in Asia, with $40 billion spent
on such deals in 2006.
India’s capital markets
are market driven and adhere to
the free economic principles of
supply and demand. Such a vigorous
financial structure has precipitated
several success stories for the
foreign and local investment institutions
exemplified by the high rates
of returns via Initial Public
Offerings (IPO) and M&A in
the country. The market driven
valuations, coupled with multiple
exit strategies, has instilled
a confidence in the financial
system of the country resulting
in an incursion of foreign capital
flow into India.
| Emergence of World Class
Organizations |
Infosys
and Tata Consulting Services (TCS)
in information technology, Bharti
and Reliance Communications
in telecom, Bharat Forge
in manufacturing, Tata Steel
and Tata Motors in steel
and small-car markets respectively,
Bajaj Auto and Hero Honda
in two-wheelers, Ranbaxy
in pharmaceuticals, and Reliance
Industries, considered to
be the GE of India, represent
some companies from diverse segments
that have gone public and grown
into global leaders, proving that
investments in India can indeed
gain international recognition.
| Demographics and Human
Capital |
There
is an enormous availability of
well-educated human capital. Of
India's 1.1 billion people, half
are under 25 and 65% are of working
age. There is a domestic middle
class of over 100 million household
whose disposable income, and hence
purchasing power is growing rapidly.
There is a steady incursion of
talent pool, a necessary prerequisite
for growing businesses. There
are 2.4 million English-speaking
students graduating annually from
Indian educational institutions,
making India an attractive domicile
for sourcing talent to develop
products and services. You can
get high quality management, engineers,
scientists, and business people
in India who can serve global
markets.
| An Ecosystem for Developing
and Protecting Intellectual
Property |
India
has developed a renowned ecosystem
for developing intellectual-capital
based businesses as evidenced
by the stupendous achievements
chronicled worldwide in the past
few years. The businesses employ
western style management as well
as follow general guidelines of
the Anglo-Saxon type ‘Common
Law’ accounting and
legal system. The existence of
a strong and familiar legal system
that protects intellectual property
and honors contracts provides
confidence and transparency amongst
international and domestic business
communities who wish to exploit
the competitive advantages of
India.
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