India Is A Leading Beacon Of Progress And Possibility In An Evolving Multipolar World

India's economy has regularly outpaced its counterparts in recent years while experiencing a fast shift. The country's gross domestic product is anticipated to rise at a world-beating pace of 6.1 per cent in 2022-23, potentially becoming a USD 10 trillion economy by 2030.  Anurag Bansal, Managing Director at 13D Research & Strategy, shares his fundamental conviction that India is uniquely positioned to sustain the world-beating growth rate and emerge as the next big hub of trillion-dollar companies.

Anurag summarizes that India’s exceptional growth trajectory demonstrates the Indian government’s dedication to encouraging economic development through focused fiscal, digital, and physical infrastructure reforms and social inclusion initiatives.

Source: IMF

Anurag notes that evident flaws in the unipolar world indicate that the global order is evolving. China is challenging America's supremacy based on its supply chain dominance and technical advancements. According to the conclusions of new research by the Australian Strategic Policy Institute, China already has the worldwide lead in 37 of 44 essential technologies and is near to forming monopolies in eight. In contrast, governments and companies worldwide are concerned about China's ability to weaponize the supply chain. Consequently, there is a discernible wave of self-reliance and a requirement to rearrange supply networks.

Anurag claims that India is arguably the only nation that can offer the manufacturing size and talent to be considered the leading alternative in the China+1 strategy and stands out as a sign of stability in a volatile global environment. Several interconnected factors that make India appealing as a preferred investment location include its world-beating economic growth, sizable consumer base, young and skilled population, rising disposable income, expanding middle class, quick urbanization, digitization, and a balanced foreign policy.

Anurag outlines the key characteristics which make India one of the best investment opportunities for the years to come:
India is a demographic goldmine. With a population of 1.4 billion, India will become the world's most populous country this year. The country's young and vigorous demographic profile, with a median age of 28.4 years, distinguishes it from the industrialized world's aging population. Approximately 67 per cent of India's population is of working age. This figure is predicted to climb to one billion by 2030, accounting for a quarter of the additional global workforce over the following decade. Anurag highlights that this demographic dividend, along with a yearly addition of 2.14 million English-speaking STEM graduates (47 per cent of whom are women), puts India as a global talent center, poised to serve the international workforce with different skill sets.

Anurag observes that India is on the verge of becoming a digital superpower with a thriving startup environment. Because of its enormous and primarily rural population, digitalization is vital for India, and the country has made significant progress. India has one of the world's largest internet-connected populations and the greatest data traffic per person. Growing broadband penetration, technical improvements, cheap data use prices, and the government's emphasis on constructing digital infrastructure have contributed to India's fast digitalization. The young population fast embracing and exploiting digital technology has fueled the expansion of the startup environment and entrepreneurship. 

A platform for enabling transactions and offering products and services has been built by the Digital India Stack, a set of open Application Programming Interfaces (APIs). The Aadhaar layer, which provides online biometric-based digital identities, and the Unified Payments Interface (UPI), which enables smooth digital payments, have both played essential roles in formalizing India's digital economy. 

The UPI interface has aided financial inclusion by bringing small enterprises and unbanked individuals into the formal economy and providing them with loans, underlines Anurag. It has also established a framework for private firms to innovate and build new business models, such as fintech and e-commerce solutions. Paytm, PhonePe, and Google Pay have tremendously increased usage, making financial services more accessible to millions of unbanked and underbanked residents.

Anurag adds that India's growth as a worldwide center for global technology and innovation will stimulate innovation in the country. India is transitioning from the world's top IT and BPO services supplier to a technology and innovation powerhouse. At USD 254.5 billion in 2021-22, India's IT and BPO services exports account for more than 60 per cent of overall service exports. 

Global firms, employing over 5 million people, are exploiting Indian technological skills through competence centers throughout the country. As India's competence in more sophisticated and digital services increases, so will the country's IT services sector.

According to Anurag, India's potential as a technological hub is enhanced by the possibility of becoming the world's robotics and AI capital for use-case development, with a hybrid workforce of engineers and robots. The country could become a platform and product powerhouse with its burgeoning B2B Software as a Service (SaaS) environment. The effects are already apparent, as the emergence of the first billion-dollar product company from India and the presence of more than 20 Indian B2B SaaS unicorns demonstrate, notes E&Y.

Over 1,500 multinational firms have established Global Capability Centers (GCCs) in India, employing over 1.3 million workers. India has been a vital source of high-quality talent and cutting-edge innovation, accounting for more than 45 percent of the world's GCCs outside their home nations.

Over the next 25 years, India's per capita GDP is anticipated to increase six times, fueling a historic consumer boom. According to Brookings Institution, India's urban consumer growth is more than 6x greater than the worldwide population, nearly twice as great as the global consumer class, and even more than that of the rest of Asia. Demand is fueled by changes in consumer habits toward aspirational goods and services. The dramatic rise in credit-driven consumption, demonstrated by the near quadrupling of credit card debt to $18.5 billion and the doubling of personal loan disbursements by scheduled commercial banks, reflects the shift in consumer behavior and the enormous opportunity for businesses to benefit from this trend. 

Anurag emphasizes that urbanization and infrastructural improvement would pave the road for economic expansion. India's urban population is anticipated to increase from 34 per cent in 2021 to 40 per cent in 2030. Numerous investment possibilities have arisen in housing, transportation, and utilities due to the government's emphasis on infrastructure development. With an estimated USD 1.4 trillion investment, the ambitious National Infrastructure Pipeline (NIP) project seeks to improve the nation's infrastructure in various areas, including energy, transportation, urban development, and trains.

The Indian government has actively made policies to take advantage of the China+1 strategy. According to Anurag, the Production Linked Incentives (PLI) program is a game-changer. In 14 industries, including labor-intensive ones like textiles and food processing as well as high-value and emerging ones like semiconductors, electric vehicles, solar panels, advanced chemical cell batteries, green hydrogen, and drones, the PLI scheme has already attracted investment commitments totaling Rs 2.5 trillion (USD 31.3 billion). 

A notable example of a sunrise sector is India's electric vehicle (EV) ecosystem, which is anticipated to surpass 100 million vehicles by 2030. The Indian government has committed USD 14.5 billion to develop charging infrastructure and supply and demand-side incentives. Due to the private investments attracted by this pledge, India now has a rare potential to become a world leader in the production of electric vehicles. 

Anurag emphasizes that India's tax changes have effectively reduced the cash economy and supported capital spending, both of which would boost the nation's growth and international standing. Implementing the GST and lowering corporate tax rates have increased the number of enterprises subject to taxation, streamlined the tax code, and decreased tax evasion. Due to this, tax revenue has increased by 34 per cent, exceeding government projections by USD 61.2 billion and nominal GDP growth by more than double. 

Because of the increased tax revenues, the government has been able to invest more in infrastructure and promote economic growth. Compared to barely 7 per cent over the previous four years, the government has raised capital spending at a CAGR of 30 per cent in just four years.

Anurag points out that maintaining a balanced stance has been a critical component of India's foreign policy, which is crucial to increase economic progress and protecting the nation's strategic interests. India has navigated through intricate international connections effectively by interacting with many world powers and coordinating its political and economic goals with those of its allies. 

The nation upholds solid ties with Eastern superpowers like Russia and China and Western superpowers like the United States and the European Union. This delicate juggling act ensures that India keeps its appeal as a location for global investment while preserving its strategic independence. Important alliances like the Quadrilateral Security Dialogue (Quad) and the defense cooperation between India and Russia help India retain a strong and thriving economy. 

For instance, India has continued to buy Russian military hardware like the S-400 air defense system in defiance of impending US penalties. Like China, India has discovered common ground on global problems like trade and climate change despite border tensions and rivalry in different industries. 

The stock market is growing due to the financialization of family savings. Another factor influencing India's promising investment environment is the continuous conversion of household savings into financial assets like stocks and shares. Over the following ten years, domestic equity savings are anticipated to increase by USD 525 billion, according to Morgan Stanley. 

According to Anurag, the Indian government is boosting public exposure to stocks and fostering a free market to spur the stock market's expansion and provide long-term advantages. Additionally, initiatives to improve investor education and awareness have raised financial literacy, resulting in more robust stock market participation and a more experienced investor population. 

To make investing more accessible and inexpensive for regular and institutional investors, the Indian government and market authorities have repeatedly attempted to reduce transaction costs. The Gujarat International Finance Tec-City (GIFT) targets global banks and financial institutions. The financial center offers a complete ten-year tax vacation, and several big institutions, including HSBC, Deutsche Bank, and JP Morgan, have already started doing business there.

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**Disclaimer: Views expressed here are personal and do not represent any institution or entity Anurag is associated with.