HOW GLOBAL FIRMS ARE LOOKING AT THE INDIAN INVESTMENT STORY

A strengthening USD pushed global Investors away from Emerging markets and India couldn’t avoid this wave. However, the structural Indian growth story is still intact which attracted foreign direct investment (FDIs) coming into India in more numbers.

India started this year on a high with eight new startups making it to the list of Unicorn companies in the first 40 days of the year.

According to a Price Waterhouse Cooper report, over 50 Indian startups may be part of the unicorn club by the end of 2022. This year’s Budget marked positive signs for the Indian startup ecosystem, doubling the number of unicorns in 2021.

A Unicorn firm is a company with a valuation of over $1 billion.

Total 83 unicorns reached $1 billion valuations in 2021 alone, giving a boost to new-age entrepreneurs at a time when the world is grappling with the after-effects of the pandemic.

Booming economy, Booming startup

Since the pandemic started, there has been a big gap between FPI and FDI trends. Almost 100 bn USD was out from the Indian capital markets in the last 2 and half years but interestingly, FDI inflow into India broke records every year.

A strengthening USD pushed global Investors away from Emerging markets and India couldn’t avoid this wave. However, the structural Indian growth story is still intact which attracted foreign direct investment (FDIs) coming into India in more numbers.

It is not surprising that global money flows are interested in a country which has the potential to become the third largest economy in the coming years.

According to a Centre for Economic Research and Business (CERB) report, it is predicted that the rate at which India’s economy is slated to grow, the country will grab the sixth position from France in the coming years and become the third largest economy in 2031.

India is even showing stability in terms of inflation, growth rates etc. compared to the top 10 global economies. In fact, I believe, India should now be compared with OECD countries.

A booming economy, booming startup ecosystem which can again attract more FDIs into the country.

Challenges and perspective:

Yes, there are challenges that the Indian financial market should overcome in order to become a world-class market for global investors.

Many investors have shown reluctance on making investments or starting a business owing to uncertainties stemming from a complicated market environment, older regulations among others.

Especially within the financial industry, there are not many companies that can talk of successful stories of foreign investment which can attract other investors to India or make the Indian private equity segment become the top tier market in the world.

Given all the bottlenecks like weak infrastructure, smaller portion of manufacturing industries, how long can India enjoy a higher growth rate is now becoming a topic of discussion among global players.

However, India has three assets going in its favour — a)the significant domestic demand for supplies and services, b)the Government’s drive to increase manufacturing and c)a demographic edge that is distinct and beneficial.

The Indian government has developed a strategic focus on export-led growth, spurring the economy.

Its production-linked incentive scheme for sectors like electronics, manufacturing, food, IT, battery, automobiles, and steel, has gained traction in recent times. All of these efforts aim for the structural progress of the Indian economy.

Tech shows the way forward

India is at the crossroads of phenomenal opportunity. With world-level human resources in the IT sector, along with steady and balanced reforms, I do hope India finally crosses the road and goes on to the next stage.

It should be achievable when there is open ground for innovation and advancements in technology, which will prepare the country for the future as far as digitisation is concerned.

The market should be competitive, and this coupled with the adoption of new services across sectors would compel companies to increase their offerings in the digital space.

India’s commitment toward digital sovereignty being strengthened further by the adoption of technological solutions and innovations should further lead to prowess in manufacturing, and empowerment of the common man and the youth.

Since the time I came to settle down in India, I have observed, that this country is willing to collaborate with allies in common goals of security and prosperity, powered by the enterprise and creativity of the new generation.

So, I believe, challenges on India are increasingly being converted into opportunities.

Deluge of investors

The last few years have seen an increase in investors for Indian companies and startups. A deluge in initial public offerings has boded well for the economy despite challenges.

The huge spurt in e-commerce has pushed many consumers into loyalty toward companies and brands.

Global venture capital investment into digital shopping has more than doubled in 2021 following a significant consumer shift to e-commerce platforms during the pandemic.

The year 2021 saw India rank fourth globally in 2020 jumping to the third spot for venture capitalist technology sector investments. All in all, Indian technology sector investments tripled from $14.9 billion in 2020 to $44.6 billion in 2021.

The United Kingdom ranked fourth with $39.8 billion, with only London being ahead of Bengaluru as the world’s top tech hub with $25.5 billion.

There is of course a huge demand for Indian IT professionals in the US and EU with Indians being top of the socioeconomic hierarchy who are flooding companies across Silicon Valley.

In a survey of global CEOs, India surpassed Japan as the fifth most attractive destination for investors. India’s economic growth story is slated to get phenomenally interesting with increasing global investments in the coming times.

However, for sustainable growth, until India becomes a developed market, we require more changes in the heart of investors with increasing faith in the Indian growth story.

-       Auto ET