Is It The Right Time To Invest In India?

After becoming the most powerful market controller in Asia, India is most likely to make inroads for investors around the world after the COVID-19 fallout. While we’ve been making a gloomy prognosis about unpredictability taking over the world, the role of India in mobilizing international cooperation in the past few years has added heft to arguments about investors in post-pandemic India. Let’s take a deeper look.

Besides the pandemic, the challenges presented by the US-China trade war in the global financial markets have also unfolded debates around India’s economic prospects. Although the COVID-19 situation has somewhat subsided in China, the country is likely to face a de-risking backlash from most global companies in the near future, which provides India plenty of opportunities from foreign lands, mainly from the US. The US and other powerful economies have already gained a strong foothold in the Indian consumer market in the last few years. In fact, some of the world’s top companies like Apple, Facebook, and Walmart have already announced billion-dollar investments in India. It is astonishing to see how some of these announcements have been made during the pandemic, which is evidently the toughest of all times in the global financial history.

Billion Dollar investments in the Indian consumer marketplace

Electronics and technology giant, Apple Inc, recently planned to move almost a fifth of its production capacity from China to India. According to a report by the International Data Corporation (IDC) earlier this month, Apple took 62.7% of the market share in India’s premium smartphone market in the last quarter which was primarily driven by the shipments of the iPhone 11 series. The company has already benefited from Indian markets in recent times and is now all set to make India its next big production hub which is a huge victory for India. To scale up its local manufacturing revenue, Apple will produce up to $40 billion worth of smartphones with the help of contractors in India. According to experts, if this happens, Apple could become India’s largest exporter. Its success in one of the biggest smartphone markets also led the company to confirm India’s first Apple retail store in 2021.

Speaking of e-commerce expansion, Walmart- the world’s largest retailer – acquired a 77% stake in Flipkart, a key e-commerce player in India for $16 billion in 2018. This was apparently the country’s largest acquisition and also the world’s biggest purchase of an e-commerce company. With this major acquisition, Walmart stepped up its business in Asia by targeting one of the world’s fastest-growing economies. The global retail giant also has a rapid growth plan for India with more stores on the horizon.

India has certainly surpassed other emerging economies in technology and e-commerce, but it has also witnessed enormous success in two other industries- telecom and social media. The Communication Service Providers have played a crucial role in driving connections during this pandemic and social media platforms have provided a medium to communicate at a distance which has become our topmost priority. Taking cognizance of this, Facebook, the largest social media platform in the world, recently invested $5.7 billion into Jio Platforms in India. Jio is a subsidiary of Reliance industries and is a major provider of cellular and internet services in the country. JioMart, a collective initiative by Jio and Facebook, will enable people to connect with businesses and shops via Whatsapp, Facebook’s global messaging service. 

Amid the brewing trade conflicts between the US and China, India is also expecting to win over US companies associated with healthcare products and devices. An Indian official also revealed that India is currently in talks with Medtronic Plc and Abbott Laboratories on relocating their units to India and the government in April also reached out to 1000 plus companies in the US. Speaking of helping the nation in times of distress and acute shortage, India recently lifted a ban partially for exporting hydroxychloroquine and paracetamol following a request from President Trump. Besides fulfilling this request, the country also approved investments amounting to $1.7 billion to boost local manufacturing of drug intermediates and active pharmaceutical ingredients which will cut India’s dependence on imports from China. This in turn will attract global investments in India’s healthcare industry in the coming months.

Other than strategic global investments in India, the economic role that India plays in the post-pandemic world will be determined by how the country deals with the crisis now. India has been time and again commended by the World Health Organisation for its timely and tough decision to announce a nationwide lockdown at a very nascent stage. WHO director J Ryan had even praised India’s tremendous capacity in fighting the pandemic saying that it had earlier led the global battle against two epidemics- smallpox and polio. PM Modi and several researchers have also proven how the situation in India today would have been completely different had the nation not adopted a holistic and integrated approach for containing the spread of COVID-19.

India – a safe harbor for global investors

Due to a global financial setback, this pandemic has affected India’s GDP, but we are also anticipating the biggest hit in global investments that will cover up for the insolvency of small businesses and a collapse in profit due to the extended lockdown. India’s discretionary spending has also come to a temporary halt due to the ongoing crisis, but the country is also preparing to make up for the losses with phased exit strategies and strict physical distancing norms. Besides being the world’s largest democracy, the diverse land also attracts millions of tourists every year. Hence, the aviation and hotel industry will also restore to normalcy gradually with less to no travel restrictions. Despite the challenges posed by COVID-19 and the world’s longest nationwide lockdown, the billion-dollar companies who have continued to invest in India demonstrate that global interest in the Indian consumer market is too strong to ignore at the moment.

While many businesses have been hurt by the fallout of COVID-19 pandemic, companies globally are moving forward with strategic investments in India, which sends a signal for retail investors to consider investing in this South Asian nation to reap handsome rewards in the future.

The best way forward is to invest in India using an exchange-traded fund as this provides a diversified exposure to the country while minimizing the costs associated with investing internationally.

**If you enjoyed this article, please consider signing-up for Beat Billions by providing your e-mail address in the box above. You will then receive a SINGLE daily e-mail with all the articles published on Beat Billions.

**Visit us again to see what we’ve got to offer small-cap investors. We write multiple times a week.

Pratha Arora

Pratha is a content writer with 4 years of experience in writing content related to development, economics, and brands. She has developed a keen interest in economics and investing and is driven by the passion to unlock macro-economic developments that could make a difference in the investment decision-making process of investors.

Next Post

Genius Brands: Where There’s Smoke, There’s Fire

Sun Jul 5 , 2020
Genius Brands International (GNUS) has a history of buildup which results in the sky-rocketing of the share price based on speculation of better performance. Nonetheless, the company has a feeble track record of delivering on their promises which is next-to-never-reflected in their financial statements. GNUS is a true reflection of […]
GNUS stock

You May Like