Under current Prime Minister Narendra Modi, who came to power in May 2014, India’s economy has moved to become more pro-business and economy-focused, Mirae Asset Global Investments (Mirae) said.
The asset manager noted the Mr Modi's ‘Make in India’ initiative that aims to increase the GDP contribution made by the manufacturing sector from 16 per cent to 25 per cent by 2022.
“A main priority of the initiative is to attract and increase foreign investments by making a number of bold and unprecedented reforms to rules on foreign direct investments into India,” said Mirae.
“Reforms include opening up new sectors for foreign investment, easing or removing FDI caps on existing sectors, and simplifying the FDI policy to improve the ease of doing business for foreign companies.”
The company noted that India’s large workforce is relatively young, with 62 per cent of the population under 35, a figure expected to increase to 67 per cent by 2020.
“India’s young and growing workforce is favourable for the country’s competitiveness by providing benefits such as a low-cost labour force, improving labour productivity, and an expanding domestic market,” the company said.
Mirae added that increasing wages among the Indian workforce meant an increase in disposable income and consumerism, with both average annual incomes and annual spending in India more than doubling between 2009 and 2015.
“By 2030, India is forecast to have the second largest consumer base, after China, in the world. The sheer scale of this consumer base attests to the vast investment opportunities presented by India’s domestic demand story,” the company said.
In addition to having the second largest consumer base, Mirae said India would “become the world’s third largest economy by 2030” and was likely to have a major role in the global economy in the future.
“The Modi government’s economic and pro-business initiatives have brought confidence back to India and helped position the country as a very attractive market for investors,” Mirae said.
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