Next Investors logo grey

Is India an attractive investment destination?

Published 06-JUL-2017 12:22 P.M.


3 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

In the latter half of the twentieth century, liberalisation and massive spending on infrastructure propelled China into an economic powerhouse. Such reforms were a massive boon for the “Middle Kingdom”, leading to rising incomes, incredible economic growth, and strong foreign investment. However, with Chinese growth starting to slow, the golden age of Chinese economic liberalisation may be coming to an end.

So where should investors look if they want exposure to an emerging market that is likely to see significant economic growth in the years ahead?

I believe the answer is India.

India as an investment destination has long been considered a haven of corruption, bureaucracy, and crumbling infrastructure.

This was the predominant narrative for India in the 20th Century, and many investors still believe that India is a high risk region and therefore still apply caution to their investment decisions.

However, the truth is that over the past decade or so, India has had a revolution in technological infrastructure that is poised to propel the country into becoming the world’s next economic powerhouse.

In the early 2000s, India had a massive roadblock preventing their economic success. More than half of its population did not have any form of official identification. Much of the population was born outside the scope of hospitals and government services, and as a result, they did not receive a birth certificate.

This lack of identification has made personal finance tasks like opening a bank account, taking out a loan, or purchasing insurance very difficult. As a result, the lack of ID has hamstrung much of the Indian economy, acting as a roadblock towards the economic success experienced by some of India’s easterly peers. That is, until now.

In 2009, India launched one of the most ambitious technical projects ever undertaken. The project is called Aadhaar, and it aims to rectify the lack of identification by creating a biometric database that is serving as proof of identity for India’s residents.

The project has been a huge success so far, with 1.1 billion people (95 percent of the population) now able to prove their identity under the system. This has huge implications, with hundreds of millions of additional Indians now able to open bank accounts, subscribe to mobile phone plans, and conduct other tasks that are essential in a modernised economy.

India has other massive plans for a digitalised future economy, setting up digital payment system and expanding mobile phone infrastructure. They are even setting-up an automated personal data system that makes our “MyGov” look obsolete; the system, called India Stack, is an all-inclusive record keep system that is designed to ensure the new digital economy functions seamlessly.

Much of these digital reforms are happening quietly, but as a result, India is slowly and increasingly being seen as a fantastic investment destination. Indeed, Indian Prime Minister Narendra Modi last month invited global companies to invest in India, stating that “I invite you all. A nation of 1.2 billion people invites the world. The world’s oldest civilization invites you all,” he said. “The sky is the limit in India.”

General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.