India - A largely overlooked investment opportunity

India - A largely overlooked investment opportunity


India is emerging as one of the world's most dynamic investment opportunities. With a rapidly expanding economy, a youthful population, and significant structural reforms, India is on track to surpass Germany this year, becoming the world's fourth-largest economy. Despite this, many global investors remain underexposed to its potential, making now an opportune moment to consider India as a long-term investment destination.

A growth story rivalling China's boom

India's economic rise is reminiscent of China's meteoric growth in the 1980s and 1990s. Over the past two decades, India has consistently delivered strong GDP growth, averaging around 6-7% per year. This rapid expansion has helped lift over 400 million people out of poverty, a feat comparable to China's economic transformation. Unlike China's state-driven model, however, India's growth is primarily fuelled by domestic consumption, a thriving services sector, and a booming digital economy, providing resilience against global downturns.

Key drivers of India's growth

  1. Demographics and a growing middle class
    India boasts a median age of just 28, compared to 38 in China and 48 in Japan. With a rising working-age population and increasing urbanization, the country is set to benefit from strong consumer demand and productivity gains for decades to come.
  2. A thriving technology and innovation hub
    India is home to some of the world's most successful tech start-ups, and its IT services sector remains a global leader. The government's push for digitalization, including initiatives like UPI (Unified Payments Interface), has further accelerated financial inclusion and technological adoption.
  3. Manufacturing and infrastructure investments
    As companies seek alternatives to China for manufacturing, India is positioning itself as a key beneficiary. Government initiatives such as 'Make in India' and production-linked incentives (PLIs) have attracted significant foreign investment into manufacturing, particularly in sectors like electronics, automotive, and pharmaceuticals.
  4. Pro-business reforms
    India has undertaken key structural reforms, including tax simplification (GST), improvements in ease of doing business, and labour market reforms. The government continues to invest heavily in infrastructure, energy, and transportation, enhancing long-term economic prospects.

Why now could be the right time to invest

Recent pullbacks in Indian equities have created a potential buying opportunity for long-term investors. While valuations had surged in recent years due to strong earnings growth and investor optimism, recent corrections may offer attractive entry points. India's market remains volatile in the short term, but its long-term trajectory remains compelling.

One way to gain exposure to this dynamic market is through the Jupiter India Fund, which provides investors with access to some of the most promising companies in the Indian economy.

Risks and long-term perspective
As with any investment, India is not without risks. Political uncertainty, regulatory changes, and global economic headwinds can impact market sentiment. Currency fluctuations and inflationary pressures are also factors to consider. However, for investors with a long-term horizon of at least five years, India's growth potential presents a compelling case for portfolio diversification.

Conclusion

India is often overlooked compared to other emerging markets, but its economic trajectory, young population, and structural reforms make it an attractive long-term investment opportunity. As it continues to rise as a global economic powerhouse, now may be the time for investors to take a closer look at India's potential.

Why wait? Invest online today.

Posted by Elson Associates on March 17th, 2025

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