By Indonomics Consulting Private Limited – Ritesh Kumar Singh
ICPL specialises in research and advisory with respect to opportunities and risks of doing business in India. It focuses on regulations.
5th largest economy: US$ 3.469 trillion (estimated GDP 2022)
US$ 11.665 trillion at PPP basis
China (US$ 18.32 trillion; US$ 30.07 trillion at PPP basis)
Low per capita yes, but it still has over 50 million aﬄuent households with annual income of US$20000/annum – a major draw for sellers of discretionary goods and services
Growth outlook: 6.5% – 7% compared to China at 3% or ASEAN <6%
A large and steadily growing domestic market of 1.4 billion people and highly diversified industrial base vis-a-vis countries such as Vietnam, that increases India’s relative attractiveness as an investment destination.
That relative attractiveness will further improve if India concludes its FTAs with the EU, GCC, Russia-led Eurasian Region and UK
Relatively cheaper labour plus ample supply of English speaking engineers and other skilled workers
Taxation and subsidies
Competitive corporation tax rates: 26%, and for new manufacturers, it’s 17%
PLI subsidies to promote manufacturing: 4-12% of incremental output
Favourable geopolitical environment when all kinds of countries and corporations wants to cut their China exposure and looking
Top PLI manufacturing sectors to explore: (criteria – domestic sales as well as export sales potential)
Electronics hardware including mobile phones and laptops Pharmaceuticals: APIs and KSM (Key Starting Materials) Food processing, Automotive, White goods
Sectors not covered by PLI yet possess high potential for investors: Infrastructure (roads, ports, airport ports to warehousing), real estate, healthcare, hospitality and tourism, and not only banking and finance, fintech or ecommerce.
Key recommendation: The focus of top investors is on high margin premium products and services – consumed by aﬄuent Indian households.
However, in my view, a much larger and “largely untapped” opportunity exist in “low margin-high volume” products and services starting from homes, hospitals and hotels to bikes, cars, SUVs and white goods.
Major challenge: Navigating India’s opaque and control freak bureaucracy.
For details on PLI: