Unleashing Potential: A Comprehensive Guide to Investing in India's Booming Economy

Investing in India from Australia presents a promising opportunity for savvy investors looking to diversify their portfolios and capitalise on emerging markets. 

As one of the fastest-growing economies in the world, India offers robust growth prospects, driven by rapid industrialisation, a burgeoning tech sector, and a dynamic consumer market. 

Moreover, global shifts in supply chains away from China are positioning India as a key player on the global stage. 

This guide explores why India is an attractive investment destination, the best sectors to consider, and the practical steps Australian investors need to take to enter the Indian market confidently.

Why Choose India for Your Next Investment?

Once considered a sluggish and underperforming economy, India’s economy is now one of the fastest-growing in the world. Despite global economic challenges, India’s experienced a GBP growth rate of 7.8% in 2023, compared to the United States (2.5%) and Australia (2.1%). 

With a population of over 1.3 billion, India boasts a vast consumer market that is increasingly affluent and aspirational. This expanding middle class, coupled with a young and tech-savvy workforce, has fueled demand for a wide range of products and services, creating lucrative opportunities across various sectors.

One of the key drivers of India’s economic growth has been the technology and services industries. The country has emerged as a global hub for information technology (IT) services, software development, and business process outsourcing (BPO). Major multinational corporations such as Microsoft, Apple, and IBM have established operations in India, attracted by the availability of skilled labour and cost-effective solutions.

Moreover, India’s manufacturing sector has gained significant momentum in recent years. Initiatives such as “Make in India” have aimed to position the country as a global manufacturing hub ​​by encouraging both domestic and foreign companies to set up manufacturing units.

With a vast domestic market, a skilled workforce, and a pro-business government, India presents a compelling investment opportunity for Australian investors seeking to diversify their portfolios and tap into the potential of an emerging economic powerhouse.

Demographic Advantages

One of India’s most significant advantages lies in its demographic profile, which presents a unique opportunity for sustained economic growth and investment returns. With a median age of just 28.7 years, India boasts a young and rapidly growing population, providing a substantial demographic dividend.

This demographic dividend refers to the economic growth potential that arises from having a large working-age population relative to the dependent population (children and elderly). India’s youthful workforce not only contributes to increased productivity and economic output but also drives domestic consumption and fuels demand across various sectors.

As incomes rise and living standards improve, the middle class is expanding rapidly, creating a burgeoning consumer market for goods and services. This trend has attracted significant investment from both domestic and international companies seeking to capitalise on India’s growing purchasing power.

Additionally, India’s demographic profile has contributed to a skilled and tech-savvy workforce. The country has a large pool of educated and talented individuals, particularly in fields such as engineering, technology, and healthcare. This human capital has been a driving force behind India’s success in sectors like information technology, biotechnology, and pharmaceuticals, making it an attractive destination for investment in these industries.

Shifting Global Supply Chains

In recent years, a significant shift has been observed in global supply chains, with many developed economies, including the United States, actively seeking to reduce their reliance on China for manufacturing and sourcing needs. This strategic move has been driven by a combination of factors, including geopolitical tensions, trade disputes, and the vulnerabilities exposed by the COVID-19 pandemic.

The disruptions caused by the pandemic highlighted the risks associated with an over-reliance on a single country or region for critical supply chains. As a result, companies and governments alike have recognised the importance of diversifying their supply chains and building resilience to mitigate future shocks.

India has emerged as a prime beneficiary of this shift, positioning itself as a favorable alternative to China for global manufacturing and sourcing operations. 

Several factors contribute to India’s attractiveness in this regard:

  1. Competitive labour costs: India offers a skilled and cost-effective labour force, making it an attractive destination for labour-intensive industries seeking to optimise their production costs.
  2. Domestic market potential: With a population of over 1.3 billion and a rapidly growing middle class, India presents a vast domestic market for companies looking to establish a local presence and cater to the increasing consumer demand.
  3. Government initiatives: The Indian government has implemented various policies and initiatives, such as “Make in India” and the Production Linked Incentive (PLI) scheme, to attract foreign direct investment (FDI) and encourage domestic manufacturing across sectors like electronics, pharmaceuticals, and automobiles.
  4. Improving infrastructure: Significant investments have been made in developing India’s infrastructure, including transportation networks, power grids, and industrial corridors, to support the growth of manufacturing and logistics operations.

As companies seek to diversify their supply chains and reduce their dependence on China, India’s favourable conditions, including its skilled workforce, domestic market potential, and government support, make it an attractive destination for investment and manufacturing operations.

By capitalising on this shift in global supply chains, Australian investors can potentially benefit from the growth opportunities presented by India’s expanding manufacturing and logistics sectors, as well as the increased demand for goods and services catering to the country’s burgeoning consumer market.

How to take advantage of this opportunity

If you’re looking to invest in India but aren’t sure which company or ETF to invest in, the Future Shapers portfolio has our highest exposure to Indian companies that are at the forefront of shaping tomorrow’s landscape.

It allows you to invest early in transformative industries, companies and economies. 

This portfolio provides exposure to up to 200 companies and combines in-depth research, forward-thinking analysis, and continual risk mitigation. 

We constantly stay informed about emerging trends, technologies, and industry developments to ensure that this portfolio is perfectly balanced to succeed.

Indian companies our portfolio is invested in

As part of our strategic investment approach, we have carefully selected a portfolio of Indian companies that align with our investment philosophy and offer promising growth prospects. 

Indian companies with exposure in the Future Shapers portfolio:

Adani Enterprises Ltd is the flagship company of the Adani Group, with a diversified business portfolio spanning sectors such as resources, logistics, agribusiness, and energy.

A significant appreciation in their share price has cemented the company’s status as a powerhouse in India’s rapidly evolving business landscape.

Adani Enterprises Ltd, the flagship company of the Adani Group, presents an attractive investment opportunity due to its diversified business model spanning resources, logistics, agribusiness, and energy sectors. 

This diversification provides a hedge against industry-specific risks, ensuring a more stable revenue stream and growth potential.

Furthermore, the company’s strong focus on infrastructure development aligns with India’s ambitious plans for infrastructure upgrades and economic growth, positioning it to benefit from increased government spending and private investments in this sector. 

Adani Enterprises has also made significant investments in renewable energy projects, including solar and wind power generation, which hold promising growth prospects as India transitions towards a more sustainable energy mix. 

Additionally, the company’s active pursuit of international expansion, particularly in the mining and resources sector, diversifies its revenue streams and provides access to new markets, further enhancing its investment appeal.

Adani Green Energy Ltd, a leading renewable energy company in India, is well-positioned to capitalise on the country’s commitment to increasing its renewable energy capacity, presenting a significant growth opportunity. 

Their share price has grown over 4,700% in the last 5 years, reflecting the company’s remarkable growth trajectory and investor confidence in its prospects.

The company’s focus on solar and wind power generation aligns with the Indian government’s implementation of various incentives and policies to promote renewable energy adoption, such as tax credits, subsidies, and renewable purchase obligations. 

These favourable policies support the growth of companies like Adani Green Energy. Moreover, the company’s investments in cutting-edge renewable energy technologies, including solar tracking systems and efficient wind turbines, demonstrate its commitment to innovation, which can enhance its competitiveness and profitability. 

As environmental concerns and the demand for clean energy continue to rise globally, Adani Green Energy’s focus on sustainable energy solutions aligns with global trends, making it an attractive investment for environmentally conscious investors.

Adani Power Ltd, a prominent player in the Indian power generation sector, offers a compelling investment opportunity with its diverse portfolio of thermal and renewable energy assets. 

This diversified energy mix provides a hedge against fluctuations in fuel prices and regulatory changes affecting specific energy sources. The company has been implementing measures to enhance operational efficiency and reduce costs, which can improve profitability and competitiveness in the power generation market. 

Adani Power also has ambitious expansion plans, including the development of new power plants and the acquisition of existing assets, which can drive future revenue and earnings growth. 

Furthermore, the Indian power sector is ripe for consolidation, and Adani Power’s strong financial position and operational expertise make it well-suited to capitalise on potential acquisition opportunities, further bolstering its growth prospects.

Their share price has grown over 1,400% in the last 5 years, a staggering increase that underscores the company’s strong performance and growth potential in India’s rapidly expanding power sector.

These three companies fall within the asset mix of the GQG Partners Emerging Markets Equity Fund, which has over 30% exposure to India. The Medici Invest Future Shapers portfolio has an allocation of this investment vehicle to gain access to these uniquely positioned opportunities. 

With their strong fundamentals, innovative approaches, and commitment to sustainable practices, the team at GQG Partners believe these companies are well-positioned to deliver long-term value to our portfolio. 

As India continues its trajectory towards becoming a global economic powerhouse, we remain committed to closely monitoring and evaluating our investments, ensuring that they align with our investment objectives and contribute to the overall growth and success of Future Shapers.

How to invest in India

If the Future Shapers portfolio sounds like an investment strategy you’re interested in, you can complete the application process in less than 5 minutes. 

To get started:

Step 1: Click this get started link

Step 2: Create an OpenWealth account 

Step 3: Go to our products tab and select the Future Shapers portfolio. 

Step 4: Enter the amount of money you’d like to invest

Step 5: Choose your account type

Step 6: Answer the onboarding questions – it should take less than 5 minutes

Step 7: Transfer your funds through BPAY or via direct bank transfer

Step 8: You’re good to go! You’ll be able to monitor the performance of your investment portfolio directly through the app or your online portal.

It’s that easy! 

If you have any questions, don’t hesitate to call us on (03) 9637 1608 or via our online contact form.