India is becoming an increasingly attractive country to invest in. The country’s returns are very high. However, the country is developing less rapidly in the economic field than its neighbor China. At the same time, the country still offers many opportunities. Investing directly on the Indian stock exchange is not possible. It is possible to invest money in funds that then invest directly in India. India is becoming an increasingly attractive country for Western investors. The stock markets in India showed a growth of more than fifty percent in 2010. This puts it among the top global stock markets. The increased attention to India fits a pattern. Together with Brazil, Russia and China, India is also referred to as the BRIC countries. These are countries that are slowly developing from a disadvantaged position into an economic superpower. This also means that there is a lot of money to be made for investors. There is still some time to go before India reaches that point.
Investing in India
For example, India has so far developed much less quickly than a country like China. At the same time, India does have many advantages that it could better exploit. India, for example, has an ideal population pyramid. There are many young people. This means that there is a lot of labor and that in the short term much fewer costs need to be incurred with regard to the pension system. Another advantage is that the average level of education in India is also rising rapidly. This means that not only can Western companies get cheap labor done in India, but jobs are also moved to India that require some development.
Economic Conditions India
A stable middle class is slowly developing in India. The most opportunities are for companies that work for sectors such as insurers, banks, telephone companies and retailers. A disadvantage of India at the moment is that the infrastructure is very chaotic. The government of India is trying to change that quickly, but the reality is that it is going a lot slower than India would like. India has 1.1 billion inhabitants and is therefore an interesting market. The government of India is trying to protect that market as much as possible, but has to give more and more space under international pressure. A consideration if you want to invest directly in India could be to do this together with an Indian trading partner. This person knows the ins and outs and will probably face far fewer obstacles from the Indian government.
Investing in the Indian Stock Exchange
The stock market in India is very erratic. Prices can rise quickly and therefore also fall quickly. Someone who invests in India must therefore really do so for the long term and not be fooled too quickly and panic if prices suddenly start to fall. The long-term returns have been extremely good so far. It is not possible for most Dutch people to trade directly on the Indian stock exchange. Instead, investments must be made in funds, which in turn invest in the Indian stock exchange and/or companies. The funds that had the highest returns in recent years were JPMorgan India, Fidelity India Focus Fund and HSBC Indian Equity.