Inside India

As sub-advisor to Canada’s oldest India fund, Aditya Birla Sun Life Asset Management Company Pte. Ltd. was there as India emerged as one of the world’s fast-growing economies. Today, with a vast workforce and rising prosperity, India is just getting started. Our India specialists will continue to target companies that place investors at the centre of this remarkable growth story.

Why invest in India?

Three main drivers of India's growth

Still growing strong

With a young, well-educated workforce of over 750 million people1, prosperity is rising as India is set to become the world’s second-largest economy by 2030 (PPP).2

By 2050, India is anticipated to have the largest workforce in the world with 926 million people3. This will dramatically increase consumption and personal wealth. Moreover, as India grows richer, it will attract foreign capital and increasingly generate opportunities to create wealth.

Working population (age 20-59 years) in 2050

  • India – 926 million 
  • China – 610 million 
  • Europe – 315 million
  • US – 188 million  

Government reforms – opening the door to investors

Since 1991, successive Indian governments have introduced financial reforms, with improved governance, giving investors increased certainty.

Recent reforms, including the introduction of a GST tax and changes to the bankruptcy code, have demonstrated the government’s continuing commitment to improving India’s economic fundamentals and creating a foundation to support the next leg of growth.

Year Government/Coalition led by Government reforms
1991 United Progressive Alliance (UPA) Government/Coalition: Indian National Congress Government initiates Economic Liberalization policies in India
Until 1997 United Progressive Alliance (UPA) Drafted policies for reforms in various sectors
1998-2004 National Democratic Alliance (NDA)

Privatization of under-performing government owned business including hotels, VSNL*, Maruti Suzuki, and airports; Began reduction of taxes

An overall fiscal policy aimed at reducing deficits and debt

Introduced 26% foreign ownership in Insurance sector

2011 United Progressive Alliance (UPA) Introduction of 51% Foreign Direct Investment in retail sector
2014 National Democratic Alliance (NDA) Make in India, Financial Inclusion and Clean India
2015 National Democratic Alliance (NDA)

Allowed FDI* up to 49% in insurance sector, Digital India, StartUP India

2016 National Democratic Alliance (NDA)

Insolvency and Bankruptcy code passed Unique

Unique Identification Authority of India Bill (UIDAI). This was first introduced in 2009

2017 National Democratic Alliance (NDA)

Goods and Services Tax (GST) implemented

2018 National Democratic Alliance (NDA)

Tax rate cut, Divestment of SOE (State Owned Enterprise)

Source: Ministry of Statistics, Government of India. * FDI = Foreign Direct Investment; Vishesh Sanchar Nigam Limited (VSNL) Bhartiya Janta Party (BJP) led coalition (NDA) and Indian National Congress led coalition (UPA).

Growing consumer spending

Consumer spending is expected to grow from $1.5 trillion today to nearly $6 trillion in the next 11 years.3

India is already one of the fastest-growing consumer markets in the world. In fact, over the past seven decades domestic consumption has doubled.4

Fourth largest auto market in 2019

Four million vehicles sold

Domestic air traffic

Fastest growth in the world, at twice the global rate*

$US 22 billion

Spent on overseas tourism in 2018

$US 140 billion

The estimated size of India’s electronic goods industry in 2017

Largest motorcycle market

Twenty million sold†

2nd largest smartphone market

Nearly 124 million phones shipped in 2019

Fourth largest liquefied natural gas importer

India had the third largest incremental growth of any market in 2018

*As at February 2018

† Based on units sold in the fiscal year ended March 2018

4Source: Industry research, ‘The New Indian’ – BCG report, March 2017

Indian equities can help enhance diversification

An allocation to Indian equities can help diversify portfolios with a low correlation to other global asset classes, to help reduce the overall risk of a portfolio.

As the chart below shows, over the long-term when Indian investments were added to a Canadian equity portfolio, it increased the return potential of the portfolio over the period.

Return potential generated by adding Indian equities to a hypothetical Canadian equity portfolio

(Based on % weightings over 10 years)

Source: Morningstar Research Inc.; based on the 10-year periods from December 2009 to December 31 2019. All returns in C$. Canadian equity portfolio represented by the S&P/TSX Composite Index; Indian equities by the MSCI India Index. For illustrative purposes only. Past performance is no guarantee of future results. Actual results would have been different. You cannot invest directly in an index. A Sharpe ratio combines a risk measurement and a return measurement into a single number to determine a fund’s risk-adjusted return. A higher value is better.

1.. Source: United Nations World Population Prospects, 2017
2. Source: Standard Chartered, in purchasing power parity exchange rate terms.
3. Source: World Economic Forum, January 2019.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

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