India – a country opening up

April 7, 2017 / By  

In late February I visited the world’s fastest growing major economy, India, stopping in its two largest cities of Delhi and Mumbai, along with several other major tourist destinations. With a lot of attention on India in recent months stemming from its economic reforms, I thought I would share some observations from my experience on the ground.

Demonetisation captured many headlines following Prime Minister Modi’s sudden announcement on 8 November that 86% of the currency in circulation would no longer be valid. This exercise created a lot of uncertainty as citizens, businesses and financial institutions had to quickly adapt; however, the short-term effects appeared to be stabilising by the time I arrived in the country with shopping bazaars and restaurants all teeming with people buying goods.

The debate about the planning and implementation of this exercise will likely linger on for a long time; however, most of the people that I spoke with viewed this as a positive step in the country’s long fight to curb black money.

Regulatory reforms have also helped boost the appeal and profile of the country’s real estate market to foreign investors. Almost daily in the local newspapers, I saw headlines mentioning large international private equity or sovereign wealth funds bidding for local real estate and infrastructure assets.

Fascinatingly while on a city tour of Mumbai, one of my colleagues pointed out that a foreign firm was actually the largest owner of investment grade office assets in the country – Blackstone. Not only is the firm present in the office sector, one of its subsidiaries, Nexus, will soon open their first new mall development in the country in Mumbai. The American private equity firm is also reportedly a leading contender to launch the country’s first REIT, which is expected to happen later this year.

Economic liberalisation has been a central theme of the government’s drive to bolster growth and appears to be taking hold, attracting foreign companies. From the time that I arrived in Mumbai’s modern airport, which was plastered with signs promoting Uber, it became apparent that foreign firms were increasingly opening their eyes to the huge opportunity that the country presents with the names of MNCs on many major office buildings and top brands present in malls.

Interestingly, the most common brands I saw promoted on billboards of roadways were of two Chinese smartphone makers, OPPO and Vivo; brands which I had only recently come to know about. Utilising the successful sales approach which propelled them to market leadership positions in China, these techniques also helped underpin their rapid growth in India and saw them rank amongst the top five selling smartphone brands in 4Q 2016 according to a recent IDC report. Another top five brand, Xiaomi, recently opened its second factory in the country in partnership with Foxconn to meet demand and announced plans to further boost its investment.

Although my trip to India was short, I learned a great deal about the country and look forward to seeing what changes will have taken place when I visit again.

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