How Important Is India's Economy To Global Investors?

As the working population increases, so too do household incomes; the sales reach is vast and Indian companies are reacting to rapidly evolving spending habits of this demographic.

India's catch-up potential is unique and exciting, which raises the question: why would an investor want to own India in a catch-all fund which only dilutes its value?

As another indication of this impressive growth, India's per capita data usage is now three times higher than that of China, according to Companies Filings on mobile network operators Reliance Jio and China Mobile, as well as being the fastest-growing market for mobile phones globally.

Almost half of India's internet users are between 15 and 24-years-old and are connected online for up to 10 hours a day. Since average incomes are growing fast from a low base, this generation will usher in the new wave of e-tail consumption.

The enabling power of the internet is creating new domestic consumer bases in India - boosting both local economic growth and the revenues of ‘connected' companies.

Wealth managers in particular would do well to consider India as a standalone investment. Rising costs, pressure on fees and heightened regulation has caused a flurry of deal activity within the UK wealth management market, resulting in increased consolidation and a landscape dominated by fewer, larger firms.

These big name wealth managers are historically inclined to encourage their investment managers to own funds on their ‘buy lists', meaning the end clients also end up owning the same few funds. More than ever before, wealth managers must differentiate themselves and identify interesting investment opportunities.

However, the depth of the Indian equity market means that neither a limited weighting in an index nor a passive regional mandate will fully capture the country's growth potential.

While some risks are inevitable when investing in a developing economy, India's adherence to the rule of law, independence of the central bank and free media de-risks an investor's exposure relative to other emerging markets.

David Cornell is the CIO of Ocean Dial