India Still Has Plenty Of Growth Opportunity Left

Growth in India’s vast economy may have slowed over the past year, but with other economies feeling much more of a squeeze than a pinch, there’s still plenty of room for investment in a country with a booming entertainment industry, new rules on retail investment, and a government anxious to lay out a figurative red carpet for foreign money.

That’s not to say that investing in India is without risk. A massive power outage last July made it all too obvious that its grid is creaking and inefficient, a powerful deterrent to outside firms looking to build a presence there. Political opinion, too, is divided on recent actions taken by the government to make the entry of foreign investment easier. However, opportunities from food storage and transportation to a growing hunger for luxury bling (DeBeers has been delighted to find that India is now its fastest-growing market) beckon.

While previously the country had been careful to restrict ownership percentages by foreign direct investment (FDI) in areas that could pose a hazard to national security, and had also been wary of permitting foreign companies to run roughshod over domestic businesses, recent action by the government has relaxed requirements for FDI in sectors from broadcasting to civil aviation and energy markets, as well as retail. That has opened the door for non-Indian companies such as Walmart and Tesco to gain entrée to approach India’s huge consumer market. Ikea and Starbucks have also been eagerly awaiting their chance to make the acquaintance of the Indian consumer.

India occupies second place in global farm output; its agricultural and related ventures employ almost two-thirds of the population, according to the Food and Agriculture Organization, and make up 17.2% of the country’s GDP. However, its distribution and storage systems introduce tremendous waste into its domestic food market, and scores of millions are underfed despite India’s vast production. Outside companies now have a chance to invest in everything from refrigerated trucks and warehouses to the farms themselves. Investors have also finally this year been granted the opportunity to enter the agricultural sphere through the Multi Commodity Exchange.

India has long been known for its hunger for gold—various festivals are celebrated with gifts of the precious metal in the form of jewelry, coins, and even ingots, while weddings call for custom-made jewelry for the bride from her parents. Now, though, diamonds have become the hot item for many affluent Indians, and domestic diamond jeweler Tanishq finds itself with competition from outside firms hoping to jump into the market before it gets too crowded. A combination of a lower rupee against the dollar—with gold priced in dollars, making it more expensive—and a drop in the price of diamonds have brought the precious stones to prominence among the wealthy, with DeBeers seeing 20–30% growth in sales in response to its expanded advertising.