We must also not forget the reforms by prime minister Narendra Modi – such as the goods and services tax and the Indian bankruptcy code – all of which are designed to make the country more attractive from an investment perspective.
Another long-term factor to consider is that India is almost fully digitised now.
Almost everyone has a bank account and India is becoming increasingly prominent in the fintech space.
I remember reading that 500,000 jobs were created in the tech sector in India in 2021, with around 700,000 expected in 2022.
Even if fund flows from foreign investors are a short to medium-term concern, there is already some evidence to suggest the domestic investor will pick up the slack if foreign money moves.
Over the past two years to August 2022, individual depository equity accounts have trebled to almost 100mn from 33mn.
Investors are saving on a monthly basis, with many taking out five or 10-year investment plans.
In the second half of 2021 alone, more money was invested in Indian equities by domestic investors than was invested by foreign investors for the full seven years prior to that.
There is no doubt the reopening of the Chinese economy, coupled with inflation and interest rate headwinds, does pose challenges to the Indian economy – to the point where the argument that valuations do look expensive has merit.
However, they are only expensive in the short-term given the huge tailwinds supporting long-term growth. The fact that more than half the population of the country is under 25 years of age, with 1mn people entering the work force each month, is a great example of this.
I would be confident that anyone investing in the Indian growth story over the next 10 years is unlikely to be disappointed, given the current growth trajectory, while the additional stability in this particular emerging market underlines its ability to navigate any further challenges.
The all-weather fund
Backed by a well-resourced and experienced team, the Goldman Sachs India Equity Portfolio targets businesses of all sizes when building a 70-90-stock vehicle. The team's ability to meet companies in India differentiates it from many in its peer group.
Sustainable and long-term positioning
As the name suggests, the Stewart Investors Indian Subcontinent Sustainability Fund is about stewardship and long-term thinking.
The team tries to ignore the day-to-day volatility of the stock market and focuses on owning good quality businesses with strong balance sheets that will ultimately do well.
Most firms do not meet the fund’s quality criteria, meaning it is very different to the index.
