Ever since the COVID-19 Pandemic struck India and other parts of the world, self-acclaimed experts and wannabe economists started claiming that the Indian economy was headed towards a tailspin. Yet others were hoping that India will recover once we are past the Pandemic. However, Asia’s richest banker Uday Kotak has now come up with a real analysis, based on precedents and past behaviour of the Indian economy.
Kotak has said that overseas investors should look to invest in Indian digital to consumer sector companies as the economic slowdown triggered by the Pandemic has made business valuations attractive. He has also listed down five “right sectors”- digital, e-commerce, technology, pharmaceutical, and consumers for investing in India.
Uday Kotak, the Managing Director of Kotak Mahindra Bank Ltd. said, “I have always believed you have to invest in India when things look more challenging,” during a conversation with David Rubenstein, Co-founder, Carlye Group Inc. at the Bloomberg India Economic Summit Thursday. Kotak added, “That’s the best time to put your money to work.”
Rubenstein himself seemed convinced with what Uday Kotak had to say. The Carlye Group Inc. Co-founder said, “The best place to invest in the world outside of the U.S. over the next ten years or so are certainly going to be India and China.” He added, “India has not had as much capital from outside as China has had, but I do think in the next ten years that would change, and India is increasingly seen as an attractive place to invest for foreign capital.”
Kotak’s understanding of how the Indian economy is going to proceed from here seems rather accurate given certain empirical examples and changing factors around us. Take, for instance, the digital, e-commerce and technology sectors, which are amongst the “right sectors” to invest as per Uday Kotak. The growth in these sectors is bound to be fuelled by the internet revolution that is gripping India.
India has the second-largest internet users in the world with half a billion users. The number of internet users is also going up rapidly, and the Pandemic is only going to boost internet demand even further, with sectors like education going almost completely online.
Moreover, while the amount of digital content to be consumed is bound to go by, a vacuum is setting in as the Government of India banned Chinese apps like TikTok and WeChat amidst the ongoing Sino-India military standoff at the Line of Actual Control (LAC)- the effective India-Tibet (China controlled) border. Indian start-ups and innovators will be looking to tap into the vacuum in the digital sector and overseas investors thus have an opportunity to finance India’s digital growth ambitions.
In fact, Asia’s richest man, Mukesh Ambani has himself raised more than $20 billion this year, by selling 33 per cent of his conglomerate’s digital arm- Jio Platforms Ltd. to investors like Facebook Inc. and Google. In fact, Mukesh Ambani-led conglomerate’s initiatives like Jio Mart, an Indian online grocery delivery service, promises to cause an interplay in digital, e-commerce and telecom sectors, thereby leading to composite growth in all such Indian sectors.
As for pharmaceuticals- another ‘right sector’ to invest in as per Uday Kotak, India is again showing tremendous potential for future growth. The ongoing Pandemic has itself created a huge demand for health-care products and has made pharmaceuticals a key sector for any economy. India’s pharmaceutical sector is robust, making the South Asian country one of the biggest pharma exporters in the world.
The positive sentiment in India’s pharmaceutical sector has led to overseas investors rallying behind India. In July, KKR & Co., an American global investment company said that it would acquire a controlling stake in J.B. Chemicals and Pharmaceuticals Ltd. Carlyle Group itself has purchased 20 per cent stake in Indian billionaire Ajay Piramal’s pharma business.
Moreover, as and when a COVID-19 vaccine is found, India’s pharma sector will take a giant leap. India is the largest vaccine producing country in the world and vaccinating a sizeable portion of the world’s human population will not be possible without India’s active involvement. As India will look to manufacture COVID-19 vaccines at an unprecedented scale, new business opportunities will crop up for investors around the world.
Uday Kotak has thus made a very accurate assessment of India’s economic growth prospects. And investors around the world must take this message very seriously- if you want to invest, invest in India and invest now.