Hey there! So good to have you back again. Wondering, how the global firms are looking at the Indian investment market? If yes, then this blog is a must-read for you. Let us deep dive and understand what is attracting foreign direct investment (FDIs) coming into India despite a strengthening US Dollar.
India started this year on a very positive note with eight new start-ups making it to the list of unicorn companies in the first 40 days of the year itself. A unicorn firm is a company whose valuation is over $1 billion. It is also estimated that over 50 Indian start-ups can become a part of this unicorn club by the end of 2022. A total of 83 unicorns reached $1 billion valuations in 2021 alone, providing a major boost to new-age entrepreneurs significantly at a time when the world is still grappling with the aftermath of the global pandemic.
Since the pandemic started, nearly $100 Billion was withdrawn from the Indian capital markets in the last two and half years but interestingly, FDI inflow into India broke records every year in the pre-covid period. Wondering, why is this so? This is because there has been a big gap between FPI and FDI trends. In simple terms, FDI refers to investments made by foreign investors directly in productive assets of some other nation whereas, FPI refers to investments in financial assets, such as stocks and bonds of entities located in any other country.
No doubt, the global money flows are interested in a country that has the potential to become the third largest economy in the coming years. According to economists, India is poised to grow at 7-8% in the next decade, making it the third largest economy by 2030. Along with this, the GDP is also projected to surpass that of Germany and the UK. As of now, India became the 5th largest economy, ahead of the UK, and behind US, China, Japan and Germany, in terms of GDP.
The rapidly growing consumer market along with the industrial sector has contributed largely to making India one of the most important investment destinations for multinationals in multiple sectors, including manufacturing, infrastructure, and services. Moreover, India is also showing stability in terms of inflation and growth rate in comparison to the top 10 global economies. A booming economy along with a booming start-up ecosystem is what attracts more FDIs into the country.
Given all the bottlenecks like weak infrastructure, complicated market environment, and older regulations among others, can India achieve a higher growth rate? It has now become a topic of discussion among several global players. Yes, there are challenges, but India also has its own set of assets going in its favour. They are as follows:
- Significant demand for supplies and services.
- Government’s drive and initiatives to increase manufacturing units.
- The demographic edge is distinct and beneficial as India has the largest and the fastest growing middle class which is responsible for driving consumer spending.
The government, on the other hand, has also developed a strategic focus on export-led growth, thus spurring the economy. Its production-linked incentive scheme for sectors like manufacturing, electronics, food, IT, battery, automobiles, and steel has also gained traction in recent times. All these efforts made by the government aim for structural progress for the Indian economy. With world-class human resources in the IT sector, along with steady balanced reforms, India is now at the crossroads of phenomenal opportunities. The ground is also open for innovation which will make India prepare for the future as far as digitization is also concerned. India’s commitment to the adoption of technological solutions and innovations would further lead to an improvement in manufacturing.
The last few years have seen an increase in investors for Indian companies and start-ups despite economic challenges. According to a survey, India has surpassed Japan as the fifth most attractive destination for investors. The investment industry looks very promising and by just investing for 2 years, one can reap lifelong returns. So, why choose a career in the investment industry?
Professionals in the investment industry provide essential services to enhance financial markets. The scope of these services is broad and by enrolling in the CFA certification course, candidates can choose from a variety of career paths in the investment industry including portfolio management, private wealth, analysis, and consulting. The CFA credential is valued by employers in every sector of the global finance industry as it equips professionals with the versatility to take their career paths in various directions.
What is the CFA course? The CFA program is a three-part exam that includes fundamentals of investment tools, valuing assets, portfolio management, and wealth planning. The CFA credential is globally recognized and is the golden standard for all investment professionals. Certified Chartered Financial Analysts are often hired by reputed and leading financial institutions such as JP Morgan, HSBC, Bank of America, Morgan Stanley, and many others.
Thus, to conclude fintech and other trends in the future of finance will not only have a significant impact on investment firms but also on career paths, and compensation trends.
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