I write to you about to board a flight for Chennai. Some 6 years ago, I wrote about investing in India, just as my Private Equity fund commenced. Now 6 years later, as we exit our last Indian investment, it is clear that what I said 6 years ago about investing in India was correct.
Never before has any country outside the US had as many of its corporate leaders in the Forbes Rich List top 10 as India has today. Not even Japan in its heyday or China matches the feat. To make the case for opportunities in India would seem self-evident then. After all, if a nation’s own people, who know the country the best, can make fortunes to compete with the world’s largest economy, then surely outside investors too can do very well there. Yet, misperception still obstructs many investment decisions concerning India. Let’s eradicate them.
Meeting a California Silicon Valley billionaire who has re-emigrated back to India is perhaps one of the more striking proofs of India’s potential. These, the most successful of Indians, who moved to the US in the 1960s from an opportunity-shorn India, return today with their millionaire colleagues, to capture the types of opportunities few, if any places on earth can match. After, all, no other major capitalist economy will even come close to matching India’s growth for decades.
Consider during the last century, the Dow advanced from 66 to 11,497. This gain, though it appears huge, shrinks to 5.3% when compounded annually. And that nevertheless was the American century – the century when the US became a super power. Consider that that growth rate transformed a backward nation from the horse and carriage to one which freely sent man to the moon. Yet India today exceeds and is projected to exceed for our working life times that return-rate of 5%. The baton of Rockefeller and Getty is truly carried by Ambani and Tata.
If your investment options were binary: US, the world’s largest economy, or India, think now about this century. For investors to merely match that 5.3% market-value gain, the Dow – recently below 10,000 – would need to close at about 2,000,000 on December 31, 2099. We are nearly a decade
into this century, and we have racked up none of the 1,990,000 Dow points the
market needed to travel in this hundred years to equal the 5.3% of the last.
Whereas, India, with the real economy targeting 8% for the foreseeable future is far more likely to provide the types of returns to match the transformation the United States had since 1900. Where would you invest?
India has among the higher returns on foreign investment than China according to the US Department of Commerce. India, although the seventh largest country in the world, has the second largest area of arable land in the world – it feeds the world – as the world’s largest producer of milk, sugarcane and tea and the second largest producer of fruit, wheat, rice, vegetables. Comparisons to the US are obvious. An economic superpower needs not just persevering and innovative peoples, but abundant natural resources and an openness to the capitalist ideal – India, like the US of last century, fits the bill.
As Dan Sheinman of Cisco put it, ‘ We came to India for the costs, stayed for the quality and are now investing for innovation.’ Indeed one fifth of Fortune 500 companies have set up R&D centres in India and India is among only 6 countries in the world to have satellite launch capabilities.
Little wonder then this nation had the greatest GDP of any country on the eve of the formation of the British East India Company. There is nothing to suggest her people will not return to resume their destiny.
