The economic slowdown has not dampened India’s appeal at Davos

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Seven years ago at Davos, Indian Prime Minister Narendra Modi spoke of India’s ambitions to become a $5 trillion economy by 2025.

“Indian people and youth are here now ready to help create an economy 5 trillion dollars by 2025,” he said in his speech at the 2018 World Economic Forum (WEF).

“Not only that, when innovation and entrepreneurship… help transform (people) from job seekers to job givers, then one can only imagine the number of avenues that will open up for their country and your business,” Modi added.

It is fair to say that achieving this goal has been difficult.

The Indian economy is expected to be around $4.27 trillion according to the International Monetary Fund this year, it is $0.73 trillion short of Modi’s target.

His economic slowdown it has raised questions about the country’s ambitious growth targets. Market watchers say India is in the midst of a cyclical slowdown.

What is interesting is that the India story – and its growth potential – continues to capture the attention of investors in India, at Davos and beyond.

India is between the five main territories where global CEOs surveyed by consulting firm PwC want to invest in the next 12 months. Among the 4,700 CEOs surveyed in 109 countries, the other territories ranked in the top 5 were the US, the UK, Germany and mainland China.

India’s optimism has spread in the ongoing discussions at Davos.

Speaking to CNBC on the sidelines of this year’s World Economic Forum, Khaldoon Al Mubarak Managing Director and Group CEO of Mubadala Investment Company He described India as “a very, very interesting country (and) a very interesting market.”

Among the measures that stand out to him about India’s potential is its large but young demographic. About 480 million Indians are under the age of 18, which is more than the population of the United States, Europe combined, the number of people in the Middle East and the under-18 population of South America, Mubarak said.

“We’ve been investing in India … for years, and we’re continuing to work on building our portfolio in India and getting into that wave that’s really started,” he said.

This cycle, he added, “I think it will continue”.

Mubadala’s investments in India include the Tata Group-owned Tata Power Renewable Energy and Reliance Industries– backed tech giant Jio Platforms.

Prosus is another investment firm looking to tap into India’s growth potential, particularly in the country’s technology industry.

“You saw the impact of technology in India … and they are saying ‘we are ready for the next step,'” the company’s CEO said. Fabricio Bloisi told CNBC on the edge of the peak.

“Prosus is ready to invest much more in India. We have invested like $8 billion there in the last few years and we will invest much more,” he added.

Indian startups that Prosus has invested in include food delivery firm Swiggy, edtech firm BYJU’s, agri player Dehaat and e-commerce platform Meesho.

Making it big in technology

India’s interest – particularly its technology and startup opportunities – aligns with the government’s broader vision to develop the sector.

Among the top priorities of India’s delegation at Davos this year was to deepen the semiconductor industry through government incentives and targets.

This includes looking at developing its Graphics Processing Unit (GPU) over the next three to five years, Ashwini Vaishnaw, Minister for Railways, Information Technology and Information and Broadcasting said. said CNBC-TV18 on the sidelines of the WEF meeting.

Other projects he revealed include India’s plans to develop 25 indigenous chipsets designed and manufactured in the country. It hopes to roll out the first chip by September and the first factory by 2026.

Vaishnaw also outlined the government’s goal of providing under 1,000 GPU computing power, especially for the benefit of startups that lack access.

This is for the government this year to promote talent and leverage the data to create robust data sets to train AI models, he added.

Vaishnaw led what is the largest Indian delegation to Davos this year, with eight states each representing Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Maharashtra, West Bengal and Uttar Pradesh. investment competition for upcoming initiatives.

For example, Andhra Pradesh Chief Minister Chandrababu Naidu It is said to have shown the pro-business policies of the state in order to greet multinationals like Unilever, PepsiCoGoogle Cloud and AstraZeneca.

Its neighbor Telangana, on the other hand, showed its expertise in electric vehicles, pharmaceuticals and semiconductors. Elsewhere, Maharashtra seems to have presented itself India’s industrial powerhouse.

The heavy presence of Indian officials at Davos is probably a recognition that companies, especially those that have been around for a few years, need more capital than they can raise domestically.

Foreign investment into the country is “drying up” due to economic policy uncertainty and geopolitical risks, according to Dhiraj Nim, foreign exchange strategist and economist at ANZ Bank.

One way forward is for the Indian government to “foster greater confidence by reducing political and regulatory costs, improving the ease of doing business in India,” he suggested.

“India can do a lot despite global variables beyond its control. India aims to be a developed nation by 2047, so we’d need stronger growth than the 6-7% we’re used to. And growth it will be. Realizing more investment and labor productivity and it must be realized by increasing technological capabilities,” added Nim.

The issue of how India plans to continue growing at a sustainable pace, providing employment and increasing productivity, is top of mind for the Indian government. In Davos, India’s Minister of Railways, Electronics and Broadcasting Mr. Ashwini Vaishnaw sat down to discuss with a group of global executives, investors and Indian entrepreneurs. The breakfast hosted by Brunswick Group and CNBC on the sidelines of the World Economic Forum allowed executives and investors to ask the minister questions and discuss India’s investment environment.

India may reduce disinvestment target by FY25. The country’s government is looking for it cut divestment and asset monetization targets 40% – or less than 300 billion rupees ($3.47 billion) from 500 billion rupees – for the fiscal year 2024 to 2025, The Economic Times reported, citing people familiar with the discussion. Regulatory hurdles and valuation difficulties have proven to be obstacles, but Prime Minister Narendra Modi’s administration has yet to sell more stakes in state-owned companies than previous governments.

Quad gathered and confirmed the collaboration. Foreign ministers from the group comprising the US, Australia, India and Japan met on Tuesday and stressed the importance of maintaining a free Indo-Pacific, according to a joint statement issued after talks in Washington. The meeting, which was organized by US Secretary of State Marco Rubio on his first day on the job, was intended to express Confronting China was a top priority for the Trump administrationsaid the analysts.

Oil prices may rise in India. The US imposed it New sanctions on Russian oil On the 10th of January. With India importing around 40% of its oil from Russia, according to trade intelligence firm Kpler, New Delhi could face a sudden supply cut. Supply to India may be interrupted more than 500,000 barrels per dayRystad Energy senior analyst Viktor Kurilov told CNBC. To mitigate the potential oil shock, Indian importers are looking to import oil from Middle Eastern suppliers.

Indian stocks have traded mixed this week. The Nifty 50 the index fell by 0.03% this week and closed at 23,205.35 points.

The benchmark 10-year Indian government bond yield was flat at 6.78%.

This week on CNBC television, BNP Paribas India analyst Kumar Rakesh stated optimism in the Indian auto industry. Rakesh said that India’s passenger and motorcycle exports have been growing at a relatively high rate in recent years, especially in the markets of Africa, Latin America, the Middle East and Southeast Asia. Also, Indian automakers have been able to enjoy higher profitability because domestic production cost is one of the lowest in the world.

Meanwhile, Jose Rasco, HSBC Global Private Banking and Wealth Management Americas CIO, admitted that the Indian market is not cheap, but that is because investors are “paying for quality.” Some of the features that attract investors to India are its young and diversified economy, a sound legal system and increased productivity in recent years.