Blog: Why should India be relevant for you as a Nordic investor/company?

The simple answer is that India will be one of the main global growth drivers in the future, together with China, USA, and a few other South-East Asian countries.

It might be easy to think of India as just another emerging market country, somewhat exotic and too far away from the Nordic to be very interesting.  But consider the following:

• By 2025, one-fifth of the world’s working age population will be Indian.
• By 2030, there will be over 850 million internet users in India.
• By 2035, India will overtake China as the world’s most populous country
• India is expected to be the world’s third largest economy by 2035, after China and the United States measured by market exchange rates (MER)
• By 2035 India’s five largest cities will have economies of comparable size to middle income countries today.
• As of today, the metropolitan area of Mumbai has close to the same population as Norway, Sweden, Denmark, Finland, and Iceland combined.
• By 2050, China, India and USA are expected to be the three giants of the world when it comes to GDP, both in PPP and MER terms.

India is often thought of being “the next China” as the countries have similar size of population, geographical closeness, and scaling opportunities.  But that is almost the only things the two countries have in common. India needs to be understood on its own terms.

India is a democracy and will never be able to run their economy the way China does. Chinas one party system with total control and discipline of economic planning, will not be possible in India. The country has a total of 29 states, and 7 union territories, that is run relative independent. Hindi is the main language in central and north India, but with 22 official languages it is only the first language of 40% of the population.  

Chinas growth have largely been driven by export, while India to a large extent is based on services and consumption. Traditionally India have been the “the back office” of the west for banking and many industrial sectors. When I met with Goldman Sachs in Bangalore a few years back, as many as 1/3 of the total employees of the company was based on India. But the country has a long entrepreneurial tradition and educates 1,5 million engineers every year. Especially the startup community in India is showing large growth, and it is considered the third largest globally, after USA and China. All the leading venture managers from Silicon Valley are already well established in India.

For the big picture, it is interesting to look at the geographical area which India is a part of. Some people might argue that the global power is changing/going to change.  From Europe/USA being the most important geographical area of the globe, the south and east of Asia now seems to become more relevant.  From China and Japan in the north, following the South China Sea down to Indonesia, Singapore, and Malaysia, and then west to India, this areas importance the next 10 – 30 years will change a lot. To be mentioned is also the worsening relationship between India and China, after the boarder issues the last few years.

USA seems to be very aware of the development in Asia. The “cold war” which is establishing itself between USA and China, the increased focus on Taiwan and establishing the “QUAD countries” together with India, Japan and Australia is all a part of their strategy. And by India moving closer to the USA, it could be the case that a number of larger American companies will consider India more interesting contrary to China, in the years going forward.

There is a number of reasons why India should be on the radar of Nordic Investors and companies. I have mentioned only a few here, but if you want to understand India better, one of the best publications I have ever read about India and its future potential is “An India Economic Strategy to 2035”. It is Australia’s strategi document towards India. At more than 500 pages it is a long read, but many of the chapters is also relevant from a Nordic perspective. I specially recommend the first chapter which cover the macro story. It can be found at: https://www.dfat.gov.au/publications/trade-and-investment/india-economic-strategy/ies/index.html

At the end, I will include an interesting fact from Norway, which may be new to you. According to SSB, Outside the EEA, India is by far the country where most immigrant in Norway comes from.  This article from 2020 tell the story https://www.nettavisen.no/nyheter/pa-topp-i-norge-blant-innvandrere-minst-problemer-og-best-i-arbeids-markedet/s/12-95-3423914105

Source: Peter N. Varghese – “An India economic strategy to 2035, navigating from potential to delivery”