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FROM OUR BLOG

India: The Case for a Dedicated Allocation

India: The Case for a Dedicated Allocation

India: The Case for a Dedicated Allocation

May 2, 2025

Every generation witnesses an economic inflection point that, in retrospect, seems obvious. Japan in the 1960s. South Korea in the 1980s. China in the 2000s. Today, the world is again in flux. The familiar signposts are fading, but the contours of a new global system are yet to take shape. The era of rules-based globalization and free trade is over, and we are in a period of transition, uncertainty and possibly instability, driven by a structural shift in both trade policy and global capital flows.

As traditional investment paradigms crumble under geopolitical pressures and changing global trade & capital flows, India's $3.7 Tn economy is poised to become the third-largest in the world by 2030. There is ample data suggesting India presents a once-in-a-generation wealth creation opportunity that forward-thinking investors cannot afford to miss.

The Shifting Global Economic Order

From hyper-globalization, the world is changing to strategic fragmentation. Geopolitical tensions, such as the U.S.-China decoupling and the ongoing tariff-based conflicts, are redrawing trade lines. Companies are implementing "China+1" strategies to diversify supply chains while the energy transition creates demand for new manufacturing hubs. But replication requires an edge.

In this new reality, India offers distinctive advantages:

  • Geopolitical neutrality: India's non-aligned stance makes it a preferred partner across competing blocs

  • Demographic dividend: With a median age of 28.4 years (compared to China's 39), India boasts a growing workforce poised to drive economic expansion

  • Structural reforms: Pro-business policies, simplified taxation, and advanced digital infrastructure position India for sustainable growth

Macroeconomic Resilience: India's Growth Story

India's real GDP growth is projected at 6.5-7% annually, significantly outpacing both developed markets (1.5-2.5%) and China (4-5%). This robust growth is driven by:

  1. Strong private consumption (approximately 56% of GDP) provides exceptional resilience against global downturns. India's middle class is expanding by 25 million people annually, with discretionary spending growing at 12% CAGR. Urban household income is projected to triple by 2030, creating a $1.5 trillion consumption opportunity, predominantly in premium categories and experiential sectors.

  2. Transformative infrastructure development executed over $900 billion in infrastructure projects since 2015—triple the investment pace of the previous two decades. There is another $650 billion committed through 2027, creating a modern transportation and energy network to  fundamentally reshape logistics efficiency and economic connectivity.

  3. Technology and digital revolution: India's digital infrastructure has fundamentally transformed public service delivery and financial inclusion, creating the world's most advanced digital public infrastructure at population scale.. UPI (India’s instant digital United Payment Interface) processes over 10 billion monthly transactions (exceeding all U.S. credit cards combined), Aadhaar biometric identification has reached 1.3 billion citizens, and direct benefit transfers have eliminated $33 billion in leakages from public distribution systems.

Transformative Reforms: The Backbone of India's Economic Resilience

India's economic framework has been revolutionized through a series of strategic reforms that have fundamentally altered its business landscape:

Goods & Service Tax (GST): From Tax Fragmentation to Unified Market

The GST implementation represents India's boldest tax reform since independence:

  • Unified 17 different taxes into one system, transforming India from fragmented markets into a single economic zone

  • Accelerated business formalization with 13.6 million firms now registered on the digital platform

  • Key driver in lowering logistics costs by 0.8-0.9% of GDP from 2014 to 2022

  • Monthly collections have surged from $412 Bn  in 2017 to consistently exceeding $188 Bn by 2024

Insolvency and Bankruptcy Code (IBC): Reshaping Corporate Accountability
The IBC  has rebalanced creditor-debtor relationships:

  • Improved creditor recovery rates from 26% to over 40%

  • Introduced genuine consequences for defaults, enhancing corporate governance

  • Unlocked $435 Bn in previously trapped capital, redirecting resources to productive sectors

Production-Linked Incentive scheme (PLI): Strategic Manufacturing Development

The $26 billion PLI schemes reflect India's sophisticated industrial policy:

  • Targets 14 strategic sectors with customized incentive structures

  • Rewards incremental sales and exports rather than merely replacing imports

  • Prioritizes technology transfer and scale, distinguishing it from earlier industrial policies

The India Stack: Digital Public Infrastructure (DPI) as a Hidden Reform Engine

India Stack - a suite of open APIs and digital public goods - is transforming India's economic fundamentals at unprecedented scale:

  • Unified Payments Interface (UPI) now processes over 10 billion monthly transactions, exceeding US credit card volumes

  • Aadhaar biometric ID system covers 1.3 billion citizens (99.9% of adults), dramatically reducing benefit leakage

  • Open Network for Digital Commerce (ONDC) democratizes e-commerce by enabling all seller types and sizes

Emerging networks include Open Credit Enablement Network (OCEN) (embedding lending capabilities across platforms) and National Digital Health Mission (NDHM) (secure health data sharing). These interconnected systems create a powerful multiplier effect: digital infrastructure enables compliance, improving tax collection, funding further development, thus creating a virtuous cycle unique among emerging markets.

Economic Impact: Digital Public Infrastructure could add $8Tn to India's economy by 2030.

 

Currency Stability: A Key Risk Mitigator

For international investors, currency stability is crucial. In a journey from the ‘Fragile 5’ in 2014  to the Top 5 Global GDP now, the Indian Rupee (INR) has demonstrated an increasing pattern of relative stability with controlled adjustments:

  • 2020-2023: Approximately 10% depreciation during COVID-19 and Fed tightening

  • Current outlook: Trading in the 81-83/USD range

  • This stability is supported by:

  • Foreign exchange reserves exceeding $600 billion

  • Strong Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) inflows

  • Strong, increasing remittances from diaspora exceeding $125Bn in 2024 and growing at 15% since 2020

  • Credible monetary policy keeping inflation within the 4-6% target range

These factors make India's currency risks considerably lower than those of other emerging markets, reducing a primary concern for global investors.

The China+1 Opportunity

As companies worldwide seek to diversify supply chains beyond China, India has emerged as a preferred alternative manufacturing hub due to a combination of friendly-shoring (to allied & low-risk countries) or reshoring (to meet Indian domestic demand). Apple, for instance, is targeting a complete transition by 2026.

India's export growth has maintained a 12% CAGR over the past decade, and recent free trade agreements with the UAE, Australia, and UK further enhance its global trade position. As China faces economic challenges and geopolitical tensions, India's manufacturing appeal continues to strengthen.

Risk Assessment and Mitigation

While India offers exceptional growth potential, prudent investors should consider key risks:

  • Global recession: India's strong domestic demand (56% of GDP from consumption) provides insulation

  • Oil price volatility: Strategic reserves and energy transition policies mitigate impact

  • Political uncertainty: A stable government for 15 years and bipartisan support for major economic reforms ensures policy continuity

India's Compelling Case: A Strategic Portfolio Imperative

Beyond its 18.5% weight in emerging market indices, lies India's rightful position as a standalone allocation in sophisticated global portfolios. The world's fastest-growing major economy—poised to become its third-largest by 2027—demands strategic positioning that transcends conventional emerging market exposure.

Strategic Portfolio Architecture

Dedicated Allocation: Elevate India from a mere emerging market component to a deliberate 7-10% portfolio allocation, accessed through specialist vehicles that capture its unique growth trajectory. This strategic repositioning acknowledges India's exceptional convergence of demographic vitality, digital leadership, and policy continuity.

Sector Intelligence: Navigate India's complex market landscape by emphasizing sectors where structural transformation is most pronounced: advanced manufacturing ()benefiting from global supply chain realignment), financial services (revolutionized by the world's most advanced digital infrastructure), and consumer segments (propelled by a middle class expanding by 25 million annually).

Risk Calibration: India's distinct volatility profile requires nuanced risk management that respects partial rather than complete currency hedging, calibrated exposure across the capitalization spectrum, and disciplined entry strategies that align with long-term capital deployment.

India's 6.5% projected annual growth through 2029, coupled with its transformation into a manufacturing powerhouse and digital economy pioneer, presents a strategic imperative for investors seeking both growth and diversification in an otherwise yield-challenged global environment. The nation's journey from an emerging market option to an essential portfolio component represents not merely an adjustment of allocations but a fundamental recalibration of global investment strategy.

Conclusion: Why India Belongs in Every Global Portfolio

India is entering what many analysts consider a golden era of economic expansion. With a projected GDP growth of 6.5-7%, corporate earnings growth of 15-18% CAGR, and increasing weight in global indices, India presents a compelling case for core portfolio allocation.

The combination of structural reforms, demographic advantages, and global realignment positions India uniquely among emerging markets. For global investors seeking both growth and diversification over the coming decade, India doesn't just represent an opportunity,it  is now an essential allocation.

Your Gateway to Indian Market Opportunities
If you believe in India's growth story,and the data strongly suggests you should, the question becomes not whether to invest but how to optimize your exposure to this dynamic market.

TresoWealth provides international investors with seamless access to India's most promising Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs), curated by elite fund managers with deep local expertise and proven track records. Our platform eliminates the traditional barriers to Indian market entry, offering institutional-grade due diligence, transparent performance tracking, and streamlined compliance—all designed to maximize your potential returns while navigating this complex but rewarding market landscape.

Button - Explore TresoWealth


Sources:

 

Every generation witnesses an economic inflection point that, in retrospect, seems obvious. Japan in the 1960s. South Korea in the 1980s. China in the 2000s. Today, the world is again in flux. The familiar signposts are fading, but the contours of a new global system are yet to take shape. The era of rules-based globalization and free trade is over, and we are in a period of transition, uncertainty and possibly instability, driven by a structural shift in both trade policy and global capital flows.

As traditional investment paradigms crumble under geopolitical pressures and changing global trade & capital flows, India's $3.7 Tn economy is poised to become the third-largest in the world by 2030. There is ample data suggesting India presents a once-in-a-generation wealth creation opportunity that forward-thinking investors cannot afford to miss.

The Shifting Global Economic Order

From hyper-globalization, the world is changing to strategic fragmentation. Geopolitical tensions, such as the U.S.-China decoupling and the ongoing tariff-based conflicts, are redrawing trade lines. Companies are implementing "China+1" strategies to diversify supply chains while the energy transition creates demand for new manufacturing hubs. But replication requires an edge.

In this new reality, India offers distinctive advantages:

  • Geopolitical neutrality: India's non-aligned stance makes it a preferred partner across competing blocs

  • Demographic dividend: With a median age of 28.4 years (compared to China's 39), India boasts a growing workforce poised to drive economic expansion

  • Structural reforms: Pro-business policies, simplified taxation, and advanced digital infrastructure position India for sustainable growth

Macroeconomic Resilience: India's Growth Story

India's real GDP growth is projected at 6.5-7% annually, significantly outpacing both developed markets (1.5-2.5%) and China (4-5%). This robust growth is driven by:

  1. Strong private consumption (approximately 56% of GDP) provides exceptional resilience against global downturns. India's middle class is expanding by 25 million people annually, with discretionary spending growing at 12% CAGR. Urban household income is projected to triple by 2030, creating a $1.5 trillion consumption opportunity, predominantly in premium categories and experiential sectors.

  2. Transformative infrastructure development executed over $900 billion in infrastructure projects since 2015—triple the investment pace of the previous two decades. There is another $650 billion committed through 2027, creating a modern transportation and energy network to  fundamentally reshape logistics efficiency and economic connectivity.

  3. Technology and digital revolution: India's digital infrastructure has fundamentally transformed public service delivery and financial inclusion, creating the world's most advanced digital public infrastructure at population scale.. UPI (India’s instant digital United Payment Interface) processes over 10 billion monthly transactions (exceeding all U.S. credit cards combined), Aadhaar biometric identification has reached 1.3 billion citizens, and direct benefit transfers have eliminated $33 billion in leakages from public distribution systems.

Transformative Reforms: The Backbone of India's Economic Resilience

India's economic framework has been revolutionized through a series of strategic reforms that have fundamentally altered its business landscape:

Goods & Service Tax (GST): From Tax Fragmentation to Unified Market

The GST implementation represents India's boldest tax reform since independence:

  • Unified 17 different taxes into one system, transforming India from fragmented markets into a single economic zone

  • Accelerated business formalization with 13.6 million firms now registered on the digital platform

  • Key driver in lowering logistics costs by 0.8-0.9% of GDP from 2014 to 2022

  • Monthly collections have surged from $412 Bn  in 2017 to consistently exceeding $188 Bn by 2024

Insolvency and Bankruptcy Code (IBC): Reshaping Corporate Accountability
The IBC  has rebalanced creditor-debtor relationships:

  • Improved creditor recovery rates from 26% to over 40%

  • Introduced genuine consequences for defaults, enhancing corporate governance

  • Unlocked $435 Bn in previously trapped capital, redirecting resources to productive sectors

Production-Linked Incentive scheme (PLI): Strategic Manufacturing Development

The $26 billion PLI schemes reflect India's sophisticated industrial policy:

  • Targets 14 strategic sectors with customized incentive structures

  • Rewards incremental sales and exports rather than merely replacing imports

  • Prioritizes technology transfer and scale, distinguishing it from earlier industrial policies

The India Stack: Digital Public Infrastructure (DPI) as a Hidden Reform Engine

India Stack - a suite of open APIs and digital public goods - is transforming India's economic fundamentals at unprecedented scale:

  • Unified Payments Interface (UPI) now processes over 10 billion monthly transactions, exceeding US credit card volumes

  • Aadhaar biometric ID system covers 1.3 billion citizens (99.9% of adults), dramatically reducing benefit leakage

  • Open Network for Digital Commerce (ONDC) democratizes e-commerce by enabling all seller types and sizes

Emerging networks include Open Credit Enablement Network (OCEN) (embedding lending capabilities across platforms) and National Digital Health Mission (NDHM) (secure health data sharing). These interconnected systems create a powerful multiplier effect: digital infrastructure enables compliance, improving tax collection, funding further development, thus creating a virtuous cycle unique among emerging markets.

Economic Impact: Digital Public Infrastructure could add $8Tn to India's economy by 2030.

 

Currency Stability: A Key Risk Mitigator

For international investors, currency stability is crucial. In a journey from the ‘Fragile 5’ in 2014  to the Top 5 Global GDP now, the Indian Rupee (INR) has demonstrated an increasing pattern of relative stability with controlled adjustments:

  • 2020-2023: Approximately 10% depreciation during COVID-19 and Fed tightening

  • Current outlook: Trading in the 81-83/USD range

  • This stability is supported by:

  • Foreign exchange reserves exceeding $600 billion

  • Strong Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) inflows

  • Strong, increasing remittances from diaspora exceeding $125Bn in 2024 and growing at 15% since 2020

  • Credible monetary policy keeping inflation within the 4-6% target range

These factors make India's currency risks considerably lower than those of other emerging markets, reducing a primary concern for global investors.

The China+1 Opportunity

As companies worldwide seek to diversify supply chains beyond China, India has emerged as a preferred alternative manufacturing hub due to a combination of friendly-shoring (to allied & low-risk countries) or reshoring (to meet Indian domestic demand). Apple, for instance, is targeting a complete transition by 2026.

India's export growth has maintained a 12% CAGR over the past decade, and recent free trade agreements with the UAE, Australia, and UK further enhance its global trade position. As China faces economic challenges and geopolitical tensions, India's manufacturing appeal continues to strengthen.

Risk Assessment and Mitigation

While India offers exceptional growth potential, prudent investors should consider key risks:

  • Global recession: India's strong domestic demand (56% of GDP from consumption) provides insulation

  • Oil price volatility: Strategic reserves and energy transition policies mitigate impact

  • Political uncertainty: A stable government for 15 years and bipartisan support for major economic reforms ensures policy continuity

India's Compelling Case: A Strategic Portfolio Imperative

Beyond its 18.5% weight in emerging market indices, lies India's rightful position as a standalone allocation in sophisticated global portfolios. The world's fastest-growing major economy—poised to become its third-largest by 2027—demands strategic positioning that transcends conventional emerging market exposure.

Strategic Portfolio Architecture

Dedicated Allocation: Elevate India from a mere emerging market component to a deliberate 7-10% portfolio allocation, accessed through specialist vehicles that capture its unique growth trajectory. This strategic repositioning acknowledges India's exceptional convergence of demographic vitality, digital leadership, and policy continuity.

Sector Intelligence: Navigate India's complex market landscape by emphasizing sectors where structural transformation is most pronounced: advanced manufacturing ()benefiting from global supply chain realignment), financial services (revolutionized by the world's most advanced digital infrastructure), and consumer segments (propelled by a middle class expanding by 25 million annually).

Risk Calibration: India's distinct volatility profile requires nuanced risk management that respects partial rather than complete currency hedging, calibrated exposure across the capitalization spectrum, and disciplined entry strategies that align with long-term capital deployment.

India's 6.5% projected annual growth through 2029, coupled with its transformation into a manufacturing powerhouse and digital economy pioneer, presents a strategic imperative for investors seeking both growth and diversification in an otherwise yield-challenged global environment. The nation's journey from an emerging market option to an essential portfolio component represents not merely an adjustment of allocations but a fundamental recalibration of global investment strategy.

Conclusion: Why India Belongs in Every Global Portfolio

India is entering what many analysts consider a golden era of economic expansion. With a projected GDP growth of 6.5-7%, corporate earnings growth of 15-18% CAGR, and increasing weight in global indices, India presents a compelling case for core portfolio allocation.

The combination of structural reforms, demographic advantages, and global realignment positions India uniquely among emerging markets. For global investors seeking both growth and diversification over the coming decade, India doesn't just represent an opportunity,it  is now an essential allocation.

Your Gateway to Indian Market Opportunities
If you believe in India's growth story,and the data strongly suggests you should, the question becomes not whether to invest but how to optimize your exposure to this dynamic market.

TresoWealth provides international investors with seamless access to India's most promising Portfolio Management Services (PMS) and Alternative Investment Funds (AIFs), curated by elite fund managers with deep local expertise and proven track records. Our platform eliminates the traditional barriers to Indian market entry, offering institutional-grade due diligence, transparent performance tracking, and streamlined compliance—all designed to maximize your potential returns while navigating this complex but rewarding market landscape.

Button - Explore TresoWealth


Sources: