Canada-India Business Council

Canada-India Business Council

June 14, 2012 11:41 ET

Ignore the Alarmist Headlines: The India Growth Story & Opportunity Continues

Businesses Need to Think Long-term when it comes to India

TORONTO, ONTARIO--(Marketwire - June 14, 2012) - In the global context, the recent announcement that India's growth rate has fallen to 5.3% isn't that dramatic. Among the BRIC countries, both Brazil and Russia are posting lower growth. China still leads the pack, primarily because their economy received much greater government stimulus.

But, this is the lowest growth rate that India has seen in the past seven years and that combined with the drop in the rupee and a stubborn budget deficit, has prompted many in the Indian and international press to declare an end to India's impressive growth story.

That is not the case. The fundamentals that have underpinned the past decade's 7% percent average growth are still intact.

"Has India's bubble burst? Hopefully yes, in the positive sense that inflated projections of future growth have been replaced with more realistic expectations - after all, very few major economies have enjoyed continuous straight line growth. India should not be measured merely in terms of short term growth. It is a long term value investment", says Peter Sutherland, Vice-Chairman, at the Canada-India Business Council and Senior Advisor, Asia, Aird & Berlis.

Canadian companies and investors should confidently and proactively continue with their long-term strategies in India. Here's why:

  • The Demographic Dividend: India is still growing and it's largely due to domestic consumption and ever-rising middle class aspirations. India has the youngest population of any major economy, with over 50% of its citizens under the age of 25. Even with a slowdown, this means the addition of millions of new customers every year. Just two weeks ago, Kotak Institutional Equities predicted that India's consumption market will grow 2.5 times by 2025, to a total of almost $2 trillion.
  • Infrastructure Investment: Government and industry have now invested almost half a trillion dollars in new infrastructure over the past 5 years (37% of which came from the private sector). They've committed to investing another $1 trillion by 2017. This includes the $90-billion Delhi-Mumbai Industrial Corridor - the largest building project on the planet - which will link India's two biggest cities via high-speed freight rail, connecting seven new "smart cities" along the way. The Indian government is confident that it will be building 20 km of roads per day by 2014. It has already doubled its ports' capacities and, in the last year alone, brought on 12,000 MW of power-generation capacity.
  • Policy Changes in the Pipeline: India is the world's largest democracy and admittedly slow-moving. Political infighting has made it difficult for the government to tame the budget deficit or to reform tax and foreign investment rules. But announcements that growth has hit a 9-year low are sure to kick-start the policy process. Voters will be going to the polls in 2014 and as was the case in recent state elections, economic performance will be an important factor in their decision.

India continues to be an indispensable part of any global business strategy. Moreover, for businesses not yet in India, or looking to expand, now is the time. The lowered rupee means that market entry is cheap and assets are undervalued.

"India is one of the economies of scale of the 21st century. It's an important export market and an even more important experimental hotbed for innovation. Growth is being driven from the bottom up (despite government) and increasingly, from the regions, many of which are growing faster than the national average. The upside for Canadian companies looking to crack the Indian market is its sheer size, regional variation and competitive nature. Markets for products and services that fly well under the radar in a country as populated as India can be game-changers for Canadian companies. Canadian companies need to be in India, learning alongside Indian companies as they grow and innovate. Building these relationships and links is essential to securing our prosperity in the coming decades", adds Rana Sarkar, President & CEO of the Canada India Business Council.

About The Canada India Business Council: The Canada-India Business Council (C-IBC) was founded in 1982 by the Bank of Nova Scotia, Bombardier and the late Thomas Bata. For almost 30 years, C-IBC has been the leading, bi-national member driven association dedicated to the sustained growth of trade, investment and services between Canada and India. C-IBC works to assist Canadian corporations by offering knowledge, experience and insight on bilateral trade and investment opportunities. With over 100 members, the C-IBC represents the leading companies in the Canada-India business corridor.

C-IBC is governed nationally by a Board of Directors which is comprised of senior executives from Canada's leading organizations as well as leaders from both small and medium-sized enterprises.

C-IBC is headquartered in Toronto with operations in Delhi, Vancouver and Montreal.

For more information, please see: http://canada-indiabusiness.ca.

Contact Information

  • To arrange an interview with either Rana Sarkar or
    Peter Sutherland or for additional information on the
    material above, contact: The Canada-India Business Council
    Emily Hamilton, Communications & Research Coordinator
    416-214-5947 x26
    ehamilton@canada-indiabusiness.ca