India's meteoric rise to global prominence is inevitable. Perhaps, US
President Barack Obama, writing in Time Magazine on April 16, puts
India's and Prime Minister Narendra Modi's rise to prominence best:
"Today, he's the leader of the world's largest democracy, and his life
story - from poverty to prime minister - reflects the dynamism and
potential of India's rise."
True enough, both Modi's and India's
rise to prominence on the global scene has been remarkable. In less than
a year since becoming prime minister in May 2014, Modi has put India on
the path to becoming a global powerhouse. And Modi has made it to
Time's list of the Top 100 Most Influential People.
Christine
Lagarde, the managing director of the International Monetary Fund, in an
address at Lady Shri Ram College in New Delhi on March 16, highlighted
India's rise, saying: "Just as many countries around the world are
grappling with low growth, India has been marching in the opposite
direction. This year already, India's growth rate is expected to exceed
that of China, and by 2030, it is will overtake China as the most
populous country in the world."
In fact, the IMF has upgraded
India's growth forecast twice in the past year, most recently in April,
from 7.2 percent in 2014 to 7.5 percent in calendar year 2015. The
global watchdog said growth will come from policy reforms, a consequent
pickup in investment and lower oil prices. The government, on the other
hand, believes that GDP growth will accelerate by eight percent to 8.5
percent in fiscal 2015-16 that began on April 1.
In fact, some
analysts are forecasting double-digit growth rates in the near future,
fuelled by government reforms which are proving to be a huge driver
among foreign investors who are pumping record levels of money into
India.
Last year, foreign private and institutional investments
into India reached record levels, with a dramatic increase expected in
2015. Investors from several major developed countries, including the
US, China, Japan, France, Germany and Canada have so far committed
massive investments in India, largely due to Modi's influence.
During
his recent visit to Canada, the first by an Indian prime minister since
1973, the two countries completed memoranda of understanding in a range
of areas, including civil aviation, rail regulation, education and
skills development, space cooperation, and projects focussed on
maternal, newborn and child health and social security.
Several
commercial agreements between Canadian and Indian companies, valued at
some $1.6 billion, were also announced in sectors such as aerospace and
defence, education, energy, mining, infrastructure, sustainable
technologies, and information and communications technology.
One
of the more important commercial agreements involves the
Saskatchewan-based Cameco, which will supply India with over seven
million pounds of uranium over the next five years as part of the
Canada-India Nuclear Cooperation Agreement. Modi had earlier signed
agreements with France to build nuclear reactors, aimed at fulfilling
his plans to make India energy sufficient.
As India takes off, it
represents more than an exciting investment opportunity for Canadian
investors. Prime Minister Stephen Harper sees 1.2 million Indian voters
in Canada who love Modi, which could be a big boost for him in the next
elections. Incidentally, Harper was actively involved in cultural events
in Toronto and Vancouver held in honour of Modi - which were attended
by "sellout" crowds of Indo-Canadians.
Modi's visit to Canada
will also increase awareness among investors about the opportunities
available in India. While India is probably the most over-weighted
country among foreign institutional investors, Canadians are now
beginning to warm up to investing in the country. Last year, the Excel
India Fund was the best performing mutual in Canada out of more than
4,000 such funds, according to Morningstar Canada. This indicates that
investors need to place greater credence in India as an investment
opportunity.
India has become a priority in Canada's Global
Markets Action Plan, which seeks to increase the number of Canadian
companies exporting abroad. During Modi's visit, Harper stated that "it
is exciting to see the commercial deals being signed between Canadian
and Indian firms" that "will generate jobs and economic growth in both
countries".
He also indicated that he and Modi are "busy working
to advance bilateral agreements that will further increase two-way trade
and investment flows" aimed at leveraging the enormous untapped trade
potential between the two countries.
Evidently, the relationship
between Canada and India will only grow stronger as India takes off.
Modi recognizes that the government cannot develop India on its own and
is getting the private sector more involved. He has also relaxed foreign
institutional and foreign direct investment restrictions and opened the
doors to foreign investors, which will drive the equity markets higher
to the benefit of investors.
For now, India can only keep rising, benefitting Canadian investors.
(23-04-2015-
Bhim Asdhir is President and CEO of Excel Funds in Canada..The views
expressed are personal. He can be contacted at
[email protected])
