Today India is one of the most favoured destinations for foreign investment, with a high GDP growth level, progressive policy environment, predictability in tax matters, large pool of scientific and skilled human resource, and an environ where the ease with which businesses could be started and run is getting better and better. S Ravi pens his reading of the Indian scenario as it evolves, and presents a suggestive portfolio for our readers tgo invest into.

India’s economic fundamentals have been gaining strength steadily — a large youthful population with rising incomes that is increasingly online and consuming more. On the macro front, India is among the few emerging economies wherein IMF expects GDP growth of 7.6% in 2016-17 as an outcome of the thrust in reforms. The Indian Government too has also taken up a series of measures to improve the ‘Ease of Doing Business,’ with an emphasis on simplification and rationalization of existing rules, and the introduction of information communication technologies to make governance more efficient and effective. Here are some steps taken by the GoI:

Thus, with its fundamentals strong and a reforms regime in place, India Inc. today has the potential to reward investors placing their bets on its growth story in a long term period of 7-8 years. Though overall growth sentiment is upbeat, some sectors of the Indian economy do need some specific mention, which you will note has been detailed in the following table:

1. Information Technology (Apps, Platforms & Software) Focus of GoI on Digital India.

Business transformation.

Chance to automate certain business processes & cut costs.

ü Lendingkart, a digital lending platform, raised INR 130 crore in a series B round of funding led by Bertelsmann, Germany-based mass media giant.

DriveU, an on-demand driver provider operated by Humble Mobile Solutions Private Limited, has raised about US$ 1 million.

2. Solar Energy ü Solae Potential in India is about 130 gigawatts by 2025.

Continuing fall in PV prices could make it cheaper than coal.

ü World Bank has committed US$ 1 billion for India’s Solar Energy projects.

The GoI is likely to sign a US$ 1 billion partnership with the US government, aimed at funding off-grid solar projects, mini-grids for rural areas and other subsidy-based projects for economically backward regions in India.

3. Defense Major international defence production companies have taken keen interest in entering India.

Excise and Customs Duty exemptions enjoyed by OFB & Defence PSUs withdrawn to facilitate International entry and ensure level playing field.

GoI has awarded 56 defence manufacturing permits to private sector entities last year alone, after allowing FDI in defence in August 2014.

Boeing, Airbus, Lockheed Martin, BAE Systems etc., are actively exploring the scope of future investments into India.

4. Housing Finance Companies / Real Estate Funds Continued demand for affordable housing.

Housing finance Company Balance sheets cleaner than banks.

FDI policy regarding Construction Development Sector amended & includes easing of area restriction norms, reduction of minimum capitalisation and easier exit from project.

ü Aspire Home Finance Co has raised INR 100 crore (US$ 14.82 million) debt from IFC to be used to fund its expansion in  lower and middle income housing market segments.

Godrej Fund Management (GFM), an arm of Godrej Properties, has raised US$ 275 million from Netherlands-based APG Asset Management NV to invest in residential projects in India.

5. Pharmaceuticals Expected to expand at a CAGR of 15.92% to US$ 55 billion by 2020.

India likely to be among the top three pharma markets by incremental growth and sixth largest market globally in absolute size By 2020.

Cost of production significantly lower than that of the US and almost half of Europe’s, not to mention very strong R&D base.

Rubicon Research P Ltd, a contract research and manufacturing services firm, is in advanced talks with Everstone Capital and a few HNI to raise up to INR 240 crore

Lupin Ltd plans to acquire a portfolio of 21 generic brands from Japan-based Shionogi & Co Ltd for INR 10.08 billion to strengthen its presence.

IFC plans to invest upto US$ 75 million in Glenmark, which looks to raise US$ 200 million for expansion and launch of several new products in India and other emerging markets over next three years.

6. Auto – 4 wheeler The implementation of One Rank One Pension and 7th Pay Commission will increase urban consumption.

Decline in commodity prices of steel and aluminium will decrease costs of 4 wheelers thus increasing auto sector margins.

Rollout of GST to have positive impact.

Nissan is in discussions with GoI for bringing electric and hybrid technologies to India for aiding air pollution reduction.

Ford plans to manufacture two engine families by 2017 in India, a 2.2 litre diesel engine codenamed Panther, and a 1.2 litre petrol engine codenamed Dragon, which are expected to power 270,000 Ford vehicles globally.

7. Logistics Expected to grow at a CAGR of 12.17% by 2020 fuelled by explosive e-commerce growth and focus on ‘Make in India’.

On implementation of GST this sector to benefit most thanks to cost rationalization.

Amazon plans to set up its second largest global delivery centre in Hyderabad, 2.9 million square feet in size and employing 13,500 people.

Indian Railways has issued a Letter of Award to US-based GE for an INR 14,656 crore (US$ 2.19 billion) diesel locomotive factory project at Marhowra, and to French transport major Alstom for an INR 20,000 crore (US$ 2.98 billion) electric locomotive project in Madhepura, Bihar.

The Indian Government’s focus on pushing ‘Make In India’ while simultaneously enhancing infrastructure investment and aided with stable policy reforms, is giving a solid boost to investor confidence, as well as making India an attractive investment destination. This reading is supported by the data on growth, of 82% to US$ 27 billion in M&A deals involving Indian companies during January-June 2016, PE investments of US$ 9.8 billion during January to July 2016 as well as FDI of US$ 40 billion in 2015-16. Investors with a long term vision, wanting to be a part of this ‘Great India Growth Story,’ can contemplate investment in the above discussed sectors after understanding the risk and returns in the entities operating in these sectors.

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