Memos from the Market: New perspectives on attracting investment from India

By Sakshi Sharma

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The wide world is all about you; you can fence yourself in, but you cannot forever fence it out

 - said J.R.R. Tolkien, Lord of the Rings. I am a fan of the book, and this line by the author lives in my head rent-free. Several old economic assumptions no longer hold good, but India could offer new opportunities in leading job creation worldwide during this fog of volatility & hyperinflation. There is no significant evidence of de-globalization yet. However, there has been intense chatter across corporate earnings calls on the reshoring. Overall global trade has caught up with pre-pandemic levels. However, aggregate data hides substantial problems in specific supply chains like semiconductors and automobiles. With so much happening around us and me completing a decade-plus in Outbound FDI from India, I wanted to lay out some of my observations while conversing with CXOs from India Inc. and the expansion intelligence our team gathers in-market.

Macro Trends

Pharma companies believe the pandemic has bought renewed attention to their industry. Major players are now keen to invest in their most important markets rather than just depending on a distribution partnership.
India's decadal apathy towards recognizing innovation across sectors has led to opportunities for target countries to host R&D & CoE (Centre of Excellence) facilities. Large Indian MNCs have built frameworks to collaborate with universities, while high growth firms & startups are onboarding onto economic development incubation programs or joint working partnerships with local firms.

 

Technology services continue to rule the league tables of active investors from India. However, their location strategy is not limited to proximity to their long-contract clients anymore. IT firms, which are primarily structured horizontally, offering a bouquet of services, are now keener on choosing locations for specific industries and or specializations, think Cybersecurity, AI/ML, and Blockchain.

 

Startups, YES, them, and we produce a lot of them. Approximately 2-3 per dayTAM or (Total Addressable Market) isn't something the Indian domestic market can take pride in for now, but we could be there in 2030. In the meantime, startups with significant growth capital, existing client traction, and nudges on profitability from their investors are keen to make serious attempts to gain market share abroad. There are many examples, but firms like Zoho and Freshdesk come to mind where these companies build more than just a sales presence on the ground to gain larger market share and goodwill.

 

In our analysis comparing pre-pandemic data ( 2018-2019) to India's expansion intent & investment projects ( 2021 - Q1 2022), there are visible signs of green shoots of outward FDI momentum. India could play a key role in isolation or as part of group of source countries in the APAC region to strengthen your job creation agenda. 
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Wavteq is a global strategy consulting firm advising governments & public sector institutions in building resilient economies by offering creative solutions around new job creation & accelerating capital investment. We've been a strategic thought leader in economic development for over a decade, bringing unrivalled capabilities, tools, technologies, and talent to every client partnership. Over 1,000 governments, multilateral organizations, professional services firms and academic institutions subscribe to Wavteq-developed products. Wavteq's consulting team has helped economic development organizations secure over $50 billion in greenfield investment projects in the last ten years. The firm has a global footprint across 12 countries.  

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