Will Modi 3.0 continue to cheer up NRI investors?

 

As the National Democratic Alliance (NDA) embarks on its third term in governance, there is a palpable sense of anticipation among Non-Resident Indian (NRI) investors. The NDA's consistent claims on economic reforms, infrastructural development, and ease of doing business had resonated well with the investor community in the last two terms.

The new tenure promises to build upon these foundations, potentially offering numerous opportunities for NRI investors. Here’s a closer look at what NDA's third term means for NRI investors.

The longer vision of India 

With India aiming to emerge as the fourth-largest economy by 2026 surpassing Japan and as the third-largest economy with its GDP crossing $5 trillion by 2027 surpassing Germany, the next term in office for the government is to execute and capitalise on the momentum built in the last few years. 

India's GDP growth rate of 8.2% for FY24 is the highest among all major large economies; showcasing the growth of the economy and the opportunities it will bring for the nation.

What’s in it for NRI investors?

Indian markets outperformed global counterparts across three, five, and ten-year periods. The Nifty Large Cap Index delivered a 10.9 percent annualized return in the past 10 years. Over the same period, the US Index and China’s market delivered only 6 percent and 2.7 percent. Similarly in the last five years, Indian markets delivered 18.8 percent while the US Index delivered only 7.6 percent. India markets recently solidified its position as the most emerging market as per Morgan Stanley, a trajectory that showcases it as a potentially high return-yielding market for the upcoming future. Here are the things to look forward to in the Modi 3.0 government.

Continued economic reforms and stability 

The previous NDA governments have prided themselves on economic reforms. Initiatives such as the Goods and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC), and various financial inclusion schemes have established a robust economic framework. 

With the NDA back in power, NRI investors can expect the continuation and enhancement of these reforms, fostering an environment of stability and predictability essential for long-term investments. While reforms like GST take time to show returns, the immediate impact can be seen via fiscal policies.

Enhanced ease of doing business. 

India has climbed significantly in the World Bank’s Ease of Doing Business rankings under the NDA’s tenure. The third term is likely to witness further streamlining of regulatory processes, making it even more convenient for NRIs to invest in India.

This could include simplified processes for property transactions, financial investments, and business set-ups, ensuring that NRIs face minimal bureaucratic hurdles.

Focus on infrastructure development

The NDA's focus on infrastructure development has been a major foray of its economic strategy. Major projects such as the Bharatmala project, Smart Cities Mission, GatiShakti Scheme, and the expansion of national highways have boosted the real estate, logistics, and construction sectors.

Continued investments in these areas are expected to create lucrative opportunities for NRI investors looking at real estate, infrastructure bonds, and related financial instruments.

Strengthening of digital India and technological advancements

The digital India initiative has revolutionized the way business is conducted in India. The push towards a cashless economy, increased internet penetration, and the promotion of digital literacy is expected to transform the economic landscape further.

With a continued focus on technological advancements, the NDA’s third term is expected to bolster sectors such as fintech, e-commerce, and digital services. NRI investors can capitalize on these growing sectors by investing in tech-driven startups, IT services, and digital infrastructure projects. 

Opportunities in renewable energy

India has ambitious goals for its power and renewable energy sector, aiming to reach a $1 trillion economy in this space by 2030. The launch of the “PM Suryodaya Yojana 2024” with an allocation of  ₹10,000 crore underscores the government’s commitment to solar energy. 

This initiative is expected to drive substantial solar power generation growth, reduce fossil fuel dependency, and contribute to environmental sustainability. The NDA’s third term is likely to witness an acceleration in this sector, providing ample investment opportunities for NRIs.

NRI-centric policies

The NDA’s previous terms have seen the introduction of several NRI-friendly financial services and schemes, such as the Sovereign Green Bond Scheme and various NRI banking facilities. The third term is anticipated to bring further enhancements in this area, with more tailored financial products, investment schemes, and policies designed to cater to the unique needs of the NRI community.

One more efficient channel for streamlining NRI and foreign investments in India is GIFT City with the GOI aiming for it to become a hub for sustainable finance. In conclusion, the NDA's third term in governance promises a continuation of its pro-investment policies, economic reforms, and infrastructural advancements. For NRI investors, this translates into a stable and promising investment environment, characterised by reduced red tape, enhanced ease of doing business, and numerous opportunities across various sectors.

As India continues its journey towards becoming a global economic powerhouse, NRI investors are well-positioned to reap substantial benefits from the NDA’s governance.

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