"In a world of uncertainty, India is a bright spot"
Economic Growth
Since the landmark 1991 liberalisation, India’s real GDP has expanded at an average 6.2% through to 2025. This is one of the strongest multi‑decade growth records among major economies. Looking ahead, the IMF forecasts real GDP growth to average 6.4% between 2026 and 2030, underscoring India’s position as a durable, long‑term compounder in the global economy.
Demographics
India’s demographics are a powerful structural tailwind. Now the world’s largest population, India has a youthful median age of 28.7 and a declining dependency ratio of 48%, similar to China during its high‑growth era. A growing, increasingly productive workforce positions India to sustain strong long‑term growth and emerge as a global value‑added manufacturing hub.
Diversification
India offers Australian investors strong long‑term fundamentals and meaningful diversification. As a major commodity importer with unique demographics, India shows low correlation to both Australia (0.49) and global markets (0.47) over rolling three‑year periods. In contrast, commodity‑exporting emerging markets move more closely with Australia, making India a distinct and complementary growth exposure within portfolios.
Profit Growth
India’s long‑term fundamentals support sustained profit growth for quality companies in a large, expanding market. Over 26 years, earnings for India’s Top 50 firms have grown 10% annualised, supported by sector diversity and limited exposure to volatile cyclicals. India continues to be positioned for robust compounding earnings, driven by demographics, reforms, digitisation and capital expenditure on areas like infrastructure.
Governance
India has strengthened its governance and institutional quality over the past decade. World Bank governance indicators show clear gains in Government Effectiveness and Regulatory Quality, while Transparency International’s Corruption Perceptions Index reflects gradual improvement in anti‑corruption standards. These trends highlight India’s rising institutional credibility and reinforce its appeal as a transparent, well‑regulated investment destination.
Underexposed
India is now the 4th‑largest economy, representing around 3.5% of global GDP and 4% of global market capitalisation, yet its weight in the MSCI ACWI is only about 1.6%. As a result, most global portfolios hold well under 1% exposure to India, leaving investors materially under‑allocated to one of the world’s fastest‑growing major economies.
