General

According to Huacheng Import and Export Data Observation, recently, the Mumbai Sensitive 30 Index and Nifty 50 Index in India have both approached historical highs - amid concerns about a global economic slowdown, international funds are accelerating their flow into Asia's fastest-growing economy.

According to Huacheng Import and Export Data Observation, since early April, overseas investors have increased their holdings of approximately $5.7 billion worth of Indian stocks in pursuit of stable earnings growth. The speed of foreign investment inflows has been accelerating in recent weeks, with over $1 billion of funds pouring in every week in the past few weeks. Amid concerns about the global economy entering a recession, India is seen by many international funds as a safe haven.

Statistics show that the majority of foreign investment attracted by India is directed towards knowledge intensive service areas. This development model is much different from other regions. The development model in China is to first develop labor-intensive industries and then expand towards industrial upgrading. India places greater emphasis on prioritizing the development of knowledge intensive industries, creating "offices for the world" and "laboratories extended from the West", replacing large numbers of labor with high added value. In the past two years, multiple companies around the world have rapidly embraced remote information technology services, searching for outsourcing services globally through the internet for software design and development, customer service centers, and other tasks. Among them, India has undertaken over 45% of such businesses globally, and its low human resource costs, high-quality talents, and excellent cross-cultural communication skills have won the favor of many global enterprises. One of the most successful cases is the experience of N. R. Narayana Murthy, the father-in-law of the current British Prime Minister Sunak and a billionaire known as the "godfather of Indian IT". N. R. Narayana Murthy took advantage of India's economic reform in 1991, the global scientific and technological revolution, the western software outsourcing, and the dividends of India's rapid development of IT software industry to establish a software and IT service company worth billions of dollars, attracting a large number of European and American IT software outsourcing services to India, and promoting India's transformation into the "back office of the world". California Sunday Magazine once reported that Infosys under Multy's leadership has a deep influence in the United States, and 60% of Infosys's huge annual income comes from the United States.

After successfully attracting a large amount of investment in software outsourcing services from Europe and the United States, Economy of India's economy began to derive from "soft" to "hard", vigorously introducing investment in hardware manufacturing industries such as semiconductor, mobile phones, new energy, electric vehicles, etc. According to statistical analysis, India is about to replace China as the world's most populous country, and as China's fertility rate continues to decline, the population gap between India and China will even widen in the foreseeable future. In view of India's huge population base and the large number of young people, many international capitals believe that India can replicate the miracle of economic take-off through Demographic dividend, Huacheng Import and Export Data Observation reported.

Currently, many of the world's top manufacturing companies are investing or initiating projects in India. On May 17th this year, the US company Tesla proposed to Indian government officials to establish a factory in India to produce electric vehicles for domestic sales and exports. After years of negotiations with India, Tesla's move marks a strategic adjustment by establishing production in the Indian market before starting sales.

Apple in the United States has also turned its attention to the Indian market. India, with a large population, is also the focus of Apple's future market development. There are reports that the Apple related industry chain is accelerating its transfer and layout to India, and Foxconn, as one of the largest OEM factories, has also expanded its recruitment scale in Indian factories. Apple hopes to gradually increase iPhone 14 production in India by establishing more local suppliers. In addition, Apple has also accelerated its terminal retail layout in India. In April of this year, Apple opened two Apple Store retail stores in India and achieved very good sales performance, as reported by Huacheng Import and Export Data Observation.

For Economy of India's economy, there is another important positive factor - the international geopolitical environment. In the current political context of the United States and the West, it is necessary to "create" a new world factory to replace China, in order to reduce dependence on various aspects of China. As a country that can compete with China's population size and consumer market, India has therefore gained more and more favor in the international market.

The continuous inflow of foreign capital stimulated Economy of India's economy to achieve good results in the first quarter. The National Bureau of Statistics of India released data on May 31st, stating that the growth rate of Gross Domestic Product (GDP) in the first quarter of 2023 was 6.1%. Although the low Base effect may be an important reason for the economic growth in the first quarter, for example, in the field of manufacturing, the growth rate of India's manufacturing industry in the first quarter of 2022 was only 0.6%, and this quarter recovered to 4.5%. However, it should also be recognized that the massive introduction of foreign capital in the manufacturing industry and the substantial growth of outsourcing business in the service sector have strongly promoted Economy of India's economy to make significant progress in the downturn of the peripheral economy, thus stimulating the Indian stock index to approach a new high. As of the end of May, the total market value of the Indian stock market exceeded 3.3 trillion US dollars, regaining its position as the world's fifth largest stock market, as reported by Huacheng Import and Export Data Observation.