5 Essential Tips To Know Before Investing in India
Last year, the GDP of India reached $1.84 trillion, an astonishing 2900% increase since 1970, and the economic forecast is sunny for the subcontinent. With the economy predicted to continue to increase in leaps and bounds as well as increased government incentives for foreign investment, now is the time to get in on the ground floor. With a great deal of their population at the age of 25 or younger, India is an energetic, dynamic place brimming with potential employees. However, investing in India can be a risky enterprise, given political instability and unfamiliar territory. Keep these five essential tips in mind to ensure that you invest wisely when the time comes.
1. Educate Yourself. Get a firm grasp on the market environment by following the Bombay Stock Exchange (BSE) and National Stock Exchange of India (NSE). You may wish to consider investing in an exchange-trade fund (ETF), which is a low-risk way to invest and sidestep various legal and tax red tape proceedings. A few of these you may wish to consider include WisdomTree India Earnings Fund, PowerShares India Portfolio, and iPath MSCI India Index ETN.
2. Rise of the Rupee. Thanks to a recent boost of foreign investments, the value of the rupee rose considerably in recent years to counter their inflation rate. This in turn has made raw resources such as crude oil and diesel fuel more affordable while lowering the cost of consumer goods. The Reserve Bank of India is also poised to slash their 8% interest rates, offering an incentive for industries to expand. Keep all of this in mind as you decide which area to invest in.
3. Stay Away From Volatile Industries. Chiefly the oil industry is very unpredictable currently, with oil prices fluctuating wildly as India is a large importer of oil. Similarly, the gold industry is not reliable, as large quantities of gold have been imported and then hoarded. It would be safer to stick with industries that are predictably strong, such as tourism or software technology. Investing in infrastructure may also yield long-term benefits if you wish to reside long-term in India’s business market.
4. Keep an Eye On Regional Politics. Only a very naïve investor assumes politics have no effect on a nation’s market economy. As India borders Pakistan and is close to other Middle Eastern regions, terrorism is a very real concern for the country. Similarly, events that we take for granted can also catalyze economic fluctuation, such as elections. Fortunately, the current government is taking a very liberal stance on wooing foreign investors into their country, but any regime change could affect that.
5. Learn Hindi. You might have the best business plan laid out and invest in all the right areas, but your goals will only be half-achieved unless you have the capability to actually go in and manage your stocks and holdings independent of any translator. To do this, it is best if you start learning Hindi right away. Send us an inquiry to get started, or take a look at our various Hindi courses.