India has been receiving huge investments since Mr. Modi took over as the PM. How do these countries (Australia, Japan, Korea) benefit from investing here? Why would a developed country invest a billion dollars in a develo country like India?




Dr. Balaji Viswanathan

If you are a construction company, would you put money in a place where 100 people are looking to buy new homes or put where no one is looking to buy homes? Of course, the former.

Developed world is saturated and there is not as much need there. Underdeveloped world is too poor to afford a lot of infrastructure.



This leaves India in a sweet spot for a variety of industries. If a property developer invests money to build a home and handover the keys, you get happiness [new home] and he gets happiness [$$]. This is the exact same relationship between countries. Both benefit from such investments. That is the bedrock of capitalism.

In the next 30 years, 300 million Indians would climb up to the middle class. That is equivalent to the whole population of the United States. 300 million Americans buy a few trillion dollars worth of stuff every year. This 300 million newly rich Indians are also expected to match up to the same.



These 300 million people are going to build new homes as they probably live in shanties now. That is about 100 million new homes. Assuming that an average home costs $100,000 [₹60 lakh], we are talking about total purchase of $10 trillion dollars in housing & real estate. A few of that trillions would go into sectors like cement, steel, glass, furniture etc. Australia, Japan and South Korea have huge companies in infrastructure and mining.

An average middle class person in the west consumes about 8000 kWh per year. Multiply by 300 million and you get 2400 tWh. That is nearly America's electricity production and you would need trillions of dollars in power infrastructure.



These 300 million people might buy 1 car per family. These 100 million cars is a nightmare for Indian policymakers, but a bonanza for the auto manufacturers. Assuming an average car is priced at $5000, we are looking at a $500 billion in total car purchases. To support these 100 million new cars, India would spend 100s of billion dollars in road building, bridges and tunnels.

An average middle class family in the US spends about $1000 on healthcare per month [for insurance, medications etc]. India might not be far behind. Even taking a fourth of that would mean the new annual healthcare expenses in private sector is order of $300 billion.

These 300 million people who demand quality schools and colleges. How many good schools and colleges do we have? The admission into IITs, IIMs and AIIMs number in a few 1000s, while we are talking about a number 5 orders of magnitude bigger. That means an exploding education industry.

I can keep adding trillions of dollars in various other sectors including food, clothing & apparel, entertainment etc. We are talking in colossal numbers here [$1 trillion = ₹63 lakh crores].




其他各个行业都能新增数万亿美元的投入,包括食品、服装、娱乐等。我们谈论的可是巨额数字(1万亿美元= 63万亿卢比)。




Dr. Balaji Viswanathan


What does a country get when it invests in an another country? What is Japan getting when it invests 30 billion in India?



What do I get for investing in Google stock? Profits [hopefully]. Every investor hopes to get returns for his/her investment. If there are ventures that can make profits, there is enough money to get into it. In fact, when Google went for their IPO, investors practically begged the company to take their money.



Japanese companies don't have a lot of room to invest home. Interest rates are almost zero and efficiencies are very high. There are not a lot of low hanging fruits for the entrepreneurs squeeze profit from. Consumer spending is relatively low. They need to find ventures to multiply their idle money. India is an ideal place for it, if we can offer the right opportunities.





Ashutosh Minz

Simple reason Compounding. Do you know how much time will it take to double your money if it is earning a compound interest of 15%? Approxmately five years. Did you know that India’s Nifty( National Stock Exchange Index) has given more than 15% returns in the last 1 year. In the last 5 years the Nifty-50 index has grown at a CAGR of 11.3%.

There is a simple rule to know how much time it will take to double your money. It’s called the rule of 72. You just need to divide 72 by the annual rate of returns to find out the approxmate time. For example at 10% , it would take approx 7.2 years to double your money.



In the developed countries the economy has stagnated and markets hardly give a return of more than 2–3%. At 2%, it would take 36 years to double an investors money. Now what if he could double his money in only 5–7 years by investing in a rapidly growing economy. Of course his money will be subject to exchange rate risks but the upside is just too good to miss and he can take his money out any time he wants by investing as an FII(Foreign Institutional Investor).

Another important point is that in developed countries the interest rates are low, which translates to investors getting money at a cheaper rate than a develo country. This means that an investor in a developed country can borrow money cheaply in his own country and invest in a rapidly growing develo economy like India to earn high returns. It’s a win win for the investor.






Anil Choudhari

Originally Answered: Why will a foreign country tend to invest a billion dollars in a develo country like India?

Due to following reasons.



1. With  Billion population (roughly one sixth of the world), India is a huge untapped market. This means huge increase in sales for their products and services and therefore good profits even after paying taxes.

2. With aggressive economic policy adopted by Modi Government, it promises one of the highest growth at 8-9% YOY in GDP during next 2-3 decades. This will mean increase in per capita income from today's level of 1800 USD / year  to say 4 times over next 3 decades. This will directly reflect in 4 times increased in consumption.

1. 印度有十几亿人口,是一个待开发的庞大市场。这意味着他们的产品和服务的销售额能得到大幅提高,即使扣除纳税也能获得丰厚的利润。

2. 莫迪政府采取积极的经济政策,承诺在未来20 - 30年里保持8-9%的GDP年增长率。这意味着在未来30年里,人均收入将增加4倍。这会直接反映在消费上,实现4倍的增长。

3. India is today a low labour cost country with huge demographic advantage with 65% of total population below 35 years. This puts it at huge advantage for producing cheaper products for the global market. With increased labour cost, China is no more competing with India here. This will help improve profitability for foreign investors.

4. India has ready pool of executives and technocrats. It however requires technology for sale of export worthy products. This will be brought in by foreign companies.

3. 今天的印度是一个劳动力成本低廉的国家,拥有巨大的人口优势,总人口的65%在35岁以下。这使它在为全球市场生产更便宜的产品方面具有巨大的优势。随着劳动力成本的增加,中国不再与印度竞争。这将有助于提高外国投资者的盈利能力。

4.  印度有现成的高管和技术官僚。但是,出口产品的销售需要技术。这将由外国公司带来。

5. India's banking sector is fairly mature and transparent with respect to supply, products and reach.

6. Foreign investors are waiting for the important bills like land acquisition (required badly for infrastructure improvement), VAT (simplified tax regime) to get cleared.

5. 印度银行业在供应、产品和覆盖范围方面相当成熟和透明。

6. 外国投资者正在等待重要的法案,如土地征用(基础设施的改善急需土地征用法)、增值税(简化税收制度)等得到批准。

7. Other concern of the FDI- investors is improvement in "ease of doing business"- today low at 136. Government has initiated steps in this direction.

8. Today's foreign investment is primarily due to positive sentiments created mainly by dynamism of Mr. Modi and single party getting majority in Lok-sabha. It remains to be seen how fast Government decisions, culminate in to quick actions in our de ocratic set up.

7. 外国直接投资投资者的另一个担忧是“营商便利度”的改善,目前这一指标降至了136。政府已开始朝这个方向努力了。

8. 今天的外国投资主要是由于莫迪先生的推动和单一政党在人民院获得多数席位所创造的乐观情绪。在我们的皿煮体制中,政府的决策能以多快的速度采取行动还有待观察。





It's not just Modi, Its entire India. Though Modi fuels up the spirit of capitalism in recent times, we're slowly graduating to the youngest country in the world. If things progress as per plot, India would be the youngest country in the world

不仅仅是莫迪,整个印度都是如此。虽然莫迪最近点燃了资 本主义精神,但我们正在慢慢地走向世界上最年轻的国家。如果一切进展顺利,印度将成为世界上最年轻的国家。

So, consider the market size and potential which just opened the global arm only couple of decades back, ton of market potential to exploit when coupled with young population, isn't it?


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