As the fastest growing large economy globally, India’s GDP is poised to expand by 7.5% in 2015 and 7.4% in 2016. With a hugely favourable demographic profile, India is set to experience the same demographic boom that drove China’s growth during the past decade.
The demographic dividend in high-level numbers
- World’s largest labour force and a 600 million strong middle class
- Average age of population in 2020 expected to be 29 versus 37 in China and U.S., with Europe at 45
- 50% of India’s population is under the age of 25
- The working age population is expected to be 900 million by 2020
The world’s largest democracy, India has in the past year also seen the pro-business government of Prime Minister Narendra Modi being swept to power. In addition to tackling headline issues such as fuel subsidies and the bureaucracy, Modi is making grass root level changes to ensure that economic growth caters to all sections of the population. All of this is resulting in a tangible improvement in corporate and consumer confidence levels across the country.
Against this background, India provides a huge opportunity for disruption across sectors, where productivity and efficiency levels lag compared to Western standards. This presents a significant opportunity to deliver outsized investment returns as consumer experiences improve, in turn producing potentially substantial returns on capital.
The widespread adoption of the Internet and broader technology in India provides such a compelling opportunity for change. It represents a once in a lifetime opportunity to rewrite conventional business models in sectors from healthcare and education to financial services.
Mobile is driving the growth of internet and technology adoption in India
- Internet user base now over 400 million; an active mobile internet user base estimated at 317 million, and expected to grow at over 20% per annum over the next 5 years
- Growing community of online shoppers aiding the adoption of the internet and mobile in India
- The falling price of smartphones is playing a vital role in bringing large sections of the hitherto underserved population online.
The Indian tech sector is breaking out with a significant increase in the quantum of capital flowing into the Indian ecosystem. This can, at least in part, be attributed to the new entrepreneurial wave, which is translating into a flourishing community of early stage businesses across the country. This is being given further impetus by the Modi government, which is calling for India to become ‘the startup capital of the world’. So much so the government has called financial institutions to fund entrepreneurs and kick-start a ‘Startup India’ revolution in the country.