By AltG Investment Research Lab
The last few months in India have been dominated by headlines around a weakening currency and a slowing economy. That the business cycle moves in a pattern and that US Fed Policy has a global impact are foregone conclusions. What matters is what are the key demand and supply driven policy measures that India needs to take to boost its currency and propel rapid economic growth. The answers lie both on the consumption side and the financial sector.
Key Themes:
Deepen Capital Markets via Hybrids:
India needs to create structures that allow hybrid capital to be infused into companies. Capital that sits between the equity and the debt in the capital structure. Further development of India’s capital markets is essential to tap into lower cost and flexible capital.
Enhanced tax structures for hybrids, derivatives, and fixed-income securities in India can incentivize greater participation in both private and public markets. The multiplier effect of such instruments is where the focus needs to be and not on specifically taxation of the instrument itself. A dollar of hybrid capital goes a long way!
Taxation Key To Making Indian Investments Attractive:
For all the talk around FII outflow, the key point is investment flow sees relative valuations as the key factor. Essentially, what yield does an Indian asset provide relative to global assets.
Taxation and Investment Vehicles that allow for more attractive investment avenues will be key towards allowing for global FII flows to return.
As stated above, The “money multiplier effect": how each dollar invested fuels exponential economic value creation, underscoring the need for a long-term view on taxation policies.
High Value Add Exports:
India needs the next boost to incomes and the key is export of services and high value add goods.
Government policy that allows for this is where the answer to how to boost incomes lies.
Tapping into global demand for new industries across healthcare, technology and services will be key for creating the next wave of income and consumption boom in India.
As 2025 dawns upon us, it’s imperative that India aggressively pushes to leverage its demographic dividend and large consumer market via access to global capital and global demand to further propel its growth.
Disclaimer: In the article "1. "India's Economic Growth 2025: What Are the Top Catalysts?"" above - Any views, comments or communication (above or in the past) should not be construed to be investment advice by Alternative Growth (hereafter referred to as “AltG”) in any form whatsoever. AltG does not make an offer to sell or solicit to buy any securities.
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