May 16, 2018
Before Lord Clive’s blue-coated enforcers moved in, as the military wing of the East India Company in the late eighteenth century, between 60% and 70% of the World’s manufactured goods were produced in India: more than all the countries of Europe put together. But by 1952 the subcontinent’s share had dropped to 3.8% and, as Monmoham Singh memorably put it, “…the brightest jewel in the British Crown was, by earnings per capita, the poorest country in the world”.
Not any more.
Today India has more billionaires than the United Kingdom (despite suggestions to the contrary from Dragon’s Den): nearly three times as many at 131 to 54. And by the end of the next decade, India’s economy is projected to grow to a staggering $6.6 Trillion, with the former mother country stalling at $3.5 Trillion (just about half of the subcontinent’s projected total). Economic forecasters have also been projecting for the past few years that India will overtake the United Kingdom in aggregate GDP by 2020. Well…don’t have to hold your breath, because that’s already happened.
India tops the list of the fastest growing economies in the World, projected to grow at a rate of 7.9 per cent annually for the next ten years according to this month’s influential Report from The Centre for International Development at Harvard University (CID): and the report also finds that those countries that have diversified their economies into more complex sectors, and in particular India, will be the fastest growing global economies over the coming decade too.
Perhaps even more interestingly, CID also found that India ranks best on what it terms the Complexity Opportunity Index (COI), which calibrates how easy it is for an economy to redeploy existing knowhow and assets in support of innovative new products and services. In short, it measures the capacity of an economy to reshape itself to the needs of readily developing global markets.
CID find that “India’s existing capabilities have not only diversified its exports, but also allow for easy redeployment into related products that depend on those same capabilities, making diversification relatively easy.”
Which, in a nutshell, is why the United Kingdom’s Economy is likely to grow at less than a quarter of India’s for the foreseeable future (some 1.6% as against the subcontinent’s expected 7.9% (according to EY‘s Spring Forecast for 2018)). In the absence of a core-manufacturing base and with a huge dependence on its financial services sector, the United Kingdom simply lacks the flexibility to adapt quickly to changing market conditions. One might also point out that what is left of its vestigial manufacturing sector is largely owned by Indian interests as well (think British Steel (Tata) and Jaguar Motor Cars).
From that perspective it becomes increasingly clear that Clive of India and his blue-coated horde were more of a glitch than a long-term trend. As the French say, perhaps appropriately in these Brexit laden days, plus ca change c’est la meme chose: the more things change the more they stay the same. India is now back where it belongs, spearheading World economic growth: just as it did before the East India Company showed up.
Red Ribbon has been specialising in India’s Markets since the company was founded more than a decade ago, bringing an unparalleled expertise to its investment policies on the subcontinent with specialist sectoral advisers working from it’s Head Office in London in conjunction with more than a hundred local experts on the ground in the subcontinent itself. And by drawing on that body of expertise The Red Ribbon Private Equity Fund now offers an opportunity to secure above market rate returns in this, the fastest growing large economy in the World.
The article rightly highlights the significance of long term economic trends: in the mid-eighteenth century India (closely followed by China) were the world’s economic superpowers, and although the leverage of advanced industrial technology in Europe (Britain in particular) and the United States proved sufficient to distort that trend over the last 250 years, it now seems that the economic balance of power is reverting inexorably to it’s natural balance. I have personally found it fascinating to monitor this process over recent years.
And of course this vindicates Red Ribbon’s decision in 2008 to place India and its fast growing markets at the heart of our investment strategies from the very start. Our expert advisers now have an insight into what makes the subcontinent’s markets tick, what makes them so profitable and where the best opportunities for above market rate returns are likely to be found.