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Emerging Markets

India economy, foreign investment and agriculture

Trip notes: Indian economy reforming

May 2018

Venkatesh Sanjeevi, Senior Investment Manager

Our India team is impressed by the newly formed Invest India team and recent efforts to reform the agriculture sector.

Our trips to India are focused on acquiring insight that is unattainable through company management meetings or financial reports.  We visit India 4-6 times a year, yet we very rarely meet management teams or attend broker conferences there because our corporate access in London is excellent. Instead, our trips focus on building a feel for activity levels on the ground: for example, we visit manufacturing plants of companies we hold, or we meet dealers and distributors of competitor companies, and we talk to consumers, government officials and unlisted companies.

On our most recent trip in August 2017, we spent a week travelling across the length of the country, from Punjab and New Delhi in the North, to Mumbai in the West, to Coimbatore in the South.  Some of the meetings were focused on viewing manufacturing facilities of our portfolio companies and visiting branches of service providers.  In New Delhi, we met senior government officials across various departments like highways, aviation, agriculture and skill development. We witnessed first-hand the various structural reforms being taken by the Modi government and were positively surprised at the high energy levels across most officers.

The Invest India initiative spans multiple sectors with a value of around $80 billion

One of the most exciting meetings was with ‘Invest India’. The primary role of this small and dynamic, 30-member team of ex-bankers and consultants is to act as a bridge between international investors and government officials, thus ensuring smooth project planning and implementation.  This is an initiative spanning multiple sectors and to a value of ~$80bn.  Most team members have left their profitable private sector jobs in order to work with the government. 

The other department where we saw a lot of activity was agriculture, the backbone of the Indian economy. Having been unchanged for decades, the government is in the midst of revamping the way farmers sell their produce to traders. This reform will reduce information asymmetry on prices, which currently generates supernormal profits for middlemen, and should thus ensure fair pricing for farmers. Elsewhere, plans to improve the current toll revenues structure were well underway in the highways department.