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Several global funds have more than doubled their India allocations

Several global funds have more than doubled their India allocations, with the country now accounting for up to 15% of their total portfolios, attracted by India’s strong post-pandemic rebound, said Thomas Kuruvilla, managing partner for Middle East, India and member of the global board at Arthur D Little said in an interview.

Among prominent global investment firms, Swedish Investment house EQT AB, US-based Barings and BlackRock have increased their allocation to India. Several sovereign wealth funds, the Public Investment Fund of Saudi Arabia, Abu Dhabi’s Mubadala Investment Co. and Qatar Investment Authority, have also increased their investment in India.

“There is no other fund I am aware of in which the allocation has not increased in India. The allocations to India used to be in the range of 5% of their total allocation, which has increased up to 15% in some cases. The increase has been made mostly in sectors such as health care, financial services, education and real estate. The allocation for sovereign wealth funds is not explicitly by regions but by sectors operating in various regions, and India is becoming more prominent,” Kuruvilla said.

He added that the investors look for political stability, which translates into regulatory certainty.

Along with political certainty, investors are also concerned about the long-term outlook of the India-China relationship, besides factors such as competitiveness, the Centre-state polity, societal conflicts, short-term infrastructure and skill availability.

India has been an outlier in terms of economic recovery during the pandemic. The government, as part of its efforts to attract investments, has announced productivity-linked incentives across sectors.

This has attracted a lot of companies who are looking at India as a manufacturing base. For instance, Foxconn has started manufacturing phones at facilities in Karnataka, Telangana and Andhra Pradesh. GE Healthcare, Boeing, and Embraer Defence are looking to increase manufacturing in the country.

Not just sectors, global funds are now beginning to pay more attention to the Indian market. The latest Greed & Fear report by Jefferies attributed this to the market now having 30 companies with a market value of over $25 billion.

Sensing a growth opportunity in the Indian market, ADL is looking at building India as its hub for sectors such as automotive and energy.

“We are going to build many global hubs in India. So, the automotive sector, for sure and energy. We are also building for healthcare, which we need to get into that and also technology and digital. Telecom, ICT sector we need to get into that and manufacturing also. And these are, I think, very critical sectors (for India),” Kuruvilla said.

He added that many consultancy firms are not building expertise in India but only sourcing rudimentary work to India, and ADL will change that. Livemint

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