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2018 June
Emerging India: Outlook a Crucial Consideration for Investors

Although not “official”, India Prime Minister Narendra Modi’s visit to China in April was seen as a move to mend troubled relationship between the two countries to get India out of economic plight. Hong Kong is the “super connector” for close economic collaboration between China and India. What does the future hold for local businesses investing in India?

 

While border conflicts fire up every once in a while, economic benefits do come first; China and India are willing to put down their differences to drive economic cooperation. In fact, China hopes to have greater access to the Indian market and India wishes to invigorate its manufacturing industry with new momentum from Chinese investment. As investment and trade between the two countries grow, a win-win outcome can be anticipated.

 

Sino-Indian trade getting increasingly frequent

According to Puneet Agrawal, Consul-General of India to Hong Kong, figures show that China and India are enjoying increasingly closer trade relationship. China is currently India’s biggest trade partner, recording against-trend bilateral trade growth of 20.3% in 2017, totaling USD84.5 billion. Total investment by both sides is also increasing steadily, mirroring a favorable trend. Agrawal cites the example of Mi. He says this Chinese brand is developing so strong in India that it has now overtaken Samsung of Korea as the biggest mobile phone earphone manufacturer in India.

 

Successful opening will benefit Hong Kong

Agrawal continues to say that under Modi’s pro-commerce and pro-growth administration, India has been relaxing restrictions on foreign direct investment in the past few years. In Doing Business 2018 published by the World Bank, India has jumped 30 places from the previous year to rank 100th globally. According to another report, India clocked 7.2% GDP growth last year, making it the fastest growing major economy in the world. Agrawal thinks all these are attributable to comprehensive reform and it is evident that India’s investment outlook is much more promising than before.

 

As for Hong Kong with backing from China, India is Hong Kong’s third biggest export market and seventh biggest import source market. The country is also the fastest growing major emerging economy in the world. Middle-class and young consumers have been increasing in numbers rapidly in recent years. It is a market of great potentials. Agrawal believes that Hong Kong as the “super connector” is well placed to be China’s portal to investing in India. For this reason, Hong Kong will definitely benefit from the growth in Sino-Indian bilateral investment. He suggests that Hong Kong businesses should take more active part in India’s infrastructure, finance and town planning sectors.

 

Investment-friendly policy brings promising prospect

He continues to say that Hong Kong and India signed a comprehensive agreement for avoiding double taxation in March. According to Agrawal, this treaty makes taxation more transparent and turns a new page for Hong Kong and India’s trade relationship.

 

He also mentions that startups are a new impetus for the Indian economy. Naturally, the government places great emphasis on these companies and encourages their development. The Indian government co-organized a two-day event for startups with Asia Society Hong Kong Centre last November. Agrawal feels such activities can promote Indian startups to integrate into the Hong Kong business circle. As Consul-Greneral, he is more than happy to answer any questions that Hong Kong businesses may have about investing in India. He looks forward to seeing India becoming one of the most attractive investment destinations in the world.