I personally believe that there are three major dividends in the Indian market:
The first is the population, which is undoubtedly significant. India has the largest population in the world, but it is not enough to just recognize the absolute number. More importantly, the median age of the population is only 28 years. What does this mean? In comparison, China's median age is now 39 years.
This indicates that India is still in an upward consumption cycle. Investing in India now, in terms of population structure and dividends, is equivalent to China ten years ago. However, due to India's cultural structure, the labor costs are lower than those in China ten years ago.
The second is manufacturing. India's manufacturing, like Vietnam's, has begun to migrate from China. Although India has many shortcomings in manufacturing, its advantages are also evident: low labor costs, generally high English proficiency, and a young workforce.
Many people believe that Indians are lazy, work slowly, and produce low-quality work. While this is true, the costs are low enough, and the cost-performance ratio is high enough to facilitate management. In fact, it is likely that the future demand for labor in India will focus on segments that are highly dependent on labor but have relatively low precision requirements.
The third is the market's blank period, which I think is the most important point among the three. China also has a large population, but its development has been too rapid. The development in all aspects—economy, housing, education, and daily necessities—has been too fast. Compared to China, India now seems like a joke, with low penetration rates for "electricity" and "water." This represents the market; this represents money.
India already has foreign labor, but the gap in domestic demand is still a mess. This will force changes in India's economic structure, stimulate domestic demand, and provide the Indian middle class with places to spend and invest. This is something India is already beginning to change. Of course, the current middle class is mostly planning to go abroad, which is very similar to early China.
However, India's shortcomings are also evident. Although India has a large population and a low population structure, the gap in infrastructure and basic education is too significant, resulting in many ordinary Indians remaining confused and unable to directly convert into productivity in a short time. This requires a joint effort in systems, finance, and urbanization. In terms of labor efficiency, process discipline, and quality stability, India is significantly lower than China.
Furthermore, the ceiling for India's manufacturing is very low. India cannot and will not have the opportunity to replace China, which means that India can only be a part of the industrial chain and cannot achieve a closed loop.
Finally, there are India's politics, religion, and ethnicity. The only evaluation I can make is four words—utter chaos. This determines that the friction costs of India's system will exist for a long time and that its development path will not easily present a linear progression like China's.
As for investing in India, I have three suggestions suitable for most people:
- India's stock market, core indices like Nifty 50 and Sensex 30.
- The financial sector, including credit, insurance, and cryptocurrency.
- Mid-to-high-end domestic consumer goods, including commercial and residential real estate.
My understanding of India is like a joke that says:
Two shoe salesmen went to Africa and called back to the company. One said, "I want to go back; no one here wears shoes." The other said, "This is a paradise for development because no one here has worn shoes yet."
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