India is on the rise in more ways than one. In the next 40 years, the world’s population will increase by roughly 2.5 billion people, and a majority of these people will be coming out of countries such as India. India is becoming a popular frontier market to invest in for a few reasons. Shifting demographics point toward changes that will propel further economic growth. There is also a governmental environment that fosters positive economic growth, as well as avenues for safe investments.


When economists and financial analysts talk about demographics in terms of positive economic growth, the focus is on ages 15 to 60, because this constitutes the majority of the workforce. A lot of positive demographic growth in frontier markets is in this age bracket, and it makes for compelling reasons for investors to put their money into these markets.

The ratio in India of working age compared to nonworking age will increase and help propel the growth. It is expected India will add 2% to the GDP growth annually in the foreseeable future. The reason for this correlates directly to the demographic age increase. More of a young workforce equals more money to be made.

An interesting parallel to draw between India and China is the early rise of China in the 20th century. Both of these nations were in similar positions in the 1980s, right before a drastic change in the demographics of China. The one-child policy had a huge ripple effect on the workforce and changed China into the economic powerhouse it is in 2016.

During the early 2000s, an incredible growth rate was seen in China that has just begun to slow down. India is poised to follow suit and have its moment to shine, giving investors an opportunity in the country.

Investment Opportunities

Shifting demographics lead to social mobility or more people entering into the middle class. A thriving middle class is a barometer of how the economy is doing on a macro level and where it is going. The next decade belongs to India. Other frontier markets are slowing down or just not seeing the same type of stability as India. There will be a time when India will no longer be classified as a frontier but an established country in which to invest.

As of early 2016, India is benefiting from the low price of energy commodities and the culmination of decades of growth leading the country into the 21st century. It also helps that Prime Minister Narendra Modi has a much more open attitude about the state of business, making it easier for startups and other businesses to flourish.

Some examples of steps the government is taking to foster a better environment include getting rid of filing registrations at the start of a business and getting rid of unnecessary licensing laws. There have been a few examples of Indian officials meeting personally with startup businesses and having a dialogue about how to go about changing certain processes to help facilitate a better working environment. A lot of this allows foreign investors to get in on the ground floor of some of these startups and reap the benefits.

India has historically been faced with a few problems for developing businesses. Before Prime Minister Modi began working on legislation changes, people had a hard time because of overt government interference.

India is also faced with a crumbling infrastructure. But instead of seeing this as a negative aspect, it should be looked at through a different lens. An infrastructure that needs work paired with a young demographic increase is a perfect combination. There will be workers to fix and progress the country, providing economic growth and investment opportunity.

As of February 2016, India's current state is reminiscent of China's history. China was once a mostly agrarian culture before its shifting age population put a lot of people to work in the factories. This is similar to India's situation, where most of the population lives and works on farms with agricultural jobs. India will be facing the same shift from working on the farms to working in the growing urban centers.

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