An Investor's Guide to India

Bloomberg

13-03-2025

The Catalyst: Consumption drives nearly 60% of India's gross domestic product. The government is rolling out tax concessions for the middle class, lining their pockets with an additional $12 billion of cash. More broadly, India's consumer market is projected to grow 46% by 2030, propelled by rising incomes and urbanization.
Case Study: Lenskart
India is proving to be a market ripe for scale, with homegrown businesses expanding beyond its borders. Eyewear retailer Lenskart, founded in 2010, is gaining traction overseas after disrupting the domestic market by cutting out middlemen and making premium eyeglasses more affordable.
In a sector once dominated by small, independent sellers where generic eyeglasses were seen as a commodity, Lenskart has built a recognizable brand. By shifting consumers toward a branded product, the company is tapping into one of India's biggest retail opportunities — bringing quality control and consumer trust to turn an informal market into a structured, scalable business.
'If you look at the population, the disposable income, the need-gap, there is a huge consumption story in India,' said Peyush Bansal, Lenskart's chief executive officer. The company has expanded aggressively, acquiring Japan's Owndays in 2022. Today, it operates in nearly 20 countries with over 2,500 stores across Asia — 2,000 of them in India.
The Opportunity: Businesses like Lenskart, which plans to go public this year, can reach far more customers today than just a few years ago. Nearly every Indian now has a bank account, most have smartphones, and discretionary income is rising. That's led to more innovation and optimism in markets. In 2024, India recorded the highest volume of IPOs globally, listing almost twice as many companies as the US. But IPOs can be risky, and the exuberance is now tempered by caution as a sharp correction in India's secondary market is impacting fundraising and delaying IPO plans.
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The Catalyst: India's rapid digitization is transforming its economy, with a real-time payment system that enables consumers to pay for everything from groceries to street food using QR codes. But as financial institutions have struggled to keep pace with this shift, a surge in financial fraud has prompted regulatory crackdowns. In response, companies are developing cyberdefense solutions to help financial firms keep on the right side of regulatory compliance.
Case Study: IDfy
Mumbai-based IDfy started as a background verification service but evolved alongside India's digital boom. By tapping into digitized police records and personal identification systems, it developed secure verification solutions for financial firms operating under stringent regulations.
As digital banking accelerated during the pandemic, IDfy's technology became crucial for everything, from opening bank accounts to small business lending. Demand has soared under India's new compliance standards, with clients including Hindustan Unilever Ltd., HDFC Bank Ltd. and American Express Co.
IDfy turned its first profit last year, and is poised for faster growth, co-founder Ashok Hariharan said. Nearly 90% of all customer verification processes are still analog, making them vulnerable to data leaks and fraud, he said, adding that interest in their products had increased significantly in recent months.
The Opportunity: India ranks third in total fintech and unicorn companies, with banking-focused fintech firms set to capture more than 20% of banking revenue by 2030 — well above the global average of 13%, according to Boston Consulting Group. Meanwhile, Indian financial institutions are expected to increase cybersecurity spending, which stands at just one-ninth of the global average as a percentage of revenue. Popular fintech stocks include One 97 Communications Ltd. and PB Fintech Ltd., better known as Paytm and Policy Bazaar, respectively.
*Source: US International Trade Administration
Sector
Infrastructure
The Key Number 500% Increase in India's green investments by 2030*
Who's Investing? KKR, Global Infrastructure Partners
The Catalyst: India's patchy infrastructure has improved at a brisk pace. Over the past decade, the highway network has grown 60% and the number of operational airports has more than doubled, according to government data. In the last five years, infrastructure spending totaled about $1 trillion, EY estimates. When adjusted for gross domestic product, that figure is equivalent to the US setting aside nearly $8 trillion.
Case Study: Greenko Group
Green energy is an increasingly vital sector as fossil fuel usage is declining and renewables need to fill the gap to power India's 1.4 billion people. Firms like Greenko Group, a leading company working on decarbonization, are tapping into India's vast natural resources. Since its founding about two decades ago, Greenko has evolved from running a 21 MW biomass plant to having almost 10,000 MW of operational capacity across wind, solar and hydro projects in 15 Indian states.
The Opportunity: Though Greenko is privately held after several years of trading on the London stock exchange, other clean energy firms are listed in India, including JSW Energy Ltd. and Tata Power Company Ltd. The Indian government is also coming up with inventive ways to fund its infrastructure goals. One type of vehicle is the InvIT, an investment instrument that works like a mutual fund and is regulated by the Securities and Exchange Board of India. Institutional investors and individuals can park their money into finished, revenue-generating projects or those that are still under construction.
*Source: Crisil