India's progress is a path towards reality, says SoftBank's Sumer Juneja

India will once again serve as the bellwether for global growth in 2024. With the IMF projecting India’s GDP growth to sustain at 6.3%, even as the world grapples with a slowdown at 2.9%, the country’s business narrative is a contrast to the recession clouds hovering over Europe and other regions.

This optimism is palpable in the actions of both domestic and foreign investors. In 2023, India witnessed a record $2 billion of monthly SIP inflows, coupled with foreign investors infusing $20 billion into Indian equities and turning net buyers of Indian debt for the first time in four years. When I speak with investors abroad, it is evident that participating in India’s growth story has transformed from a ‘nice-to- have’ to a ‘must-have’.

SoftBank has been investing in Indian start-ups since 2013 and we have seen first-hand the country’s transformation driven by infrastructure investments, India Stack, stable governance and a maturing tech ecosystem. Investors who put their faith in the India story have benefitted with handsome returns across multiple deals.

Looking forward to the next decade, there are ample reasons to be enthusiastic about India’s potential as an economic and cultural superpower. While India is making rapid strides on all fronts, we are particularly excited about three themes that should have a multiplier effect on the Indian growth story.

Establishing more Tier I universities

Universities are the cornerstone of a vibrant economic ecosystem. US universities have played a key role in the development of Silicon Valley. Similarly, Europe is emerging as an AI hub despite economic and demographic headwinds because of the concentration of high-quality technical institutions. In India, institutions like the IITs have been instrumental in nurturing talent that has gone on to found and lead some of India’s and the world’s most influential companies.

To continue this legacy, it is imperative to scale these centres of excellence. India currently has 23 IITs and 31 NITs. It would be in India’s interests to focus on increasing the number of high-quality universities that can offer best-in-class education and become centres of cutting-edge research. India is a unique example of a nation that has built a skills-based economy (IT, auto, pharma and now tech) akin to a developed country. As a result, it is critical that we can keep supplying skilled talent at scale to our economy. In this regard, it is exciting to see enlightened policy, including support for leading foreign universities to establish campuses in India, which will increase affordability and access for Indian students.

Holistic infrastructure development

India has made immense progress in infrastructure development over the past decade. Our airport network has doubled to 150, highway construction has tripled to 37 km per day, high-speed corridors have increased tenfold to 30,000 km, and our railway network has not just expanded but upgraded with high-speed Vande Bharat trains. Meanwhile our digital infrastructure and public tech stack, including platforms like UPI, is ahead of most developed economies. As India positions itself as a global manufacturing and global capability centre (GCC) hub, holistic investments in infrastructure that contribute to both economic development and quality of life are crucial.

Economic infrastructure entails continued investment in logistics, physical infrastructure and skilled talent that enables India to service the manufacturing and business services demand we are seeing from the world’s largest companies including Apple, Foxconn, UPS and JPMorgan. Equally important is the development of infrastructure that contributes to a better quality of life. As the demand for white-collar talent surges, every governmental arm must prioritise the liveability of Indian cities. This encompasses affordable housing, public transport, recreational infrastructure, and environmental quality.

Predictable regulation for businesses and investors

Under Prime Minister Narendra Modi, India has made visible progress in creating a business-friendly environment. This is evidenced by our Ease of Doing Business ranking improving from 142 in 2014 to 63 in 2019, driven by reforms like IBC and GST, streamlining of permits and digitisation of permits. This has paid large dividends with numerous US and European MNCs making India a key manufacturing and GCC hub.

As venture investors, there are three areas where we believe enlightened regulation would provide a fillip to innovation. Firstly, timely and clear regulation, particularly for sensitive or emerging sectors is essential for the free flow of capital and innovation. While investors are willing to take equity risk when investing in start-ups, they do not want to take regulatory risk. Secondly, encouraging domestic capital (institutional and retail) into the venture ecosystem would increase the resilience of the industry, as we are seeing with the Indian stock market. This could be done by taxing capital gains on private securities on a par with public equities and offering tax incentives to individuals on private investments. Lastly, the encouraging trend of start-ups incorporating and listing in India (as opposed to the US) must be supported by regulation that simplify India holding structures and IPO processes. This will not only facilitate wealth creation for a broader range of Indian investors but also inspire the next generation of entrepreneurs.

India in 2024 is not just a story; it’s a reality backed by a recent decade of tangible progress. At SoftBank, we are more bullish on India than ever before. We are committed to being a part of India’s growth and look forward to backing a new generation of entrepreneurs who will shape the economic and cultural landscape of the nation.

The author is Head of India & EMEA at SoftBank Investment Advisers. Views are personal