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India market and business update: March 2024

13 March 2024
This month's business update highlights recent developments in India, including a steady increase in its Foreign Direct Investment (FDI) influx, growing appetite for initial public offerings (IPOs) and noteworthy news in respect of its impressive GDP growth.

India outpaces China in FDI

As outlined in our January update, India is witnessing a surge in FDI, driven by robust streamlining of regulatory processes and government initiatives to boost international investments. The country's economic growth, bolstered by the current government's focus on infrastructure and digitisation, has led to India outpacing China in FDI influx.

We expect this surge in FDI will play a significant role in enhancing the country's infrastructure, fostering technological advancements and improving the country's competitiveness on the global stage.

Rise in IPOs in India

In addition to significant FDI influx, IPOs in India are on the rise, driven by positive economic growth prospects, improved corporate earnings, and strong appetite from foreign investors. India's IPO market resurgence has propelled its total market capitalisation to approximately $4 trillion, surpassing Hong Kong to become the world's seventh-largest market. The Financial Times reported last month that in January 2024 alone, 21 IPOs raised around $678 million, a stark contrast to the $17 million raised a year prior. An additional 66 companies have also recently filed listing documents with Indian regulators, indicating good prospects of ongoing IPO activity this year.

However, investors should note that while the IPO market in India presents promising growth opportunities, concerns have been raised regarding valuation and post-listing performance. Therefore, exercising cautious optimism, conducting thorough assessments, and seeking expert advice are imperative for any fund considering investing in this market.

Surge in GDP growth in India

India's economy experienced its most rapid growth in eighteen months during the final quarter of 2023. The country's GDP expanded by 8.4% in the October-December period, surpassing economists' expectations of 6.6% and outpacing the 7.6% growth recorded in the preceding quarter, according to Reuters

This surge in GDP, which is primarily attributed to robust manufacturing and construction sectors, demonstrates the resilience of the Indian economy and we expect that these strong figures are likely to further boost investment in the country.

India's recent economic trends, including the notable rise in GDP, surge in IPO activity and increased influx of FDI paint a picture of a dynamic and rapidly evolving economy. We expect these trends to instil growing investor confidence and underscore the country's attractiveness as an important investment destination.  

DWF is a leading legal adviser to Indian and India-focussed companies, financial institutions and high net worth individuals and families. Our India Group, consisting of over 76 lawyers from 9 countries, 13 practice areas and 9 sector groups, is one of the largest India groups of any international law firm located outside India.  With decades of extensive expertise in guiding Indian clients in respect of outbound legal work, our team of experts and specialists empower both India-focused and India-based clients to achieve their strategic objectives. If you have queries on any of the issues covered in this article please contact one of our experts.

We would like to thank Sarah Deloison for contributing to this article. 

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