Diversifying your Asia exposure: India private equity

Introduction

According to most economic research, Asia is the world’s growth engine, accounting for 60% of global GDP growth in 2024. China’s rapid ascent has long dominated headlines about Asia and global growth. However, in recent years, the spotlight has shifted to India’s growth story as China’s economy reaches a more mature phase.

After more than a decade of economic reform and infrastructure spending, India is again booming. These developments, along with its maturing capital markets, have fostered an environment for private equity firms to outperform.

Since our prior India report in 2019, we believe India’s private equity investment landscape has continued to improve. This white paper provides additional market context and highlights the key investment themes on which our team focuses.

• Our “India for the world” case is rooted in India’s standing as a capital efficient home to build global products and services.
• Our “India for India” case is based on the strength of the domestic market.

Macro backdrop

Demographics

India’s macroeconomic story remains compelling. Its real GDP growth rate (7.0%) is forecasted to be the highest of any major economy in 2024 (Figure 1). Over the next five years, India’s population is projected to surpass 1.5 billion, with over 60% of its people expected to be under the age of 35. This growing and youthful population is set to position India as an economic powerhouse for years to come. 
 

Figure 1 | Select economic and business indicators (2014 vs 2024)

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Source: World Bank as of September 2024, IMF as of October 2024, Economic Times as of July 2023, Ministry of Road Transport & Highways as of January 2024, Association of Mutual Funds in India (using prevailing FX rates) as of December 2024, CEIC as of December 2024, National Association of Software and Services Companies as quoted in 2014 and 2024 press. 
*Middle class is generally defined as annual income between INR 500k to INR 3m (~US$ 8k-48k using December 2014 FX rates, and ~US$ 6k-$35k using December 2024 FX rates). 
 

Labor market

India stands to benefit as an appealing “China+1” alternative in the region, thanks to its low manufacturing costs and technically skilled workforce. Global companies are increasingly drawn to India as a production hub; for example, Apple now makes around 14% of its iPhones in India—roughly double what it produced in 2022. Other global brands like Tesla and Samsung have followed suit in expanding their operations in the country.