UK Archives - Red Ribbon Asset Management

10 Reasons to Invest in India by Red Ribbon Asset Management Plc

The place to be: 10 reasons to invest in India

By | Archive, India, News | No Comments

India’s economy and business landscape are changing, ushering in a period of growth, prosperity and investment opportunities. All the ingredients are in place for India to become a world leader investment destination.

Let’s look a little more closely at just a few of the more compelling reasons why investing in India is an opportunity you can’t afford to miss:

1. The Perfect Demographic For Growth: India is the fastest growing large economy on the planet. Its rapidly increasing population is predicted to overtake China by 2022, and become the largest in the world.

2. Exceptional Consumer Led Demand: A large part of the 1.34 billion people are increasingly sophisticated, technologically literate and wealthy.

3. Supportive Fiscal Regime: The government has been making radical changes to create a more business friendly environment. There is now a uniform tax regime (GST) across all 29 states of India, and introducing an affordable housing programme with additional tax breaks.

4. Dynamic Real Estate Market: India is experiencing an unprecedented demand for both domestic housing and commercial property. Real Estate investment in India’s six major cities doubled in the first half of 2017.

5. Vibrant Private Equity Sector: 2017 was the busiest year for more than a decade for private equity deals in India, with total investments of £16.84 billion.

6. Unprecedented Infrastructure Spending: There is a public infrastructure programme of moving scale. This includes 83,677 km of new road being built over the next 5 years (The UK’s motorway network is a little over 3,000 km).

7. Regulatory Certainty: The government has been decisive. Demonetisation has removed much of the ‘black economy’ and over 6,000 companies suspected of improper activities have been closed. Arbitration and court procedures have been overhauled and sped up.

8. Global Trading Hub: Major international companies, such as Virgin and Amazon are now moving to India to invest in and participate in the expansion.

9. World Leading Computer Technology: India is now recognised globally as a technology powerhouse, with an increasingly IT literate population.

10. Stable Federal Structure: India’s federal structure offers highly effective risk management, that helps protect the economy from any unpredictable events. Which means that investors are more than ever protected against localised market risk.

For these reasons and more, India is now one of the most exciting places to invest. At Red Ribbon, we use our expertise and resources to identify the investment opportunities that have the potential of delivering superior returns to our investors.

Nobody understands that potential for growth better than Red Ribbon Asset Management, which has placed India at the very heart of its investment strategies since the company was founded more than a decade ago. With an unrivalled knowledge of market conditions on the subcontinent, Red Ribbon offers a unique opportunity to share in that vast potential.

Red Ribbon CEO, Suchit Punnose said:

India is more than just an exciting investment opportunity, it’s also a driver to global economic growth and that’s why Red Ribbon has long held the view that no investment portfolio can be considered properly balanced unless at least 10% of its holdings are deployed in Growth Markets and, of course, for us that has always meant India in particular.

At Red Ribbon we are very proud to have been playing our own part in India’s economic resurgence over the last decade, investing in just the kind of projects that are at the heart of the interlocking triangle of growth mentioned in the article: everything from the modular construction technologies now being developed by Modulex so as to deliver affordable housing at the pace demanded by the subcontinent’s urban expansion, through to innovative sustainable energy infrastructure investment. And to see India now firmly established at its place on the economic top table, uniquely well placed to move further forward still is, of course, a particular source of pride for us.

We look forward to continuing to play our part in India’s future, participating to the utmost in the opportunities the subcontinent’s explosive growth has to offer and at the same time providing above market rate returns from our investors in what I am convinced will continue to be one of the world’s most exciting markets for many years to come.

Smart Eco Hospitality - Red Ribbon Asset Management Plc - Eco Hotels

Better Smart than Big: India’s Eco Hospitality Sector

By | Archive, India, News | No Comments

The problem with global conglomerates is that they have global reach but monolithic thinking. Look how long it took Facebook to respond to high profile data breaches, with the hardly media shy Mark Zuckerberg virtually disappearing from the ubiquity of his own platform for weeks on end. Think of IBM: slow to the point of near extinction in responding to software innovations in the market, and poor old Kodak, slow to the point of actual extinction in meeting challenges posed by a blizzard of new, digital based technologies. So it should be a sobering thought for our current crop of global empire builders that big certainly doesn’t always best, because all too often great size comes with an inbuilt decision making stasis …in business, it’s always better to be smart.

Even so the thickest commercial hides can sometimes let in a little oxygen, which is why economists still like to look at the interesting conundrum of scaled decision making: big companies deluded into thinking they are fleet enough of foot to react on time to critical and fast moving trends, rather like an elephant finding a discarded pair of tweezers and thinking they must be good for something.

The latest example is Hilton Hotels, which this month unveiled its “Travel with Purpose Campaign” designed to reduce the group’s global carbon emissions by, wait for it, reusing old bars of soap left behind by its guests. Good luck with that: the Hilton Hotel chain on the subcontinent has properties with in excess of 1000 rooms pumping out as much carbon as a Victorian glue factory, so you might be forgiven for thinking the odd bar of soap is unlikely to make much of a difference. But the Hilton monolith is simply reacting (monolithically) to the unsurprising revelation that most of its guests are now placing environmental concerns at the top of their list when deciding where to stay. Hilton knows this because it conducted an expensive survey of 72,000 of its guests in May this year.

Of course it could have saved its hard earned cash and had a look instead at earlier newsletters on this site (amongst other places): sustainability concerns have been a key trend in the Indian Hospitality sector for at least the last decade and are becoming progressively more important. Hilton’s laborious, too little too late response is yet another example of big not being better. Big, in this case, is positively bad.

The companies that are instead best placed to make the most of eco trends are not operating out of densely occupied concrete blocks. They are strategically positioned in India’s mid market hospitality sector, with Lemon Tree Hotels and Eco Hotels being prime examples: smaller in scale and with sustainability ingrained into the fabric of their buildings (rather than in last minute memoranda urging staff to pick up discarded soap). As a result Lemon Tree Hotels is currently valued at 17 times EV/EBITDA and since completing its successful IPO in March of this year the company’s shares have risen in price by an impressive 28 per cent.  

Both companies find themselves carried forward by a relentlessly upbeat market outlook, typical of which is JLL India: “The hospitality industry is witnessing a new buoyancy” and Anarock Capital, where Shobbit Agarwal had this to say: “Stocks of listed hotel companies are on a new high due to improving fundamentals increased occupancy levels, higher revenues and average room rates seeing 5 to 6 per cent year-on-year growth”.

Quite so, we don’t need an expensive survey to tell us that.

And it also has a great deal to do too with a recent surge in India’s domestic and overseas tourist numbers as well as an increasingly affluent middle class demographic prepared to put their money where their heart is…Hilton Hotels might take note.

Red Ribbon Asset Management is the founder of Eco Hotels, the world’s first carbon neutral mid market hotel brand, offering “green hospitality” as part of a progressive roll out across India which intended to take full advantage of current market opportunities on the subcontinent. The brand offers sustainable living without compromising on standards of hospitality and is designed to cater to commercial and recreational travellers alike.

Red Ribbon CEO, Suchit Punnose said:

I’ve always believed in the essential flexibility and virtue of smaller business platforms, capable of responding quickly and effectively to market opportunities as well as medium term market trends. Because, to paraphrase Keynes, over the medium term a business that finds itself rooted in a fixed strategy can also all to often find itself dead. Just look at the object lesson provided by the once all powerful Kodak Corporation.

And the sheer pace of change and market innovation in the subcontinent’s hotel and hospitality sector at the moment makes that lesson all the more compelling. Mid market groups like Lemon Tree Hotels and Eco Hotels are quite simply better placed to respond successfully to rapid innovation and key demographic changes. Not least because they have both been positioned from the outset to anticipate a sustained and progressive move towards sustainability based tourism and business travel. Sustainability is built into their DNA.

That’s why I’m particularly proud of the part Red Ribbon has played in founding Eco Hotels and helping with its strategic development, anticipating exciting developments in Indian markets capable of generating above market rate returns for our investors. So, whilst like the Hilton Group, I’m sure Eco Hotels will be encouraging guests not to waste soap, the company has a lot more to offer in the future.

India - The case of Investment - Red Ribbon Asset Management Plc

India: The case for Investment

By | Archive, India, News, United Kingdom | No Comments

United Kingdom is the gateway to many investment opportunities, of which India is one to take notice of. India’s economy and business landscape are changing, ushering in a period of growth, prosperity and investment opportunities.

Let’s look a little more closely at just a few of the more compelling reasons why investing in India is an opportunity you can’t afford to miss:

The Indian economy is the fastest growing major economy in the world. It surpassed China in 2015 and is forecast to expand by 7.7% in 2018, before accelerating to 8.3% in 2019. India’s population is also expected to increase from 1.34 billion and exceed that of China, within the next five years.

As 10 million countryside inhabitants move into India cities, per annum, urban society across the country is increasing. Those new and growing societies are increasingly wealthy, sophisticated and technologically literate, providing a platform for growth, fuelled by demand.

India also has an incredibly supportive government that’s working hard to facilitate economic growth and a fundamental change in the way the population lives and interacts. PM Narendra Modi has introduced a single tax base across India’s 29 states, while the regulatory environment has also radically transformed.

United Kingdom – gateway to India

United Kingdom is an economy that has a proven track record at identifying areas and regions that have a lot to offer. That’s why India is already among the countries where investments and partnerships can be easily accessed via United Kingdom.

As a UK-based business, Red Ribbon Asset Management Plc is an obvious partner to access those Indian investment opportunities.

Not only do we understand what is driving India’s economy and investment boom, at Red Ribbon we know how different areas of investment are performing. Our well-connected Indian-based team, provides hands-on support to our UK-based investment specialists. It’s a successful partnership, that ensures we identify the right investment for each and every investor we work with.

Red Ribbon has been involved in numerous major projects in India and the UK, that have proven successful in both execution and from an investment perspective.

But, that’s not all. At Red Ribbon we believe investments should offer benefits to everyone involved. Aligned with our philosophy and core values, all our investments are morally acceptable, provide measurable social and environment impacts and deliver strong financial returns.

As you can see, Red Ribbon Asset Management Plc has been quick to recognise the potential in India and through us you can access an array of investment opportunities.

Red Ribbon brings you a gateway into investing in India, offering bespoke services in wealth management, private equity and real estate. Our strong network of contacts means we know India from the inside and outside. That’s just one reason why we’re ideally placed to identify the best opportunities as they arise.

Red Ribbon CEO, Suchit Punnose said:

India is more than just an exciting investment opportunity, it’s also a driver to global economic growth and that’s why Red Ribbon has long held the view that no investment portfolio can be considered properly balanced unless at least 10% of its holdings are deployed in Growth Markets and, of course, for us that has always meant India in particular.

And of course this vindicates Red Ribbon’s decision in 2008 to place India and its fast growing markets at the heart of our investment strategies from the very start. Our expert advisers now have an insight into what makes the subcontinent’s markets tick, what makes them so profitable and where the best opportunities for above market rate returns are likely to be found.

Interest Rates India - Red Ribbon Asset Management

Interest Rates: What the Reserve Bank of India can teach the Bank of England

By | Archive, India, News, United Kingdom | No Comments

Inflation, as it happens, is also attracting considerable attention not only on the Monetary Policy Committee of the Bank of England but also at the Reserve Bank of India which anticipated recent events in Threadneedle Street by raising its own interest rate to 6.5%. That came hard on the heels of a hike of 0.25% in June, which was the first rate increase on the subcontinent for more than four years. And given the two Central Banks now appear to be moving in ever closer lockstep on the issue, it’s no surprise that the smart money in the City is on Urjit Patel to replace Mark Carney as Governor when the first overseas national to hold the position returns home next year to spend more time with his money. Urjit Patel is currently Governor of the Reserve Bank and his own three-year term ends next July. Mark Carney’s time is up next June, so If nothing else, it looks like good timing.

And should Urjit Patel eventually end up in the hot seat he could do worse than draw some lessons from the underlying reasons that are driving inflationary growth in India at the moment, which stand in stark contrast to those troubling the former mother country. As a seasoned economist he might also remind himself of the old adage that there is no inflation in a graveyard: consumer demand can only fuel inflation if consumers have something to spend.

The UK’s headline inflation rate of 2.4% is barely driven by consumer spending at all for the simple reason that domestic consumers have very little surplus income to spend. Such pressure as there is on that front is driven rather by the biggest rise in UK consumer borrowing since the global financial crash of 2008. Of much greater importance is the increased cost of imported goods due to a weakened sterling coupled with (inevitably) ongoing fears over Brexit, so the decision to raise rates last week had much more to do with bolstering the value of sterling going forward (although, in the light of market movements in the aftermath of the announcement, that may itself be something of a triumph of hope over experience).

Now lets take a look at India.

Last’s week’s 0.25% rate rise on the subcontinent was primarily a response to rising crude oil prices on international markets. India has spent 12% more on imported oil since April this year, reflecting an upward pressure in key prices and, to a certain extent, a 3% depreciation in the value of the rupee against the dollar over the same period (dollars being, of course, the lingua franca of oil). But that’s nothing in itself to be worried about because there’s a reason why India is buying all this extra oil: it is (quite literally) fuelling the economic expansion which is now expected to see India’s GDP grow by 7.25% this year; and with limited reserves of its own the subcontinent is bound to be vulnerable to adverse price movements on global markets. That is a necessary cost of its startling economic success.

And as for the other element of the inflation equation, we hardly need reminding of India’s unprecedented surge in consumer demand. With the fastest growing population on the planet, an increasingly younger demographic and steadily rising rates of average income, very little of this is leveraged with debt (unlike the UK) but India’s annual consumer inflation rate still hit 5% in June (the eighth month in a row that it has exceeded the 4% medium term inflation target). But again, that is hardly a cause for significant concern either, bearing in mind that the RBI target has an upper tolerance of 6%, which is above the current inflation return. After all, there’s no inflation in a graveyard.

So unlike the Bank of England, the Reserve Bank of India (although pursuing a similar monetary policy) has in reality simply trimmed its inflation projections rather than run scared of them, confident in the knowledge that it is not only still working within existing tolerances but also harnessing unprecedented economic growth. That’s why it has been able to maintain its well-rehearsed policy of neutrality: encouraging growth and keeping inflation under control. Urjit Patel might not be able to take that particular policy with him if he comes to London next year.

Red Ribbon Asset Management has placed India at the heart of its investment strategies since the company was founded more than a decade ago, and nobody understands the subcontinent’s potential for growth better than Red Ribbon. With an unrivalled knowledge of market conditions on the subcontinent, the Red Ribbon Private Equity Fund offers a unique opportunity to share in the potential of the fastest growing large economy in the world.

Red Ribbon CEO, Suchit Punnose said:

I had heard that Urjit Patel was being tipped to take over as Governor of the Bank of England when Mark Carney moves on next year, and for my part I think he would be an excellent choice. Certainly it would be a matter of great pride for every Indian to see him take the helm and build on his policy experience on the subcontinent, perhaps even (as the article points out) adding some of the subcontinent’s current economic sparkle to the UK economy.

And it is also interesting to note the radically different reasons for the Central Banks in each country making virtually the same monetary policy announcements in virtually the same week. Inflation is not always an enemy of sound economic growth, and in India’s case it seems rather to be an inevitable product of its own success. As the article says, there’s no inflation in a graveyard.

India Infrastructure Investment - Red Ribbon Asset Management web

India’s New Direction in Infrastructure Investment: A Country Break

By | India, News | No Comments

For those commentators who might have thought they detected a slackening off over recent months in the appetite of Prime Minister Modi’s Government to engage in still further rounds of major infrastructure spending, the Union Budget Statement was something of a wake up call. Anyone sensing a slackening was simply looking in the wrong place, because key infrastructure developments are now happening outside India’s crowded urban conurbations: they’re happening in the countryside.

Rural Infrastructure Investment is the next big thing…

The Union Budget allocated close to Rs 5.97 lakh crore in infrastructure investment for the 2018/19 Financial Year, which is an increase of 21% on the equivalent figure for the Financial Year ending April 2018. So much for a slowing down and a loss of appetite; and that’s not all by any means, because the Budget has also created an “environment for demand recovery” particularly aimed at rural India and which looks set to lead to still further improvements in capacity utilisation and greater private capital involvement in future projects.

The Budget increased Rural Infrastructure spending commitments by no less than 30% percent to Rs 1.43 lakh crore, all of which will go towards increasing rural income levels through providing additional employment and greater market demand through the operation of the multiplier effect in rural markets (bearing in mind of course that the marginal propensity to consume is so much higher in rural areas of India).

Just take a look at the underlying facts if you’re still in any doubt on that.

Nearly 65% of India’s burgeoning population of 125 crore people live in the countryside, so an increase in spending across the board of 30% through ongoing connectivity projects (within the aegis of the Pradhan Mantri Gram Sadak Yojana Programme) is bound to give a major boost to growth. In particular, through new highways that will not only create a welter of additional construction jobs but also by connecting internal agricultural markets; and then there are sanitation projects, projects to conserve and distribute precious ground water and new electricity supply infrastructure, all of which will have positive economic spin offs.

And the Budget also envisages the construction of 51 lakh rural houses this financial year and another 51 lakh next year, meeting a pressing and ever increasing demand for more affordable housing across the subcontinent.

But it’s not all about the countryside by any mean.

57,000 kilometers of new roads have also been slated for construction at a total cost of Rs 19,000 crore; and to put that in perspective, the United Kingdom motorway network is 3,400 kilometers in length (less than a tenth of the new roads now to be built in India). There will also be 600 new major railway stations and a planned fivefold increase in airport capacity with the intention that it should meet the rapid increase in tourist and business travelers visiting India each year: the new capacity will be an eye watering one billion trips a year.

Economic miracles are seldom miraculous or sudden; they are ground out every day in the slow process of infrastructure expansion, but in modern India that process now has real traction and it has started to change the very fundamentals of the subcontinents economy. No wonder then that Red Ribbon still places Indian Projects at the heart of its investment strategies, just as it has done ever since the company was founded more than a decade ago.

India in the Post-Brexit World: Something More Than Diplomacy

By | India | No Comments

The Queen of England learned a new dance this month: she was taught Indian Mudras, or hand gestures, by the celebrated dancer and choreographer Arunima Kumar; and in keeping with the dignity of the occasion the lesson was conducted in the State Room at Buckingham Palace: “We brought Indian Art into Buckingham Palace” Ms. Kumar proudly announced afterwards. Not for the first time, you might be thinking; people have been bringing Indian Art back to the United Kingdom for centuries.

The Prince of Wales set off on a four-month tour of the subcontinent in 1875 and he managed to bring back a spectacular amount of Indian Art: no less than seventy four precious artefacts from the toshkhanas, or personal treasuries of each of the 21 Provinces he travelled through; including a seventeenth century gold Durbar Set from Mysuru and a sixteenth century jade attardan from Jaipur (the largest ever made). They have been in the Royal Collection ever since but you will be able to see them at the Victoria and Albert Museum this summer as part of the UK India Year of Culture 2017 celebrations; the Queen’s dancing lesson this month formed part of the inaugural events.

And it was no coincidence that the most senior representative of the Indian Government watching Her Majesty dance was Finance Minister Arun Jaitley.

The United Kingdom and India have a richly textured history reaching back to the days of the East India Company, and that relationship is now being radically refashioned as part of Britain’s post-Brexit world. Given the UK India Year of Culture is part of the same process it seems wholly appropriate that the Finance Minister of India should have been there to see it on its way.

India overtook the United Kingdom as the World’s fifth largest economy in December of last year and it is currently the fastest growing large economy on the Planet. Little wonder then that Theresa May’s first foray overseas after the EU Referendum last year was to India; and less wonder still that her visit coincided with the launch of a new generation of ten-year Rupee Bonds being traded on London’s Capital Markets. Historic ties and a resurgent economy give India a special significance for the United Kingdom in the post-Brexit world.

But just how important is all this for India?

It is a question well worth asking, especially at the moment because today’s cultural icons, the equivalent of the sixteenth century jade attardan from Jaipur, are social media, telecoms and the internet: and they have all been holding up pretty nicely on the subcontinent; primarily, of course, through the vaulting ambitions of India’s richest man, Mukesh Ambani.

It would be an understatement of titanic proportions to say that Ambani surprised the business world when he launched Jio telecoms in India last September, with a colossal initial investment of £25 Billion; allowing its burgeoning population to secure (initially free) access to data spectra on a wholly unprecedented scale. In the past six months alone Jio has signed up 100 Million new customers and is now carrying more data than either China Mobile or AT&T; and bear in mind too that the population on the subcontinent is predicted by the United Nations to be the biggest in the World by 2020, so it is difficult to underestimate the future growth potential of its telecoms sector. For the moment at least, Jio is uniquely well placed to reap the benefits of that growth.

All of which might explain why Vodafone has this month announced its long-awaited merger with Idea Cellular (India’s third largest telecoms supplier); not least because Jio plans to start charging its 100 Million (and growing) customers for its services from 1st April this year so it looks as though a price war could be in the offing. It should all get very interesting for both key players and for the sector generally; but as we have had cause to comment on this site before, there are no fleas on a dead dog.

Vodafone is a United Kingdom company with operations worldwide; and the Group is being drawn deeper into India for the simple reason that India obviously matters (for a whole range of reasons, not least its huge potential for growth); and the same can be said of other substantial United Kingdom companies investing into India in other key sectors at this critical juncture in its economic development. This is all about these companies seeking to share in the steady release of India’s explosive economic potential. It is, in short, about something much more than diplomacy and post Brexit trade missions.

Something more even than a courtly dance at Buckingham Palace.

Red Ribbon CEO, Suchit Punnose said:

I was pleased to hear of the launch this month of the UK India Year of Culture 2017: our two countries have such a rich heritage in common, admittedly sometimes strained as all friendships are but always grounded firmly in a mutual respect for each other; and now, as the article points out, we are both moving into a new era of co-operation as the United Kingdom gradually looks outwards to its traditional friends and trading partners in the post-Brexit world. We saw a good example of that in the Trade Mission to India headed up by Theresa May last year and I expect the UK India Year of Culture will throw up a lot more opportunities for further common ties to be forged between businesses in both countries.

But above all else, the historic relationship between the United Kingdom and India is now being refashioned in the heat of India’s extraordinary economic growth. The Indian market is simply impossible to ignore, which would explain the level of investment into the subcontinent by UK and European companies over recent years. The Vodafone merger this month is only one of many striking examples each being driven by the sheer pace of economic change on the subcontinent.

What lesson should we remember after celebrating Republic Day in India this year?

By | India | No Comments

While the world slept and at the stroke of midnight on 15 August 1947 India, as we all know, woke to independence; but once it had rubbed the sleep from its eyes the next morning, it found in its brave new day that it still had a King (George VI) and it still had a Governor General too (Lord Mountbatten); and it was to take India another two years, eleven months and eighteen days before it replaced both of them with a formal Constitution, which is why 26th January is celebrated each year on the subcontinent as Republic Day. But the historic date of 26th January 1950, the true birth date of independent India, is memorable for more than its parades and parties; we should not forget that it has a genuine economic resonance as well.

The Indian Economy had virtually stagnated for fifty years between 1900 and 1950, and of course, much of the country’s pre-1900 wealth had been created only to be carried promptly back to London or Leadenhall Street. Average growth in those 50 years before true Independence was a mere 0.5%; but once the British had departed, India almost immediately embarked on a concerted programme of Central, State Controlled Planning which lifted average growth to 3.5% per annum within ten years. It was, on any basis, a staggering achievement; and one which was quickly appropriated into economic dictionaries and lexicons as the “Hindu Rate of Growth”; the new Indian economy was certainly something to be proud of.

And prouder still by the 1980’s when growth rates reached an unprecedented 6% per annum.

Conventional economic analysis divides India’s progress since 1950 into two distinct periods, pivoting sharply on the central axis of the economic reforms of 1991; but looked at in its historic perspective, that analysis begins to look more than a little misguided.

Because the truth is that ever since the Constitution of the Republic in 1950 there has been a steady, broadly consistent and sometimes striking rate of growth on the subcontinent. And of course it is an inescapable fact that since 2004 India’s annual rate of growth has been truly astonishing, but seen in its proper perspective that is not only because of the absolute figures for growth achieved in the period (8.5% per annum in 2008) it is equally about the shifting paradigm of the growth itself.

In 1950 the combined share of Trade, Transport and Communications in Indian GDP was 10%. The equivalent combined figure by 2008 was 32%; these three Sectors together constitute the biggest agents for growth in the economy and that tells us something not only about the way in which the Indian economy has grown since 1950 but also about how it is likely to grow in the future. It is a lesson well worth paying attention to.

When the British Government made India its first port of call after the Brexit referendum last year, it was at pains to put infrastructure spending at the centre of its agenda; both governments signing up to an MOU that improved access to London Capital Markets at a time when the Indian Government is already a long way down the road to implementing a series of Transport and Communication projects on a breathtaking scale. Improved access to capital markets under the terms of the MOU comes at exactly the right time to kick-start the crucial part which Transport and Communications will have to play in future Indian Economic Growth. It is the single biggest lesson to be learned from economic history on the subcontinent over the past thirty years: you ignore infrastructure spending at your peril. And it is a lesson which the Indian Government seems to have taken firmly on board.

In purely political terms it is also interesting to take a look back at the economic climate which was prevailing immediately after the Constitution was adopted in 1950. As we have seen, fifty years of economic stagnation were converted into growth rates in excess of 3.5%; and this happened substantially because of a concerted policy of Central Government Planning; the type of Central Planning which has now been almost utterly discredited in favour of a looser, open market economy. But that shift in political thinking has certainly not stopped the Government in India from playing a continuing part and crucial part in orchestrating infrastructure spending across the subcontinent. That should not be seen as a bad thing (as each of the Governments of the United Kingdom and India recognised during the Trade Mission last year): infrastructure spending is simply too important to be ignored.

Having just celebrated Republic Day this year, that is a lesson we should all remember.

Red Ribbon CEO, Suchit Punnose said:

India has come a long way in the last, near seventy years; and it can sometimes be easy to overlook the scale of the progress the country has been made over that period, dazzled as we might be by the astonishing, exponential growth of the last decade. But it seems to me the article is right to seek to put the last decade in its proper, historic perspective. The resources which India has to offer have the capacity to make it a real power in the economic world, and of course only last month we learned that it had moved up to fifth place in the world economic league. We should never forget that this is far from the work of ten years; it is the culmination and expression of India’s true economic potential.

And having just celebrated Republic Day, it is certainly appropriate that we should keep that in mind.

India’s economy surpasses that of the UK for the first time in 150 years

By | India, United Kingdom | No Comments

All of the territories and properties belonging to the East India Company were transferred to the British Crown in 1858 and the Crown went on to take political and administrative control of India for the next 90 years, rapidly accelerating the pace of economic growth on the subcontinent as it set out to demonstrate that whatever the East India Company might have done, it could do better; which, on the whole, it could. Major public works programmes proliferated up and down the country; and given it was easier for the Imperial Government to secure loans for large capital projects, it wasn’t slow to flex its economic muscles, combined as they now were with full policy making powers across all of India.

And in the intervening years since 1858 India, with more than two hundred times the population of its former mother country, has never in a single year recorded a higher domestic economic output than Britain.

Not, that is, until now.

Forbes Magazine reported last month that India has now become the Fifth Biggest Economy in the World, after the United States, China, Japan and Germany and with a well-modulated sense of understatement, the Minister of State for Home Affairs, Kiren Rijiju, described the historic moment as “a big leap”.

It is indeed a big leap, but it is also part of an even more historic trend.

India had been expected for some years to leapfrog Britain into fifth place in the world economic league, but most analysts including the highly influential Centre for Economics and Business Research (CEBR), had expected it to have to wait until 2020 before crossing the crucial threshold. And it’s worth reflecting on that fact for a moment: because a full three years ahead of projections, India has moved into fifth place on the Global Stage with its economy still forecast to grow at a consistent six to eight per cent per annum (compared, for example, with the United Kingdom’s one to two per cent); so where will India be in three years’ time?

There is a virtuous circle at the heart of all economic forecasting: growth breeds confidence and confidence breeds growth, and India now finds itself sitting at the heart of an unprecedented expansion in its domestic infrastructure programmes. As we have commented before on this site, the Indian Government has been launching project after project, committing dizzying sums to new transport, energy and capital developments which must surely by now have convinced even the most hardened economic sceptic that it has the firm resolve to follow through and build on these historic trends. Is it any wonder that the first Trade Mission of the newly established Government of Prime Minister Theresa May headed straight for India? Is it any wonder that the Trump Corporation sees India as its most fertile market for growth? And is it any surprise that London’s Capital Markets have been geared up specifically to support the most ambitious of India’s expansion plans?

Less than two weeks ago we heard that IL&FS Engineering and Construction (IL&FS) had been awarded a new Rs 242.2 crore contract by the Government of Karnataka for the widening from two to four lanes of the highway between Bidar and Humnabad, expected to be completed in two years’ time; and IL&FS is already working on a major project in Karnataka for the Bangalore Metro Rail Corporation which is worth no less than Rs 326.99 crore. These and projects just like them, already taking place up and down the subcontinent, are the key drivers for future economic growth in India.

In his short, eventful lifetime Robert Clive came to dominate the extraordinary economic creature which was the East India Company; and when he was called to give evidence before the British House of Commons to deal with widespread allegations of embezzlement and appropriation which were dogging the company he said candidly that given India’s great wealth it was a wonder only that more wasn’t stolen. We’ve come a long way since then. India is finally taking its place at the top table of global economies, standing on its own two feet and marshalling its huge resources for itself. Who knows what the future holds?

Red Ribbon CEO, Suchit Punnose said:

There can be no doubting the historic significance of India leapfrogging Great Britain so as to secure 5th place in the global economic tables; indeed, when set in its full economic context it is likely to be a truly game-changing moment for the subcontinent. But for my part I am not surprised: as the article points out, economic growth is all about confidence and confidence will, in turn, engender further growth; and India has certainly not been short of confidence over recent years. Just look at the scale of its infrastructure programmes which at times have been simply breathtaking in their scope.

Britain turned India into an imperial powerhouse through investing in what we would now call public infrastructure projects. One hundred and fifty years later, India under its own steam and fuelled by its own ambitions is set to match the ambition of its former colonial mother country; so it seems appropriate that it should now be taking its place at the top economic table.

Introduction to Red Ribbon Asset Management

By | Video | No Comments

We are an Impact Investment company that incubates scalable projects in growth markets, with an initial focus on India. We export established products, services and technology from the UK and other western economies, by taking best practices to markets where great opportunities exist.

Red Ribbon

At Red Ribbon we understand that the transition towards a resilient global economy will be led by well-governed businesses in mainstream markets, striving to reduce the environmental impact of their production processes on society at large and on the environment as well.