Lessons from frugal businesses minting money in India
For foreign investors, India is a puzzle. On the plus side, it is a potentially huge market, recently passing China as the world’s most populous. The IMF predicts that India will be the fastest-growing of the world’s 20 biggest economies this year. By 2028 its GDP is expected to be the third-largest, moving past Japan and Germany. The stockmarket is pricing in heady growth. Over the past five years Indian stocks have beaten those elsewhere in the world, including America’s.
The minuses can seem equally formidable. Just 8% of Indian households own a car. Last year the number of individual investors in Indian public markets was a paltry 35m. The smartphone revolution unleashed 850m netizens, but most scroll free apps like WhatsApp (500m users) and YouTube (460m). Blume, a venture-capital (VC) firm, estimates that only 45m Indians are responsible for over half of all online spending. Netflix, the video-streaming giant, which entered India in 2016 and charges Indians less than almost anyone else, has attracted just 6m subscribers.
The tension between tomorrow’s promise and today’s reality is reflected in India’s tech scene. Over the past decade giddy projections of spending by hundreds of millions of consumers led investors to pour money into young tech firms. According to Bain, a consultancy, between 2013 and 2021 total annual VC funding ballooned from $3bn to $38.5bn. Now the easy money is running out. In 2022 startups received $25.7bn. In the first half of this year they got a measly $5.5bn.
2023-10-26 07:35:33
Post from www.economist.com
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