I have followed Indian markets for most of my working life, first from Kolkata and later from Dubai and London. If there is one lesson the country teaches investors, it is that the quarterly noise and the decade-long signal are almost never the same thing.
Foreign flows come and go. Valuations stretch and then snap back. Commentators declare India either unstoppable or overrated, sometimes in the same month. Underneath all that, a handful of structural forces keep compounding. These are the ones I watch.
1. The formalisation of the economy
For decades, a large share of Indian economic activity happened informally: cash transactions, unregistered businesses, credit from relatives rather than banks. That is changing. A national goods and services tax, digital payments and digital identity have pulled millions of businesses and households into the formal system.
Formalisation is not glamorous, but it is powerful. It widens the tax base, makes credit easier to price and gives lenders, insurers and investors data they never had before. Over a decade, that quietly raises the quality of the whole economy.
2. Digital public infrastructure
India built something unusual: payments, identity and data-sharing rails designed as public goods. The Unified Payments Interface turned a street vendor's QR code into a bank branch. For investors, the important point is not the technology itself but what gets built on top of it: lending, insurance, wealth management and commerce that were previously too costly to deliver to small customers.
3. Infrastructure and manufacturing
Roads, railways, ports, airports and power have received sustained public investment. Better logistics lower costs for every business that moves goods. At the same time, global companies looking to diversify supply chains have taken a fresh look at India for manufacturing. Not every announcement will become a factory, but the direction of travel is clear.
4. Demographics and consumption
India has one of the youngest large populations in the world. A young workforce is an opportunity only if it finds productive jobs, which is why education, skills and urbanisation matter as much as any headline growth rate. Where that works, rising incomes feed a consumption story that can run for decades.
The risks worth respecting
Taking the long view does not mean wearing rose-tinted glasses. I keep several risks firmly in view:
- Valuations. A great economy can still be a poor investment if you pay too much for it. Enthusiasm is already priced into many parts of the Indian market.
- Jobs. Growth that does not create enough employment for a young population is fragile, economically and politically.
- Execution. Policy ambition is high. Delivery at state and local level is uneven.
- Currency. For international investors, the rupee matters. Returns measured in rupees and returns measured in dollars can tell very different stories.
5. Deepening capital markets
One of the quieter changes of the past decade has been the rise of the domestic Indian investor. Monthly systematic investment plans into mutual funds have turned millions of households into long-term owners of Indian businesses. That steady domestic flow makes the market less dependent on foreign money than it used to be, and it gives good companies a deeper pool of capital to raise from at home.
How I think about it
None of this is a recommendation to buy or sell anything. It is a framework. I would rather own a small number of well-run businesses that benefit from these long trends than try to trade every headline about them. When the noise gets loud, I find it useful to ask a simple question: has anything changed that will still matter in ten years? Usually the honest answer is no.
India rarely moves in a straight line. It does, however, tend to move. Patient capital that can sit through the detours has historically been rewarded for doing so.
Read next: Areas of conviction → The Long View → Biography →