Investors want more of India, says Goldman Sachs' Sengupta

 

Shantanu Sengupta, chief India economist at Goldman Sachs Group Inc., has said that investors are aiming to pump more money into Asia's third largest economy.

As India manages to shield its economy from global adversities, Shantanu Sengupta, chief Indian economist at Goldman Sachs Group Inc., said foreign investors are showing interest in India as it boosts manufacturing capacity and infrastructure.

Foreign investors are showing increased interest in India as Asia's third largest economy improves its manufacturing capacity and improves infrastructure, said Sengupta, chief India economist at Goldman Sachs Group Inc.

As investors chase markets with digital new economy assets, India continues to attract $50 billion to $55 billion in annual foreign direct investment even in the pandemic, Sengupta said in an interview with Bloomberg Television's Haslinda Amin and Rishad Salamat. Have done

He said that government incentives are a big attraction for companies looking to expand their manufacturing base in India. “There is clearly a lot of interest from foreign institutional investors, especially on the foreign direct investment side, to invest in India.”

India is trying to woo investors as global manufacturing companies, especially in the technology sector, look to diversify away from China. India and Vietnam are expected to capture a large share of the business, especially in electronics.

"The window is likely to be the largest over the next several years," Sengupta said in a note released last week. ,

More broadly, Sengupta said India's economy is in good shape. He expects GDP for the July-September quarter, which is due today, to come in at 6.3%. He said with inflation still high, the Reserve Bank of India could hike the policy rate by half a point next week and by another 35 basis points in February.

Sengupta said inflation for core articles may peak in the coming quarters, but services inflation may remain flat for longer. The current account deficit is likely to remain high at 3%-3.5% of GDP, even as a peaking dollar gives the central bank "some freedom to play with lower levels of reserves as external balance pressures become more manageable". Will happen."

Manufacturers have strengthened their balance sheets by reducing debt, he said, and Indian banks are doing well, helping to insulate the country from external financial shocks. Sengupta said, however, that a prolonged US Federal Reserve interest rate hike cycle, and a rise in oil prices when China fully opens up its economy, pose risks to 2023.