Finnfund economist Tangeni Shatiwa: “India’s growth, green transition and digitalisation offer significant opportunities for impact investors and Finnish companies”

India’s economy is growing strongly. At the same time, private investment is picking up, and the green and digital transitions are moving quickly. According to Finnfund’s latest India Insight review of the Indian market (Finnfund Insights: Focus on India), this opens significant opportunities for both impact investors and Finnish companies.

“India has become one of the world’s fastest-growing major economies. It is expected to remain one of the key drivers of global growth in the coming years. India’s economy has quadrupled in real terms since 2000, and per capita incomes have tripled. The country is already the world’s fifth-largest economy, and its position is expected to strengthen further,” says Tangeni Shatiwa, economist at Finnfund.

From Finnfund’s perspective, India combines a large market, major development needs and strong growth in sectors that fit well with Finnfund’s investment mandate. Long-term growth is supported by a large and growing working-age population, rapid digitalisation and major infrastructure investments..

Revival of private investment

Investor confidence is being strengthened by the recovery in private investment in India. Growth now appears to be at its strongest level in a decade. In the past, the public sector has been responsible for much of the country’s infrastructure investment. These investments have reduced risks and created a stronger basis for new private sector investment.

“The recovery in private investment shows that companies have growing confidence in India’s business environment. India is generating strong growth from its investments compared with many peer economies. This strengthens its position as an attractive long-term market,” Shatiwa says.

India’s policy environment has also become more favourable for investors. India has signed new free trade agreements with partners including the UK, Oman, EFTA and New Zealand. Trade negotiations with the EU and the United States have also made progress. This strengthens India’s position as an international business hub. At the state level, many reforms that are important to business have moved forward, although more complex reforms related to land and labour markets continue to progress gradually.

Electric mobility expands rapidly

For Finnfund, the most interesting opportunities are closely linked to India’s green and digital transitions. Electric mobility is growing rapidly. Sales of electric vehicles are increasing, but their share of all vehicles remains relatively low. This leaves significant room for growth. Finnfund’s investment in Transvolt Mobility supports the expansion of electric buses and heavy commercial vehicles. Its partnership with Fortum Charge & Drive India has also helped expand charging infrastructure for public transport, vehicle fleets and other captive-use needs.

“India’s electric mobility market is developing quickly. The need for charging infrastructure is growing as electric vehicles become more common in personal and public transport, as well as movement of goods,” says Helena Teppana, Associate Director at Finnfund.

India’s digital sector also offers major growth opportunities. The country already has more than one billion internet subscribers. However, further investment is still needed in stronger, more reliable networks, data centres, cybersecurity, and digital services. Demand for data centres is expected to grow quickly in the coming years. This growth is driven by requirements to store data locally, the spread of 5G and the increasing use of artificial intelligence.

Finnfund’s recent investment in Ecofy, a Mumbai-based digital financing company, through the Digital Access Impact Fund shows how digital platforms can improve access to finance. Ecofy finances solutions that support people’s livelihoods and the green transition. Together with an earlier investment in Indifi, Ecofy shows how technology-based financial services can promote financial inclusion and the growth of small businesses in markets where access to financing has been difficult.

Growth market for Finnish companies

India can also be an important growth market for Finnish companies. Rapid urbanisation, growing industrial investment, electrification, expanding digital infrastructure and policies focused on clean growth are increasing demand in areas where Finnish companies have strong expertise. These areas include electric mobility, renewable energy, energy storage, grid solutions, cyber-secure digital services, the circular economy, water and wastewater solutions, and advanced manufacturing technologies.

“India offers significant opportunities for Finnish companies that develop solutions for clean growth, electrification and digital infrastructure. Finnfund can help companies identify bankable opportunities and trusted partners in the Indian market,” says Patrik Bredbacka, Head of EU and Finnish Partnerships at Finnfund. Finnfund can support Finnish companies, for example, by financing their expansion projects in India, investing in Indian customers or partners, and using its portfolio and networks. In this way, Finnfund can help Finnish companies find credible growth opportunities in India. The best opportunities are likely to emerge where Indian demand, Finnish expertise and Finnfund’s impact mandate meet.

For more information:

Economist Tangeni Shatiwa, Finnfund, tangeni.shatiwa@finnfund.fi, tel. +358 40 562 8917

Chief Communications Officer, Unna Lehtipuu, Finnfund, unna.lehtipuu@finnfund.fi, tel. +358 40 624 0896