At a time of significant geopolitical uncertainties, the India growth story has proven remarkably resilient. The world’s fifth-largest economy is well-positioned to remain the fastest-growing major economy, supported by its diversified and cost-competitive industrial base, robust domestic consumption, and thriving start-up ecosystem.
At Temasek, we recognised India’s long-term potential early on. This year marks 20 years of active investment, with a total portfolio exposure of $37 billion. We expect to add up to an additional $10 billion over the next three years if we identify the right opportunities.
As we sought to grow our portfolio based on emerging trends, we began exploring economies in Asia beyond Singapore. India was among the markets entering a phase of rapid growth, driven by its expanding middle-income population. The country had implemented economic reforms in the early 1990s to boost its competitiveness and joined the World Trade Organization. While it was still early, we were ready to take a long-term view.
In 2004, we established our Mumbai office—Temasek’s first active investment office outside Singapore. We were optimistic as India benefitted from strong macroeconomic trends, secular growth, and improved governance. We identified opportunities in sectors that mirrored the growing economy, such as banking, telecommunications, and automotives, as well as companies leveraging India’s globally competitive strengths in biopharma, healthcare, and IT.
The following decade saw digital transformation become a key catalyst, complementing economic reforms and laying the groundwork for innovation. We expanded our early-stage and growth portfolio, investing in tech-enabled start-ups aligned with consumption themes. Today, companies like Zomato and Policybazaar, with whom we were fortunate to partner at their early stages, have grown into market leaders.
Looking ahead, we believe India’s growth will be driven by four structural trends that will shape future tailwinds and persist through economic cycles.
Digitisation and sustainable living, for example, are megatrends with far-reaching impacts across sectors and business models. Similarly, the future of consumption and longer lifespans highlight shifts in India’s consumption patterns and its rising healthcare needs. For instance, we are building a pan-India healthcare services business through our majority investment in Manipal Hospitals, as we see significant demand for quality healthcare across all market tiers in the country.
At Temasek, our investments are guided by these trends. Within our portfolio, many of our Singapore-based subsidiaries are also pursuing similar opportunities in India. For example, Singapore Airlines and Tata Sons have agreed to merge Air India and Vistara to create India’s leading airline group. Similarly, Sembcorp Industries plans to expand its renewables portfolio in India as part of its five-year strategic plan to accelerate the energy transition.
We see strong structural drivers supporting long-term growth in India. The political and regulatory environment remains stable and conducive for investment. Reforms in taxation, infrastructure development, financialisation, and production-linked incentives have established a solid foundation for growth. Policies such as GST have transformed the business landscape. We expect the reform process to continue under the current pro-business government.
India’s financial markets are now the fourth-largest globally. Consistent domestic flows of approximately $20 billion annually into equity and debt markets, coupled with rapid product development and market sophistication under a progressive regulator, have created significant scale and value. The markets now have the depth to manage large transactions (over $1 billion) within a single trading day. Despite elevated valuation levels and Indian equities trading above global averages, the growth prospects, strong management teams, and a positive economic environment offer opportunities for value. Our intrinsic value tests serve as our guardrails for investing or divesting, ensuring long-term compounding returns.
India’s favourable demographics, including a young, skilled workforce with rising disposable incomes, drive strong domestic consumption that remains resilient to global shocks. While challenges in skilling and job creation persist, both public and private sectors are actively addressing them.
India’s structural advantages, combined with its deep entrepreneurial talent pool, make it highly attractive to global capital. At Temasek, we are keen to explore co-investment opportunities with partners who share our vision for long-term value creation in India.
Now 20 years on, India’s growth story remains compelling. The country is becoming a key player in global supply chains. The opportunities we see further strengthen our confidence to double down in the market for the long term—so every generation prospers.
The author is Head of Strategic Initiatives and Head of India, Temasek. Views are personal