3/15/2015 Davos 2015: India revs up its growth engine

http://www.ap.jll.com/asiapacific/engb/news/special/davos2014indiarevsupitsgrowthengine?utm_source=taboola&utm_medium=ezoic2myfirstclasslif… 1/3

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04 February 2015

Davos 2015: India revs up its growth engineJLL's Anuj Puri invites investors to explore the Indian economy as itenters a new era of growth, fuelled by 'Modi mania' and a revitalisingreform agenda

Fresh from the frosty slopes of Davos in Switzerland, which once again formed a scenic backdrop to the annualmeeting of the World Economic Forum (WEF), JLL India's Chairman and Country Head, Anuj Puri, reflects on India'sremarkable progress under its new leadership.

In May 2013, India was dubbed a 'fragile' nation but 20 months on it's one of the world's most promising economies. If the recent IMF prediction proves correct, India's GDP growth will outpace China by 2016.

The nation's economic revival was reflected in its presence at this year's WEF. 120 delegates attended, more thanChina, whereas last year India was conspicuous in its underrepresentation.

"In 2013 there was no poster boy for India, but that's changed with Prime Minister Modi. India was frequentlymentioned this year," said Puri.

The reasons behind this impressively quick turnaround, he says, can be attributed to a 'smart government clearlyintent on making business reforms'.

Made in India

India is back in business, with a brand new slogan to boot: Made in India. When Prime Minister Narendra Modi came

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3/15/2015 Davos 2015: India revs up its growth engine

http://www.ap.jll.com/asiapacific/engb/news/special/davos2014indiarevsupitsgrowthengine?utm_source=taboola&utm_medium=ezoic2myfirstclasslif… 2/3

to power in May 2014, he promised a raft of reforms that would flip the nation's reliance on the IT services sector tocreate a manufacturingcentric economy, as China has over the past few decades.

"Multiple 'Make in India' signs and hoardings were visible all across the conference venue and this sent the country'spride barometer soaring," said Puri.

"Modi is from Gujarat, the manufacturing engine for India and he understands this sector," he added. "Much ofIndia's vast demographic dividend is unfit for the service sector; Modi is looking to skill these people with trades forthe manufacturing industry."

His commitment to support public firms with much needed financing has served as a further shot in the arm formanufacturing. Coal India received a rousing reception from the equity markets just last week.

The government aims to raise the reliance on manufacturing to 25 per cent of total economic output by 2022, upfrom the current 16 per cent, to create 100 million jobs. But stumbling blocks stand in the way of India realising thisambition. Manufacturing relies on serviceable infrastructure and transparent trade rules, and India is deficient inboth.

"Infrastructure investment is vital and that's something Modi has promised in order to entice investors," added Puri."Crucially, he [Modi] must follow through on his big GST reform."

Revitalising reforms

As March's Budget looms, Modi is under pressure to deliver on his biggest promise of all: a reform on India'snotoriously bureaucratic multistate GST levies. If he succeeds in passing such comprehensive national taxlegislation across all of India's 29 states, domestic trade will benefit and foreign investors will see the Prime Ministeras a man of his word.

"Changes like the GST reforms need to be implemented. Foreign investors need to be confident that the governmentwon't pull the rug from under them anytime soon."

The anticipation surrounding India's makeorbreak year was palpable in Davos, and Puri was privy to significantmedia attention throughout the conference, conducting interviews with journalists who wanted to understand thesituation in India: "They wanted to know what is currently happening in the country, but also how it's affected byChina slowing.

"In recent years the world has had four major engines of growth: China, Japan, Europe and America. Three of theseengines are slowing and there's an opportunity for India, which is revving up." Enticing foreign investors

The combination of a stable rupee, easing inflation and lower energy prices will buoy the Indian economy in thecoming months and for the real estate industry, opportunity abounds in the current climate.

Increased confidence in India is driving domestic business demand, particularly in the technology sector, and officetakeup from Indian corporates is rising, which means rental values are growing. This is in contrast to the last four orfive years, which have been marked by excess supply and lacklustre growth.

Foreign investors may be few and far between but the US, India's biggest trade partner, is feeding its servicehungryeconomy on India's outsourcing sector. Testimony to the continued American interest in India, Barack Obama begana state visit as Puri touched down from Davos.

Ensuring that all of this translates into growth on the ground, however, is another matter.

"Foreign investors want to see Modi's policies in action. We will see investment levels creep up over the next six to12 months but the majority of it will come through in 2016."

If Modi can bring his reforms to fruition, 2016 will be the year investors knock on JLL India's door: "For now, theforeign community remains cautiously optimistic and is watching India very closely, to see how the ‘Modi mania’unravels itself. Next year I’d hope to see Modi make an appearance at Davos, which would surely be a shotinthearm for us. It will not only affirm India’s new position in the global pecking order, but also hopefully encourageinvestors."

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3/15/2015 Davos 2015: India revs up its growth engine

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