Another five years of a majority government in India could usher in a flood of foreign direct investment (FDI), Bajaj Finserv Chair and Managing Director Sanjiv Bajaj told Reuters at the World Economic Forum annual meeting on Monday.
"Ten years of this growth we have seen, at least another five years of a strong majority government will end up institutionalising those policies to a fair extent," Bajaj said in an interview in Davos, Switzerland.
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"It doesn't mean someone can't reverse those things but not easy to do when you have 15 years under your belt, so I think that makes a big difference", Bajaj added.
Bajaj Finserv is one of India's leading diversified financial services companies and has helped to reshape the business of consumer finance in the country. It is part of the autos to insurance Bajaj Group, one of India's oldest family conglomerates, and has a $32 billion market value.
"For the last 10 years, we've had a single party running the government, that just brings in significant amount of alignment and continuity in policy", Bajaj said.
Prior to Prime Minister Narendra Modi's Bhartiya Janata Party government coming to power in 2014 India was led by a coalition government.
India is forecasting annual growth of 7.3% in the fiscal year ending in March ahead of the national elections scheduled to be held before May.
FDI flood
"The next three or four quarters are going to be very important for India to get a larger perspective on foreign direct investment. Are we seeing a flood or a trickle? I believe it is going to be a flood", Bajaj said, referring to a recent slowdown in inflows.
Companies and investors need time to liquidate investments elsewhere to redirect their cash to markets like India, he said, adding they may be waiting for the outcome of elections.
FDI into India was $71.4 billion in 2022-23, 16% lower year-on-year, official statistics show. The global FDI pot is also shrinking on higher U.S. interest rates and tighter liquidity.
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India can at times be slow to get started but companies in the electronics sector are starting to show impressive scale after barely existing a decade ago, he said noting the impact of Modi's efforts to boost manufacturing.
Bajaj is the largest financier for mobile phones in the country, he said. Many of India's lower to middle classes use small loans to buy gadgets.
"For every one Apple that does production in India, it gives tremendous confidence to the next 10, and then next 50," he said, adding: "If Tesla comes in, in the next year or two, again, this will create additional confidence as well."
As India tries to boost domestic manufacturing and electric vehicle (EV) adoption, U.S. carmaker Tesla is proposing to set up an Indian factory, but is demanding lower EV import taxes.
Growing pains
In November, the Reserve Bank of India applied curbs to a small part of the company's lending business, which Bajaj said the company is in the process of complying with.
"It is important because if you're slipping up somewhere small, tomorrow it could be somewhere big, so we have to make sure that we get stronger and stronger on our compliance side as well, as we're growing as a business", he added.
"Fortunately, we have 40 different product lines. So if two or three slow down, we have many others that are doing well."