Indian Elections – “Supply-side policies are equally critical alongside investments in manufacturing capacity”, TEMIT

by | Apr 6, 2024

Share this article

By Chetan Sehgal, Lead Portfolio Manager, Templeton Emerging Markets Investment Trust (TEMIT)

India is gearing up for its general election, scheduled to take place on April 19, with voting continuing over a span of six weeks and concluding on June 1. The incumbent Bharatiya Janata Party (BJP), led by Prime Minister Narendra Modi, is widely expected to secure a comfortable victory. 

Should Prime Minister Modi secure a third term, it is likely that his focus on conservative fiscal policies will persist. A two-thirds majority of votes for the BJP and its coalition partners would empower Prime Minister Modi to make constitutional changes, addressing critical concerns among local businesses and foreign investors. Additionally, there is potential for judicial and economic reforms that could enhance the government’s capacity to generate additional tax revenue.


Investment in India’s workforce is another crucial area. Efforts are needed to improve female participation in the workforce, upskill workers to facilitate a smoother transition to new employment opportunities, and encourage greater youth engagement. Enhancing skills and productivity is essential for India to harness the benefits of its sizable and youthful population.

Prime Minister Modi has dubbed the 2020s as India’s “Techade.” In the short term, he aims to boost domestic demand, while the medium-term focus lies in enhancing export capacity. Negotiations for free trade agreements are underway with the European Union and the United Kingdom. Additionally, the India-Middle East-Europe trade corridor is being developed to leverage tariff-free access to these markets.

These supply-side policies are equally critical alongside investments in manufacturing capacity, as they contribute to building a sustainable long-term export base in India. Recently, policymakers have emphasized investment in semiconductors to diversify the technology sector’s reliance beyond software services.


India offers investors a significant growth opportunity given its structural tailwinds, which include attractive demographics, a market-oriented economy, and a rising middle class. These robust growth prospects are, however, reflected in valuations of many securities, which trade at a premium to other emerging markets. We remain selective in companies we invest in and favour companies which have sustainable earnings power and whose share prices are at a discount to our estimate of their intrinsic worth.

Share this article

Related articles

Sign up to the IFA Magazine Newsletter

Trending articles

IFA Talk logo

IFA Talk is our flagship podcast, that fits perfectly into your busy life, bringing the latest insight, analysis, news and interviews to you, wherever you are.

IFA Talk Podcast - listen to the latest episode