Beyond the Hype: Why India is Still a Compelling Bet in 2025
February 12, 2025
Read Time 4 MIN
Indian stocks have outperformed broad emerging markets for four consecutive years, reflecting the country's strong economic growth, structural reforms, and digital transformation. In 2024, India continued its trend of outperformance versus emerging markets, but specialized indexes like the MarketGrader India All-Cap Growth Leaders Index and the MVIS Digital India Index outpaced the broader Indian market.
In the fourth quarter of 2024, emerging markets sold off broadly due to a stronger U.S. dollar, trade tension and uneven growth across emerging markets economies, with India underperforming the broad market. Despite this, growth at a reasonable price (GARP) and digital-sector stocks proved more resilient, declining less than the broad Indian market. Digital sector stocks performed particularly well in Q4 due to a combination of sustained global demand for IT services, increased domestic digital adoption, and strategic investor interest. However, weakness extended into early 2025, with India continuing to lag even as emerging markets saw signs of recovery. Growth stocks, including GARP and digital sector stocks, underperformed the broader Indian market in January.
| 2024 | Q4 2024 | Jan-25 | |
| MarketGrader India All-Cap Growth Leaders Index | 17.71 | -7.66 | -8.58 |
| MVIS Digital India Index | 29.63 | -0.44 | -7.40 |
| MSCI India Index | 11.22 | -11.32 | -3.56 |
| MSCI Emerging Markets Index | 7.50 | -8.01 | 1.79 |
Source: Morningstar as of 1/31/25 Past performance is no guarantee of future results. Index performance is not representative of fund performance. It is not possible to invest directly in an index.
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India 2025 Outlook – More of the Same
As outlined in our blog, India’s Economic Rise Deserves Investor Attention, India's rapid economic ascent is capturing significant investor interest, driven by several key factors. The nation is experiencing robust GDP growth, bolstered by forward-looking government policies that create a conducive business environment. A significant contributor to this expansion is the digital sector, which is flourishing due to widespread smartphone adoption and initiatives promoting financial inclusion and fintech innovation. Additionally, India's young, English-proficient workforce provides a competitive edge, attracting multinational corporations and fostering a thriving equity market that has recently surpassed China's in performance. These dynamics underscore India's unique position in the global investment landscape, presenting compelling opportunities for investors seeking growth in emerging markets.
Going forward, we expect:
- Sustained GDP Growth: India’s economy is expected to expand at 6-8% annually, driven by domestic consumption, structural reforms, and a growing digital economy.
- Infrastructure Expansion on Track: Government-led investments in renewables, logistics, and soft infrastructure will have second- and third-order effects on real estate, inflation trends, and DTC business models.
- Economic Resilience: Low trade deficits and a diversified economy make India less vulnerable to global shocks, with digitization and financial formalization strengthening long-term stability.
- Justified Valuations: India’s high P/E ratios reflect productivity gains, economic formalization, and superior growth rates compared to similarly valued markets like the U.S. and Taiwan. Sector-specific opportunities outweigh broad valuation concerns.
Ongoing Risks
We see the below ongoing risks for Indian equity investors:
- Domestic Political Uncertainty: Despite securing a third term in the 2024 elections, India's political landscape remains uncertain as the majority party now relies on coalition partners, which could impact policy execution and reform momentum. Upcoming state elections and governance challenges may introduce further volatility. Additionally, concerns over media restrictions and civil liberties could affect investor confidence and India's global standing.
- Global Market Downturn: India is not immune to external shocks. A global economic slowdown, recession in key trading partners, or tightening financial conditions could lead to capital outflows and currency depreciation. Rising U.S. interest rates, geopolitical conflicts, or a slowdown in global trade could impact India’s exports and foreign direct investment (FDI). Additionally, risk-off sentiment in global markets could lead to short-term corrections in Indian equities, particularly in foreign-investment-heavy sectors like technology and financials.
Now Is the Time to Invest in India
India is rapidly transforming into a powerhouse investment hub. Its booming digital sector, combined with a strong equity market, is drawing global attention. Additionally, the government's committed push for financial inclusion and fintech innovation is further fueling this interest. When compared to China, India's demographic advantage amplifies its allure. Simply put, we believe India's strong economic foundations and massive market potential make it an irresistible destination for investments.
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IMPORTANT DISCLOSURES
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
MarketGrader India All-Cap Growth Leaders Index comprises Indian equity securities which are generally considered by the index provider to exhibit favorable fundamental characteristics according to the index provider’s proprietary scoring methodology.
MVIS Digital India Index intends to track the overall performance of companies involved in supporting the digitization of the Indian economy.
MSCI India Index: tracks large and mid cap representation across the Indian equity market.
MSCI Emerging Markets Index: captures large and mid cap representation across 24 Emerging Markets (EM) countries.
An investment in the VanEck Digital India ETF (DGIN) may be subject to risks which include, but are not limited to, special risk considerations of investing in Indian issuers, equity securities, small- and medium-capitalization companies, communication services sector, information technology sector, emerging market issuers, foreign securities, foreign currency, depositary receipts, cash transactions, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversified and index- related concentration risks, all of which may adversely affect the Fund. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks. Small- and medium capitalization companies may be subject to elevated risks.
You can lose money by investing in the VanEck Emerging Markets Fund. Any investment in the Fund should be part of an overall investment program, not a complete program. The Fund is subject to risks which may include, but are not limited to, risks associated with active management, consumer discretionary sector, direct investments, emerging market issuers, ESG investing strategy, financials sector, foreign currency, foreign securities, industrials sector, information technology sector, market, operational, restricted securities, investing in other funds, small- and medium-capitalization companies, special purpose acquisition companies, special risk considerations of investing in Brazilian, Chinese, Indian, and Latin American issuers, and Stock Connect risks, all of which may adversely affect the Fund. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks. Small- and medium-capitalization companies may be subject to elevated risks. Investments in Chinese issuers may entail additional risks that include, among others, lack of liquidity and price volatility, currency devaluations and exchange rate fluctuations, intervention by the Chinese government, nationalization or expropriation, limitations on the use of brokers, and trade limitations.
An investment in the VanEck India Growth Leaders ETF (GLIN) may be subject to risks which include, but are not limited to, special risk considerations of investing in Indian issuers, foreign securities, emerging market issuers, foreign currency, depositary receipts, information technology sector, financials sector, industrials sector, micro-, small- and medium capitalization companies, cash transactions, equity securities, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversification and index-related concentration risks, all of which may adversely affect the Fund. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks. Micro-, small- and medium capitalization companies may be subject to elevated risks.
ESG integration is the practice of incorporating material environmental, social and governance (ESG) information or insights alongside traditional measures into the investment decision process to improve long term financial outcomes of portfolios. ESG investing is qualitative and subjective by nature, and there is no guarantee that the factors utilized by VanEck or any judgment exercised by VanEck will reflect the opinions of any particular investor. Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and VanEck is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful. An investment strategy may hold securities of issuers that are not aligned with ESG principles.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly-owned subsidiary of Van Eck Associates Corporation.
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IMPORTANT DISCLOSURES
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
MarketGrader India All-Cap Growth Leaders Index comprises Indian equity securities which are generally considered by the index provider to exhibit favorable fundamental characteristics according to the index provider’s proprietary scoring methodology.
MVIS Digital India Index intends to track the overall performance of companies involved in supporting the digitization of the Indian economy.
MSCI India Index: tracks large and mid cap representation across the Indian equity market.
MSCI Emerging Markets Index: captures large and mid cap representation across 24 Emerging Markets (EM) countries.
An investment in the VanEck Digital India ETF (DGIN) may be subject to risks which include, but are not limited to, special risk considerations of investing in Indian issuers, equity securities, small- and medium-capitalization companies, communication services sector, information technology sector, emerging market issuers, foreign securities, foreign currency, depositary receipts, cash transactions, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversified and index- related concentration risks, all of which may adversely affect the Fund. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks. Small- and medium capitalization companies may be subject to elevated risks.
You can lose money by investing in the VanEck Emerging Markets Fund. Any investment in the Fund should be part of an overall investment program, not a complete program. The Fund is subject to risks which may include, but are not limited to, risks associated with active management, consumer discretionary sector, direct investments, emerging market issuers, ESG investing strategy, financials sector, foreign currency, foreign securities, industrials sector, information technology sector, market, operational, restricted securities, investing in other funds, small- and medium-capitalization companies, special purpose acquisition companies, special risk considerations of investing in Brazilian, Chinese, Indian, and Latin American issuers, and Stock Connect risks, all of which may adversely affect the Fund. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks. Small- and medium-capitalization companies may be subject to elevated risks. Investments in Chinese issuers may entail additional risks that include, among others, lack of liquidity and price volatility, currency devaluations and exchange rate fluctuations, intervention by the Chinese government, nationalization or expropriation, limitations on the use of brokers, and trade limitations.
An investment in the VanEck India Growth Leaders ETF (GLIN) may be subject to risks which include, but are not limited to, special risk considerations of investing in Indian issuers, foreign securities, emerging market issuers, foreign currency, depositary receipts, information technology sector, financials sector, industrials sector, micro-, small- and medium capitalization companies, cash transactions, equity securities, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversification and index-related concentration risks, all of which may adversely affect the Fund. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks. Micro-, small- and medium capitalization companies may be subject to elevated risks.
ESG integration is the practice of incorporating material environmental, social and governance (ESG) information or insights alongside traditional measures into the investment decision process to improve long term financial outcomes of portfolios. ESG investing is qualitative and subjective by nature, and there is no guarantee that the factors utilized by VanEck or any judgment exercised by VanEck will reflect the opinions of any particular investor. Information regarding responsible practices is obtained through voluntary or third-party reporting, which may not be accurate or complete, and VanEck is dependent on such information to evaluate a company’s commitment to, or implementation of, responsible practices. Socially responsible norms differ by region. There is no assurance that the socially responsible investing strategy and techniques employed will be successful. An investment strategy may hold securities of issuers that are not aligned with ESG principles.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
© Van Eck Securities Corporation, Distributor, a wholly-owned subsidiary of Van Eck Associates Corporation.