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The key drivers that are enabling the growth in the current cycle are consumption…infrastructure investments and the tech stack…”

Vice President, Murali Yerram, highlights how these drivers are helping innovation and entrepreneurship and why investors should consider India – a gateway to growth.

What is driving India’s growth?

India overtook Japan in 2025 to become the world’s fourth-largest economy, and the IMF expects it to surpass Germany by 20281. What’s behind this momentum?

Deep, domestic capital market

  • Domestic revenues dominate corporate earnings, making India less vulnerable to geopolitical risks.
  • Rising domestic retail investor participation provides resilience against foreign capital outflows.

Country and industry upgrades

  • A proactive government is investing heavily in industry capex, public spending and infrastructure.
  • India benefits from global supply chain diversification.
  • Changes in the energy mix are helping reduce the burden of imported inflation.

Digital transformation

  • India’s digital economy is expanding rapidly, with a longer runway than China or the US.
  • Growth opportunities span e-commerce, electric vehicles and renewable energy.

Consumerism and premiumisation

  • Favourable demographics, rising income levels and evolving consumption patterns are driving demand.
  • Many goods and services remain under-penetrated, leaving room for growth.

Did you know?

India’s growth outpaced China in 2024 and is expected to do so again in 2025 and 2026.2

Four reasons to invest in India

1. A growing workforce and rising consumption

 

64.8%

of GDP comes from private consumption3

68.9%

of the population will be of working age by 20304

75%

of expenditure growth will come from the middle class by 20405

2. The world’s fastest growing major economy

3. Structural reforms

Reform initiatives – including corporate tax cuts, the production-linked incentive (PLI) scheme and infrastructure investment – are boosting corporate efficiency. India has also set ambitious renewable energy targets.

Did you know?

India’s share of global gross domestic product (GDP) rose to 8.25% in 2024.⁷

4. A large and rising middle class

By 2040, India’s middle class is expected to grow by nearly 600 million people, driving 75% of expenditure growth⁸. This will create one of the world’s largest and most dynamic consumer markets.

RELATED THEMES AND INSIGHTS

India: new developments to drive growth and earnings

Investors see India's growth potential, but market valuations may not fully reflect it.

Four themes driving growth

Why Franklin Templeton for India equity investing?

Franklin Templeton is a pioneer in emerging markets equity investing. With a heritage spanning over 30 years, we believe we’re uniquely positioned to offer meaningful insights into emerging markets. We offer market leading active and passive solutions.

Franklin India Fund

  • Actively managed by one of the biggest domestic Indian equity teams – established over 30 years ago.
  • The investment team uses macro and micro factors to select individual securities that it believes are attractively valued in light of their prospects for growth.
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Franklin FTSE India UCITS ETF

  • Our India ETF is a passive, physically replicated ETF. 
  • It seeks to track the performance of the FTSE India 30/18 Capped Index, offering targeted exposure to large- and mid-sized companies in India.
  • The ETF is competitively priced with a Total Expense Ratio of 0.19%* providing cost-efficient exposure to the asset class.
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*The total expense ratio of a fund (TER). The on-going charges are the fees the fund charges to investors to cover the costs of running the Fund. Additional costs, including transaction fees, will also be incurred. These costs are paid out by the Fund, which will impact on the overall return of the Fund. Fund charges will be incurred in multiple currencies, meaning that payments may increase or decrease as a result of currency exchange fluctuations.

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