May 14, 2025

As a welcome acknowledgement of the growing potential and excellent future prospects of Indian industry, the state-run Chinese bank, The Industrial and Commercial Bank of China, has started an India-dedicated investment fund. Although there is nothing surprising about an investment bank trying to channel funds in an area it thinks will offer lucrative returns to investors, what is surprising is that a Chinese bank is doing so. This is a first, for China till now always tried to downplay the Indian industry which was seen as competition. The fund is named the Industrial and Commercial Bank Credit Suisse India Market Fund and its corpus will be invested “in exchange-traded funds listed on more than 20 exchanges in Europe and the US that are based on the Indian market." The fund has listed priority sectors for investment and the financial sector will get the bulk of its investments followed by the information technology industry.

It is even more surprising that the pitch for the fund talks about the Indian economy in glowing terms. One can of course say that it is just sales pitch but coming from the Chinese it is no small praise. The Chinese have always been disdainful of the inefficiency and red tape that rules economic activity in India. They also scoff at India’s focus on small and medium enterprises and point to the success of their huge factories churning out products by the millions to take advantage of economies of scale. Although they secretly admire India for the excellent quality of its engineering products, the work being done in its IT sector and the reach and diversity of its financial sector, the Chinese are loath to admit it in public. This is the first time they have put this on paper.

The write-up pitching the fund says that "across the overseas market, India, as the second largest emerging market economy, is entering the golden age of economic take-off, and has become an area where international and domestic capitals are competing to pursue," and adds that "the larger marginal improvement formed by various structural reforms led by Modi government is expected to unleash India's abundant demographic dividend." Quoting figures from the IMF, it goes on to say that India’s economy will continue to lead the global economy for a long time to come.

This, coupled with the recent record breaking Walmart-Flipkart deal, is likely to boost some sectors of the Indian economy further. The onus is now upon the government to identify bottlenecks and introduce further reforms, especially in the financial and retail sector, to attract FDI. People abroad have funds to invest. If India can capitalize on its growing potential by easing norms, it will be a winner. Otherwise, there are other emerging markets waiting in the wings.