India is maturing as a
market in which foreign investors who take into account
environmental, social and governance (ESG) factors are confident
in dedicating more of their portfolio to, according to fund
managers at the Indian Venture and Alternate Capital Association
conclave in Mumbai, who cite the economy’s scale, improving
return outlook and advancing ESG standards as key
differentiators.
India’s market regulator SEBI has been expanding the scope
of ESG-related regulations for over a decade, making detailed
Business and Sustainability Report disclosures mandatory for the
country’s top 1000 listed companies since 2023.
“India is clearly earning its space in terms of allocations
from global investors,” said Ralph Keitel, head of Fund
Investments at Zurich-based responsAbility Investment, speaking
to Reuters at the conclave.
“Fifteen to 20 years ago, India was a great space, but
returns took longer,” Keitel said. Now he sees a stronger
near-term case as well.
Investors also said the country’s appeal rests on its
relative resilience at a time when global allocations are being
reassessed across China, the United States and other emerging
markets.
India’s economy is projectedto grow 6.5% in both fiscal
years 2024-25 and 2025-26, according to the International
Monetary Fund.
“Besides risk mitigation, ESG impact — having (a) good
impact on communities adds value,” Neha Grover, South Asia Lead
for Private Equity at IFC told Reuters. Grover added that India
has become one of the most consistent emerging markets for
profitable exits, supported by a strengthening initial public
offering (IPO) pipeline.
ResponsAbility Investment’s Keitel also pointed to
climate-related opportunities as a core area of interest, citing
sectors such as mobility and solar panels. As incomes rise,
environmental pressures tend to intensify, he added.