Modi winning will be very positive as he has clear vision for India, says Mark Mobius

Mark Mobius, Chairman Of Mobius Emerging Opportunities Fund, sounded bullish on the India growth story and believes that Modi will emerge stronger after the ongoing Lok Sabha elections. Mobius said that Modi winning a third term will be very positive as he has a clear vision for India and a clear vision for modernisation. 

In a conversation with BTTV's Managing Editor Siddharth Zarabi and Senior Associate Editor Sakshi Batra, the veteran investor also pointed out bureaucratic hurdle that the country needs to address to grab the best of the opportunity as companies increasingly look beyond China as the numero uno manufacturing hub.

The Indiana Jones of emerging market investing expressed delight at the atmosphere of optimism and growth during his visit to the country. "I was very positive because I felt that the Indian market was going to do very well and I felt that way for the last few years. When I visited all of my beliefs were confirmed because as I travel around the country I saw the incredible growth taking place," he said, adding "I love this term Viksit Bharat because I think that says a lot about where India is heading."

On the potential of short-term risk such as an overheating stock market and possible changes in government policies, the veteran investor said that when a market is going up as fast and as long as the Indian market has done then there will be corrections along the way. "People have to have to realise that it doesn't mean that the growth story is over but they have to prepare for downturns here and there. These downturns would be opportunities to buy so you know the markets don't go up," he said.

There's always going to be corrections along the way but I believe that from a long-term perspective of course India is a place to be, Mobius said.

Speaking about the political continuity following the low voter turnout in the first two phases of the ongoing Lok Sabha elections, the Chairman Of Mobius Emerging Opportunities Fund said that he doesn't think there's is any risk. "Modi will probably get stronger coming out of this election I think," he said.

Mobius said that Prime Minister Modi winning a third term would be very positive because he has a clear vision for India, a clear vision for modernisation. 

On the issue of Elon Musk visiting China and skipping India despite a red carpet being prepared to welcome him, and investors, institutional investors and foreign direct investment still focusing on China versus India, the veteran investor said that India needs to reduce the bureaucracy burden. "I think this is a big barrier for many investors. There's a lot of bureaucracy, there are a lot of barriers to entry and exit. At the end of the day when someone puts money into the country you've got to give them a path to exit as well. So, I think this is something that Modi has to work on," he said.

He lauded PM Modi's efforts to reduce red-tapism in his home state of Gujarat and said, "You have all these individual states that have their barriers so he's got to work on that. I think he's setting some good examples in his home state, but at the end of the day this is the biggest challenge facing India today." 

Many manufacturers in China are moving to India because they have to diversify their supply chain. They realise that it's very risky to be so dependent upon China so they want to be in India but there are lots of barriers for them to do that, the investor added.

However, he doesn't want to count out China easily. "China is continuing to be a very strong manufacturer but at the end of the day India will have to take over some of the manufacturing from China. Both countries will probably continue to do well but I think India will do better."

Speaking about the lack of any major semiconductor investment under the incentive scheme launched by the Union government, Mobius said that many of these manufacturers, who are thinking about India are waiting for the election results. "So, after the election, you'll see them moving, but you must remember that you're talking about billions not millions but billions of dollars in investment. Such investments require a lot of time and a lot of planning. There is no question that India will become a major semiconductor manufacturing centre in the future. The speed at which this takes place will depend again on the bureaucratic hurdles that companies will have going forward," he said.

Shedding light on the three broad themes that he would bet big on India over the next 5 to 10 years, Mobius said hardware manufacturing (electronics hardware), software and heavy industry. "India already is a big exporter of software but I believe going forward it will continue to be very strong in that area, particularly in semiconductor software. Believe it or not, at the end of the day companies like Tata Steel and others supplying the framework for infrastructure will be quite strong going forward," he said.

He also lauded India's neutral stance in the ongoing geopolitical tensions. "At any stage of the market if you look to history you'll see that there are always geopolitical risks. The good news for India is that they're pretty isolated from these risks. India has become somewhat of a beneficiary of these events because they are the neutral party. I think India's got a good chance to be the mediator between the parties and also become a leader in the mediation of international rivalries."