Buffett Is Bullish On India, So Should You!

Warren Buffett, the world’s third richest man made his maiden voyage to India at the age of 81. He went there as a philanthropist and as an insurance salesman, the richest and the oldest insurance salesman India will ever see!

As a philanthropist, Buffett wanted India’s wealthy to give, as an insurance agent, Buffett wanted to sell insurance to Indians! Buffett is making his first investment in India selling insurance through Berkshire’s insurance portal, Bajaj Allianz General Insurance.

Buffett was garlanded and given a bright red ’tilak’ on his forehead as was the custom in India, upon his arrival!
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Here’s what Buffett had to say about India:

I think (India) is a wonderful place. I wish they had such places all over the world!

I don’t consider India to be an emerging market, but a very big market

I should have been here much sooner

India has done pretty well without my advice

The more India and China prosper the more people in United States would prosper over the long term

We want to be where the action is and the action is here

This is a place where the market is growing, getting more prosperous by the day, where businesses are flourishing. This is a dream market.

Those are pretty strong words coming from Warren Buffett! Prior to this, Buffett had no investments in India. I guess he was watching India’s spectacular growth and waiting for the right opportunity.

Here are some facts about India

  • India is the world’s largest democracy, always has been since it’s independence in 1947
  • India produced 55 billionaires who made it into the latest Forbes billionaire list
  • India is the largest consumer of Gold
  • Indian economy grew over 8% in Q4 2010, with an average rate of about 7% since 1997
  • In recorded history, no country has been wealthier more number of times than India. (Hence the affinity for gold!)
  • India has a population of over 1 billion and home to the world’s largest middle class
  • India is world’s 12th largest economy and the second fastest growing economy right behind China
  • A number of countries and people have the word ‘India’ or ‘Indian’ since Europeans were trying to find the sea route to the wealthiest nation (at that time) and as soon as they hit land they thought that was India and named the natives Indians! (Now you know why Native Americans are called Indians!)
  • India has more than a million millionnaires!
  • Avatar is an Indian (Sanskrit) word!

Maybe you are a Buffett fan or an India fan, but what does this mean for you as an Investor? I’ll cover ways to invest in India in the concluding part of this article.

43 thoughts on “Buffett Is Bullish On India, So Should You!

  1. There is no doubt India will be a major engine of economic growth for the next few decades. I think that investing in companies that do business there (Coca Cola, Intel, Abbott Labs) is a great way to gain exposure, without the risk of buying an Indian Company. There is also the option of an Indian ETF, of one that invests in the BRIC countries.

    • Definitely! All major US companies have a presence in India. Depending on the exposure, this is a good way to be invested in India. As you mention Abbott has strengthened its base in India with a recent purchase of a drug company there, AT&T recently entered the Indian market…

  2. Buffett’s comments carry a lot of weight with me. If anyone recognizes value, it’s him. I have clients who “play around” with 20% of their assets. I’ll pass this info on to them. Also, Dividend Pig” makes a good point.
    My feeling has always been that the sky’s the limit for India if they can get around their mindset that the government has to regulate and plan the economy.

    • True DIY. Some sectors are semi-open as the India is still not ready to fully open these including where Buffett is headed, insurance sector. That’s the reason Buffett has to tie up with an Indian partner (Bajaj) rather than move in as a pure US company.

      But I think, eventually India will open up. I’m sure Buffett is counting on it!

  3. I have not given much thought to investing in India to tell you the truth. I find it interesting though that Buffett is just now interested in India as an investment.

    On the other hand, most my investments are in index funds, and I think about 20 percent of my holdings are international. So I am probably investing in India more than I realize!

  4. Being Indian it always makes me feel good to hear these things about India.
    I’ve been looking at an emerging market money market fund that also had assets in India and will most likely be investing in them because of that. I think India has plenty of room to grow and will do so for the foreseeable future. At the same time it does have issues with its neighbors so you have to always watch out for tension.

    -Ravi Gupta

  5. It’s clear to anyone paying attention that India has been becoming a presence in the global business arena over the last 10 years. It’s a country that still has tons of abject poverty, but also many people with a strong desire to succeed, and a very respected educational system. It’s a different ballgame than China, but a growing economic power nonetheless. Buffet’s comments make sense to me.

    • India’s greatest strength is that it is a free country (vs China) and the generation is very young. The average age of an Indian will be just 29 years by 2020.

  6. I wish I had a better way to invest directly in India besides ETFs. I guess I should try to buy some of Berkshire stock? It will be nice when I have the funds to invest directly like Buffett.

    • ETFs are the best to get a wider exposure, but there are some Indian companies listed in the US markets. The range isn’t as much as Chinese companies, but there are some good ones.

      Or you could indirectly invest in India by buying US companies that have or planning to have strong presence in India.

  7. Totally agree with Warren, India is booming with GdP expected to grow about 9% this year after a similar growth rate last year. There’s a huge market to tap!

  8. I like India a lot, but I have a feeling that their customs will hold them back. Indian women only make up a minuscule part of their work force, and instead children are a huge part. Im not really sure about India’s take on education, but I would definitely argue with Buffet that India is an emerging market.

  9. I have a few Indian friends that have told me what they are investing in over in Indian, but to date I haven’t taken the plunge (other than the mutual funds in my 401k).

    An Indian friend told me a few years ago about his believe that gold will continue to rise in price because everybody in India wants gold. It’s a huge thing over there!

    Now that Buffett has given his blessing, I’ll start looking with more intensity!

  10. Indians really is a big market because of their population and also the talents that they produce. In addition, English is one of their primary languages so it is very easy for them to compete in the global market.

  11. I am a Buffett AND India fan!

    There is huge growth for India, what with call centres, creating the cheapest car in the world etc etc.

    When I went to visit India about 5 years ago, it’s such a beautiful country with so much growth. I guess colonialisation and British Rule was good in some respects because everyone speaks ENglish and that is a definite plus in terms of business ventures globally.

  12. I am also a huge fan of India and emerging markets in general. I think there will be a lot of growth. I currently like large caps that are taking advantage of this growth. One, in particular, is Abbott Labs, which recently acquired an Indian company and is now the largest distributor of generics in India. The company’s stock price has been beaten down as of late, but it pays a great dividend, and is sure to have growth over the next 5 years.

  13. I’m glad India is finally getting some fanfare. It’s kind of like the most giant underdog. A well traveled friend of mine and I were having a debate of India vs China and she was hands down all for India as the place to be.

  14. India has been on the rise for quite sometime, took him long enough! The edge over China is that the government isn’t Communist…more hoops in China I’d think though people seem to be doing just fine there too!

  15. When Warren speaks, people listen. Might have to get in the action. Can’t wait for your follow up articles. Not that I am an inventor or anything, but if India has the world’s largest middle class, which would be more profitable investing in the country or creating something for this middle class?

  16. India is a fascinating place, although I’m not sure I’d classify it as “free” versus “non-free” for China. Each have different cultural, economic and political restriction.

  17. India also has several problems — including corruption, lack of infrastructure, and stifling bureaucracy — that it will have to overcome in order to truly prosper. That said, many Indians have an optimistic, entrepreneurial spirit.

    • Sure, where other see a problem, I see opportunity. Poor infrastructure will need rebuilding – companies like Caterpillar are making a killing in India!

  18. India has so much going for it including its very smart people. But the overriding factor is going to be the fact they are embracing free enterprise capitalism!

    I believe for investing in India the best investment vehicle for most investors is an ETF. The Arbor Asset Allocation Model Portfolio (AAAMP) has a small position in the WisdomTree India Earnings Fund (EPI).

    Thank you for highlighting a true emerging market.

    • True Ken. India opened its economy only recently (1990s), so there is still lot of areas that require improvement.

  19. Ya I agree, kinda hard no to be bullish on India and China…if they continue to grow and spend money no doubt the economy will continue to bloom. China especially, if they can get the national savings rate down and spend a bit more, they should grow a lot.

  20. India is a good country to invest…

  21. Buffett is just now interested in India as an investment. Those words of Buffett is an achievement to the Indian country, very inspiring. It’s a good country to invest!

  22. India is huge when it comes to marketing… there ability and there point of views in business is quit inspiring.. so no doubt that India in coming years will grow when it comes in business matter, maybe a good place to invest also…

  23. When Warren puts his money where is mouth is, then you’ll know he really meant it, and it wasn’t just making nice. Thus far, I don’t think he’s found a suitable investment opportunity in India.

  24. India is huge and best place to invest! Maybe because of there population and there economic status. Very interesting post.

  25. Warren Buffet has already jumped into the India bandwagon, good for him. India is indeed one of the biggest markets right now. The only thing that hinders India’s image is the constant portrayal of the country’s poor and does not focus on the fact that India is one of the biggest sources of IT manpower. India should abolish the caste system though. India could be a better business partner for the US if it fully shapes up unlike with China where the US has trust issues about their loyalty.

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