An ETF for U.S.-India Trade Growth
As U.S.-India trade flourishes, an India ETF offers investors exposure to one of the fastest-growing economies.
Despite tense trade relations with other countries currently, the U.S. recently indicated a desire to strengthen its relationship with India. Indian Prime Minister Narendra Modi was recently in Washington, D.C., to discuss areas of economic cooperation with President Donald Trump. India has become an increasingly important economy in recent years. As noted in a BlackRock memo last year, India is poised to become the third-largest economy in a few years, overtaking Japan and Germany. India’s ascendant rise makes it a compelling partner for the U.S. on many levels; as such, it could be a region of consideration for investors.
India’s Economy & Enterprise
In recent years, the market’s confidence in India’s growth picture has driven higher stock valuations, supported by the numerous economic initiatives undertaken by the Indian government. The Indian government has prioritized infrastructure development, with substantial investments in transportation, energy, and urban development.
Projects like the Bharatmala and Sagarmala initiatives aim to improve road and port connectivity, enhancing trade and economic efficiency. Additionally, the “Make in India” initiative continues to attract global manufacturers, boosting the country’s industrial base and positioning the nation as a manufacturing powerhouse with a skilled workforce and competitive cost structure.
As noted in the 2023 Confederation of Indian Industry report, Indian Roots, American Soil, over 160 Indian companies are present throughout all 50 U.S. states and have collectively generated over $40 billion in tangible investments in the U.S., Together, they have created or saved over 425,000 jobs in the U.S. As contextualized in a recent HSBC memo, the U.S. is India’s top overseas foreign direct investment destination. India invested $737 million in the U.S. in fiscal year 2023. Since the early 2020s, both sides have increased trade and cooperation. In fiscal year 2023, bilateral trade between India and the U.S. was $128.78 billion, up from $119.48 billion in fiscal year 2022. In the coming years, as the Indian economy continues to grow, this number will likely grow substantially.
Accessing India’s Growth Potential
For investors looking to gain exposure to India, the iShares India Index ETF (Ticker: XID) provides comprehensive exposure to a broad cross-section of Indian equities. XID tracks the performance of the Nifty 50 Index, which represents the performance of the top 50 companies listed on India’s National Stock Exchange (NSE). These companies are selected based on market capitalization and liquidity, providing a benchmark for the Indian equity market.
Takeaway
The U.S. strengthening trade ties with India indicates the nation’s preferred status among emerging market economies. Within emerging market equities, India’s economic resilience and growth potential present a compelling opportunity for investors seeking exposure to one of the world’s most dynamic and rapidly growing economies.
Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.
