Global Perspective on India | Avinash Satwalekar | EVOKE 2026

Thank you, sir. Thank you. Thank you very much. And welcome. I know we, the world, is one family. This phrase is from Sanskrit, 'Vasudhaiva Kutumbakam'. That is essentially the way we look at investing. That's essentially the way we look at our approach and our business approach globally. We look at it from this perspective. So hopefully today I will give you a bit more understanding of how we look at the world and how that translates into what it means for India and how it translates into what it means for US investors. So let's dive right into it.

This roller coaster you see has gotten even more interesting in the last few weeks. Geopolitics, economic changes, trade deals, tariffs, these are all faces of market cycles. Right? Our objective is to find a process that helps us manage through this. How many of you have ridden a roller coaster? Exciting, scary. Correct. That's what happens in the market. Exciting and scary. But you have to keep the seatbelt on. Ride it out because you know it will stop at some point. It's the same thing with the markets. This up and down constantly happens. Right?

Now if I look at today, India has been exposed with tariffs. Right? When Trump became president in January, he decided that he is going to go after China. But he can't go after one country. So essentially a plan was made that anybody that has a trade deficit with the US, we will target. The main target is China. But in the process of targeting one, many targets got caught, including India. Now India does not have the same challenges with the US as China has, but nonetheless these challenges are there. What do tariffs do? Tariffs make it more expensive. Tariffs make our goods more expensive to American consumers. And why do they do this? Because they believe that India is selling it unnecessarily cheap. We are selling it purposely cheap. We are getting an unfair advantage. That's why they are giving you a tax. So when a consumer buys, it's equivalent to a US product.

But what has this done? It has forced India's hand. What did India do? It signed a trade agreement with the UK. Right? That negotiation was going on for 20 years. 20 years. So if we can thank President Trump for anything, it is that the 20-year negotiation was finished in 3 months. Why? Because a common enemy was found. The EU had to run away from dependency on the US. India had to move away from dependency on the US. Now what does that mean? The theme of globalization for the last 40 years is breaking. And that has real ramifications for investors, has real ramifications for businesses. So globalization is changing into regionalization. There are no global agreements. Now you have a lot of bilateral agreements. Right? If I am the US, not open to everybody, so I am going to do an agreement with Europe, I will do an agreement with the UK. What does that do? It changes our trade, it's not smooth. So anytime you shift from those things, what is the number one thing that happens? It's inflationary. Whenever you stop trade, that is inflationary. So globalization, the whole world benefited. How did it benefit? You got cheaper goods. Why? Because China could produce them cheaper and export them. Now if that is changing, goods will go up in price even more. So in general, our belief is that you are going to see more inflation than we have had in the past.

Now the other big thing is AI and tech disruption. This tech disruption tagline, tech has been disrupting for 20 years. And even more than that, actually more than 30 years. Right? When was the internet invented? In the early 90s, right? That was the single most important technology change. After that, everything has been evolutionary. All technology has evolved after that. AI is the first time where it is going to have the same impact as we had with the internet. What did the internet do? I see at least some people that have grey hair remember, because all the young ones will not remember this because they have grown up in that whole area. What did the internet do? It changed the way we did everything. Changed the way we operated as, operated our companies, changed the way we entertained ourselves, changed the way we got information, changed the way we got research. AI will do the same. So now AI will impact everything we do. So you have to think of how it is going to impact you. So as I was thinking about AI, I said that there are positives and there are negatives. In every technology evolution, and in this case revolution, there are positives and negatives. There are also positive impacts from professional life and personal life. So you have to make a grid. On the horizontal axis, personal and professional. On the vertical axis, positives and negatives. And each of you has to fill that in. Because it is not the same for everybody. When you fill this, you will realize how much impact there is going to be on your personal life, on your professional life. The decision is whether it will be positive or negative. So you have to think through that.

I mentioned trade always finds a way. The IMF chief had a really good quote. Trade is like water. You put an obstacle, it finds a way around it. This IMF chief's dialogue reminds me, in India we have one word for it. Jugaad. Simple as that. Right? What they have come up with is a nice long phrase. In one word we can convince you. It's jugaad. Basically, you have to find a solution around whatever it is that you are doing. Right?

Now tariffs, we talked about it. I won't spend too much time on it because now this has been moved across because our tariffs are now 18%. But if you think about impact to the Indian economy, where are tariffs important? Yes, exports. Exports only account for 12% of India's GDP. 12%. And of that 12%, only 2% goes to the US. So the impact won't be that much on GDP. But nonetheless, it is inflationary for everybody and it is disruptive for everybody. The EU trade deal, why was it important for us? One quarter of global GDP is now in agreement between Europe and India. That's one quarter of global GDP. And it is also one quarter of the world population. So 25% of the world is now covered under this deal. And for India, where competitive industries, labor-intensive industries, all those industries had moved out. Garment industry, footwear industry, all these were in India. Now they are seen in Vietnam, they are seen in Thailand, they are seen in Bangladesh. Right? Why? Because those countries were given preferred status from the EU and India did not have it. So the difference in tariff, even if it's 10%, that's the margin. That has now been removed. So we have now potential to get back into labor-intensive industries. Why is that? Because we have a lot of labor. We have a lot of labor. And more importantly, a lot of unskilled labor. So you have to find jobs. And these industries require those kinds of labor. Right?

Now India is fairly resilient in all scenarios. Whatever is happening in the globe, the only damage for us is oil. When oil is expensive, that has an impact on India, has a very negative impact on India. But outside of that, our full economy is internal. What does that mean? That what we make, we consume ourselves. We don't export that much. So there is not as much of an impact for us for changes that happen outside. Growth rates in India are fast than any large economy. This 2% you see is likely to come down. This is the pre-war estimate. India's estimate of 6.4% will also probably come down. But compared to any other large economy, India is growing the fastest. What has that resulted in? India's share in the global GDP, in the global economy, is increasing. By 2030, the estimate is that India's contribution to global GDP will be 10%. Today it is 8.5%. So as this contribution increases, India's importance in the global economy becomes more.

Our ranking in terms of GDP, in 2000, 26 years ago, we were ranked number 13. Today we are four. We have just taken, we just beaten Japan. Right now only Germany is ahead of us, and then the two giants. Right? So India's growth is not, there is no denying it. And these incidents happening now in the Middle East will not change this. They can delay it. But this change that is going to happen, it cannot reverse that change. That is what the attraction is for India.

Everyone must have heard about 'Viksit Bharat' (Developed India). This is China on the left side. China in 2005 was a 2.3 trillion economy. Today, almost 20 years later, the change that has happened in China is the same change that has to happen in our economy. And the building blocks, the building blocks in China, they were all started by infrastructure. And if you have seen, the government for the last 10 years has been spending only on infrastructure. So this is possible. But if we don't, it's like a building. If we don't have a strong foundation, you can't get a very high building. Infrastructure spending is that foundation.

Now if you see consumption, they have been, it's changed completely. The image on the left side is from 1996. The kirana store is still there. But the number of them is much less. Most of us are going to the malls. Right? Why is this happening? Because our spending power is increasing. Our disposable income is increasing. Right? And why is this happening? Our entire demographic structure, our income structure, is changing. So let's start on the left-hand side. In 2005, we had 201.9 million households. Of those, almost 70% survived on 0 to 4 lakhs a year. Right? 70% of our households. Right? Middle, 4 to 8 lakhs. So the spending, anything above 8 lakhs, was 8% of the households. Now if you fast forward to 2018, this has changed. This pyramid, the pyramid is changing into more of a diamond. What has happened? The lower section has moved into lower-mid and upper-mid. So now the population that was 8% in high and upper-mid, that is now 24%. Meaning more income, more disposable income. And by 2030, the forecast is more than half our households will be in the high and upper-mid. What does this mean? Disposable income is going to increase. When disposable income increases, you have different consumption habits. Basic consumption is done. Now you have premiumization. So look at your own consumption habits, those have also changed. As your income increases, your spending habits change. That is the advantage. And all that spending that is happening, that all happens within India. So 70% of India's GDP is driven by your and my consumption. So that's why we are insulated a little bit from what happens externally.

Infrastructure we talked about is improving. Who has taken the Vande Bharat? Completely different, right? Completely different. So our infrastructure that is growing, that is changing, the highways that are being built, that is massive economic growth. And how does this growth happen? I'll give you a simple example. Who has been to the Atal Setu? Everyone has. Right? Fastest way to get across now to join the Pune Expressway. When was the first plan for Atal Setu made? Take a guess. Yes. 1965. 95. Actually, your previous answer would have been the right one. Because I thought you actually did research and came. In 1965, there was a plan. But it took us how long to build it? Now, what happened in the meantime? Think about it. You work in Mumbai. If you don't want to spend two hours in a car or train, you have to stay in Mumbai. Right? So what happens in Mumbai? Crowded, economy is booming only in Mumbai. Now look at Navi Mumbai, look at Panvel, nobody would stay there. And if they stayed there, they accepted that it will take two hours to come to work. By building a bridge, what happened? You created a brand new economy. The two hours it used to take, now it doesn't even take an hour. So now you can live there. If you live there, restaurants will come, malls will come. Right? That's how economic growth happens when you improve infrastructure. And that's why it's essential to continue investing in infrastructure. And the infrastructure spend in every budget is critically important for us.

So you see the government has been spending on capex. Capex, meaning infrastructure, is the main spend. It has gone from 6% in FY22. They doubled it. From 5-6% to 12%. And at the same time, it's not like there is no discipline. The borrowing that the government does, they brought that down. So we are spending in the right places and we are not borrowing too much to do the spending. So our balance sheet is looking better.

So now let's talk about outside. What do investors say about India? Right? The IMF said a couple of years ago that India has proved everybody wrong. It has a massive economic opportunity. S&P 500 upgraded. This is recent. Gulf funds are now looking at India. When you say Gulf funds, these are sovereign wealth funds. The Gulf has an oil economy. Because of that oil economy, there is a lot of money. They make sovereign wealth funds and then they make investments. India is now going to start getting allocations from that. Now this is from February 20th this year, meaning 8 days before the war started. Unfortunately, that sovereign wealth fund money will be a bit less now, but they will continue selling oil. What I am trying to say is that India's allocation in global funds is part of an emerging market allocation. It is not a separate allocation. China's allocation is separate. In a few years, our belief is that India will also have a separate allocation. You will have a US allocation, you will have an India allocation, you will have a China allocation, you will have a Europe allocation, and you will have a market. Why? Because you cannot ignore India from a size perspective, from a growth perspective. So if we are investors, if we are global investors, we cannot ignore India. So in another 5 or 10 years, India will have its own allocation. That's how we think about India.

In the bond market, we had a couple of inclusions in a lot of the indexes. So that will bring more money into India. When there is index inclusion, then by definition, any fund manager following that index will have an allocation. You can be underweight, but you can't be zero. Your allocation won't be zero. Right? But there are risks. The India story is not without risk. What is the number one risk? If the whole globe slows down, that will have an impact on India even if we are a domestic-driven economy. On the margin, there will be an impact. War and geopolitics, you already see the impact that it will have. And the main impact is, look at the last point, war creates that energy and commodity price change. When it changes, our input costs go up. It becomes inflationary for us. Anything that becomes inflationary, our purchasing power, the value of 100 rupees decreases when you battle inflation. So there are certain risks with the India story.

Now everybody blames foreign investors. What is happening with the Sensex? That is true. Foreign investors have pulled out money. And in fact, in the last 10 years, in 25, the highest amount of money has been pulled out by foreign investors. But if you see, they have also put in a lot of money in India. And this money that is coming out, a lot of that is because we had private equity funds that have made investments, made money. When those companies go public, they have taken that out. Meaning they are successful investors. Meaning they have made money in India. Which means what? We have the fastest-growing large economy. We are relatively well-insulated because we have a domestic economy. At some point, all this money comes back into India. There is no choice. If you are a global investor, you want to have exposure to India. There is no country that has young demographics, massive infrastructure investment, and massive change in consumption patterns compared to India.

Now this has been a big problem for everybody, especially any one of us that is planning any holidays outside India. Correct. That nice fancy holiday in Bali has become expensive and will become more expensive. Right? So why is this now? Why am I bringing this up and is this likely to change? This is not a new pattern. On average, for the last 30 years, if you look, the Indian rupee depreciates against the dollar anywhere between 3 and 5%. This is not new. So when you are thinking about your planning, if you are looking at global, if you have children that are studying abroad, if you have been planning for that, you have to factor in 3 to 5% Indian depreciation. Now what does that mean? When I look at depreciation in the Indian rupee, does it have an impact on earnings? Not really. Does it have an impact on what our companies perform? Not in a big way because we don't export anything. Earnings growth is what drives our economy, drives our markets. And if you see our earnings growth in 2025 was very low. 2026, 2027, it is going into double digits. So our expectation before the war was that by June, July, you would start seeing earnings estimates going up. And as those go up, markets start to look positively at it. Right now, this war that is happening, because of the war, it might be delayed. But the growth that is going to happen will come through anyway.

So what are the opportunities? When I look at for a global investor, why would they look at India? Young demographic, massive consumption base, premiumization is happening. There are a lot of opportunities for a global investor to find a good reason to invest in India. So this FII money that has gone out, that will most likely come back. Now when will it come back? When our earnings growth starts to pick up. Because the excuse that is there, India is expensive. You must have heard that foreign investors don't like India because India is an expensive market. India has been always expensive. For 30 years, 40 years, India has always been expensive. Why? Because our growth has been good. If growth is good, you should be willing to pay up for it. And if you are worried about expensive and you don't invest for 30 years, you have not invested in India, then that is just an excuse. That is an excuse. India being expensive is just an excuse. It's an easy excuse. The problem is growth, earnings growth. If there is no earnings growth, then if you are trading expensive, that becomes a problem. At the same time, last year China started to recover a little bit and China's valuation was very low. So a global investor weighs it: 20 times, less earnings growth, 10 times in China, price to earnings, and I am getting 10-15% growth. That's why money flowed out. But as soon as India's growth starts to pick up, money will come back in because our growth is very sustainable. Why is it sustainable? Because our demographic structure, the percentage of our population that is young, meaning they are going to spend, they are coming into the economy, now it's much higher than any other economy.

So economic growth ties in with market growth. If you have economic growth, equity markets follow that. So given that we are convinced we will have economic growth, markets will follow that in the long term. Short term, maybe not.

Now we have done three different asset classes here and our favorite asset class obviously is equities. Now this is a 30-year chart, right? So if you invested a lakh 30 years ago in bonds, in gold, and in equities, in equities we have just taken a simple thing which is the Sensex. 1 lakh has turned to 46 lakhs in equities. 1 lakh has turned to 13 lakhs in bonds. And only in the last two years have you seen gold really outperform. Therefore it is now 26 lakhs. But before that, the red line and the blue line, very similar. Now there are reasons, gold is liked by everyone. But as an investment, it has only recently started looking good in the last 30 years. Now the other thing is markets always move with crisis. Right? If you go back and you see, my Sensex has gone up much more than any of the other asset classes. But look here, there is a big dip here, right? 2008. There is a big dip there in 2020. We only as human beings remember those dips. When the market goes down, that pain, that we don't forget. Besides the point that it has done better than anything else. When it goes up, the happiness is less. But when it goes down, the pain is more. That is human nature. We can't change it. You have to accept it, understand it, and react differently. Simple as that.

So now let's go through what is happening in terms of a crisis. Right? We tried to list out a whole bunch of them and we said this was the maximum drawdown of the Nifty. But if you look one year, three years, five years later, after every crisis, there is not a single case where returns are negative. Let's take 2008 for example. Global financial crisis. Nifty was down 58%. Right? 58%, meaning more than half your money is gone. But one year after that, up 91%. Three years compounded, 17.5%. And five years, 17.8%. So you didn't lose money. You actually made money. So crises happen. And this is not the first time. We have had enough wars. We had Kargil. Now in Kargil's case, 35%, but then three years, only 2%. Why? What happened in the three-year calculation? 99 to 2002. 2001 happened. The markets took a beating again. But after that, look. Five years, you made 12%. Now I know 12% doesn't sound exciting, right? When small caps are giving 70% two years ago, gold is giving 50%. 12% doesn't sound so good. But those are single asset classes. You have to look at portfolio returns. And 12% at a portfolio level is very good. Diversification is incredibly important. Global diversification and asset class diversification. There is not a winner every year the same way. But if you see in the last 10 years, seven times the US market has been number one globally. India, only once, and that too, we just went down less than all the other markets. Right? But if you put it as a mix, you add US to your portfolio, it changes the risk-return profile for you. So diversification is important. If you have got, how many of you have children studying outside of the country? Nobody. So you need a US dollar investment. If nothing else, just for that. That 3% to 4% depreciation that happens, save at least that much. Right? Now if you look at asset class diversification, 20 years, 11 times equity has come number one. Gold has come number one, eight times. And if you look at the second line, hybrids have come number two consistently. Right? So you need diversification across the board.

Now I am just going to talk a little bit about Franklin. We are a 1.74 trillion global firm. And what do we do with India? Our investment in India is 28 billion dollars. Out of which 14 is in India. Why? Because we believe in the long-term potential of India. We believe in what is, oops, we believe in the broader themes: premiumization, energy transition, digital transformation. All these transactions happening in India, we believe they are long-term and there is tremendous opportunity, which is why we have invested.

Now if I look at, I know everybody likes gold. So I am going to tell you a couple of things on gold. Structural shift that is occurring with central banks. That is the reason people like gold. That is the reason prices of gold have gone up. Now let's see why that has happened. If you see, these are the countries that have bought the last year and this is what it makes as a percentage. India bought four tons compared to Poland, about 100 tons. As long as central banks buy gold, gold will see a decent price. Now GIFT City, how many people are doing GIFT City? That is a great approach if you are trying to get money out. It's a simpler approach. You should be thinking about it. A lot of fund houses have that. So just wrapping up quickly. India, we like the demographic dividend. We like growth. We like demand because as we grow in our income, we spend more. Aspiration happens. And finally, policies and the reforms that are happening, those are incredibly positive. So I can tell you that in the last 30 years that we've been in India, we have seen and benefited from a lot of these growth initiatives. But our very kind introduction covered this section, but I just want to say, Change the Source Drive, which we did from Kanyakumari to Kashmir, you got a sense, I got a sense of what is happening at the ground. So these were all the cities that we did investor awareness programs in. So I would drive in the morning to the location, do an investor program, stay, next day drive to the next location. And if you see, these locations are not big cities, they are small cities. And that is where the change is happening. So when I look at India's growth story, it's going to come from here, this middle section. Mumbai, Delhi will always have money, don't get me wrong. But the growth that is going to happen, that's what is exciting.

So I am going to just leave you with this one animation. A couple of things. When tariffs came out, that's when this happened. One guy is trying to commit suicide by jumping out of the window. His boss is saying, 'Don't jump. The US President is about to tweet something about Chinese tariffs.' Today, now you remove Chinese tariffs, you put Iran war. Right? But what does this do? It plays with our emotions. That is what is challenging. That is what you have to control. So I will give you a simple, I mean just today in the morning, one of the most, I would say one of the most respected financial services executives that I know, who is retired now, he messaged me. 'Should I stop my equity SIP?' Now this is somebody that has spent their entire career in financial services, has seen the Sensex grow. But what is the question they asked? This is the same question anybody would ask. The market is going down. This SIP that we are paying every month, should we stop? It's a natural human reaction. And what should the answer be? Double down. Thank you. So, I will leave you with three things. Number one, stay calm. This up and down happens. The crises that are shown, they happen. You have to focus. Number two, on your long-term goals. Keep those long-term goals front and center. Then emotion doesn't play havoc with you. And lastly, be non-stop with your SIPs. Don't stop. And I know the cynics in the room will say, you people are all mutual fund people, what else will you say? Keep giving money, we will keep taking it. But if you look at the history, it's long-term, it helps everybody. If you think about it, an instrument like SIP has not helped only one category. It helps the investor. It helps your portfolios, helps create wealth. It helps us also. So same thing where you benefit, we benefit. How is that a bad thing? Thank you very much. You've been very patient.

This can be reversed when rupee starts appreciating versus the dollar. We will start appreciating against the dollar. In my mind, it is a short-term thing. Even if we do appreciate against the dollar, see, once we get to a developed economy status, when your inflation rate truly drops to 2%, then our difference between the dollar and our currency will be less. Till then, we will continue to depreciate. Next year maybe 1% but then we will do catch up, which is exactly what happened. In 2024, depreciation was not that much. We caught up for that in 2025. There are some technical things. Foreign investors pulling out money creates a demand for dollars. Reverse, foreign investors coming in will create demand for rupee. So, what needs to happen? Our economy needs to get to that 'Viksit Bharat' target. Which will then drive our inflation automatically down.

Yeah. Absolutely. Before that, no.

Where do I see the dollar in 26, 27? I just spent all this time talking about the long-term prospects of India and now you're asking, your question is what happens tomorrow, two years. Two years. In 26, we are already in 26. 27 is there because you even mentioned 2020 also. So 2027, my sense is if you are talking about the dollar, you will still have a depreciating currency. Now the percentage may be different. Maybe three, maybe two, maybe one, maybe four. But it will still be a depreciating currency. So, that won't change. So, the question you have to decide is what is the worst-case scenario? 4%. And make allowance for that. Simple.

So that's a really good thing. So your question was energy is not just oil. It is no longer just oil. It is a whole bunch of other things. Indian now. So it does not affect India. You are absolutely right. So, India's dependence on oil has reduced tremendously. So I will give you a simple thing. 10 years ago, to produce a unit of GDP growth, the amount of oil required, today it is 30% less. So our oil intensity in the economy is much lower. So you are absolutely right. But that doesn't mean there won't be an impact. We are still very, very dependent on oil. And that is where any escalation in the price of oil has an inflationary impact immediately for us. Because as far as vehicles is also concerned, India is entering into the rare earth elements now and it is trying to be self-dependent as compared to China also. Self-dependent on EV, electrical vehicles, and the rare earth elements. You are right. You are right. I mean it will take time. It will take time. I mean 85% of our energy requirements are still oil. So it's, I mean, improvement. That's why I am saying the oil intensity is reducing, but we are still dependent on oil.

The applause shouldn't fall short. Thank you so much. Thank you. Thank you, sir.