Foreign Investment Opportunities in India “Similar To China 20 Years Ago”

Posted by Reading Time: 3 minutes

Jul. 18 – Chris Devonshire-Ellis, the Founding Partner of Dezan Shira & Associates, stated in a conference in Beijing yesterday that the opportunities for foreign investors in India are along the same lines as that of China in the early 1990’s. Speaking to a select group of foreign investors, he pointed out the similarities between the two economies.

“Twenty years ago, I was told by my boss at the time not to go to China because it was decrepit and dirty and nothing worked. Plus no one after the years of the cultural revolution had any money or even many assets. People talk about infrastructure deficiencies in India today, but in 1993 Beijing airport only had one terminal, with a two lane road populated by donkeys and carts. Airport services consisted of a large Russian samovar and dried noodles, or packets of instant coffee. That was it.”

“I didn’t listen to that advice then,” he further commented. “It was China’s demographics of having a large, available and cheap workforce willing to be gainfully employed under State policies that led to the China miracle occurring. To some extent, that China dynamic has now passed to India where the average working age is just 23 – the same as China’s was in 1993.”

Pointing out the Lewisian economic theory (which won Arthur Lewis, the economist the theory is named after, a Nobel Prize) Devonshire-Ellis made some interesting observations.

“Lewis’s theory states that if you have a large young workforce, and policies exist to put them to work, you will create wealth. If you continue to invest in that workforce, in terms of equipment, education and training, eventually an economy will reach a point of sustainable wealth creation. China has completed that curve and India is starting to embark on it,” he commented.

“However, there are differences between China in 1993 and India today,” observed Devonshire-Ellis. “In 1993, Chinese consumers had no income. I can recall sparrows eggs and roast songbirds being sold in the street markets in Shanghai, just behind the Peace Hotel. The only places imported goods could be purchased were the Friendship Stores – and local Chinese were not allowed in them. A plate of noodles could be purchased for RMB1.”

“By contrast, although India’s infrastructure development is about where China was, India today has something that China did not have in 1993. Today’s India already has a middle class population, something China did not start to acquire until a decade ago. This means that the India opportunity is a foreign investment triple whammy – infrastructure projects foreign investors can participate in, a large and inexpensive workforce for global manufacturing, and a domestic consumer market of about 250 million. In 1993, China only had two of those components,” he further stated.

Talking about the difficulties of doing business in India, Devonshire-Ellis acknowledged that there are issues. However he also stressed that good management practices could and would increase the productivity of the average Indian worker and that the productiveness gap between India and China would decrease. Despite poorer infrastructure, India is set on improving, with projects such as the Delhi metro and the new efficient airports in Mumbai and Delhi to be duplicated nationwide. Government policy had on occasion been erratic, he mentioned, but the Finance Minster and the ruling Congress Party were ‘business friendly’ and now putting in place the polices needed as per Lewis’s theory to ensure India’s development and wealth creation continued.

“We will see an investment boom in India,” Devonshire-Ellis concluded. “Foreign investors should be looking at this market and making efforts to get in. The trinity of worker availability at low rates, investment opportunities in infrastructure development and the presence of a sophisticated consumer class cannot be underestimated.”

Chris Devonshire-Ellis is the Managing Partner of Dezan Shira & Associates in India. The practice services foreign investors in India and provides business advisory, legal establishment, tax planning, accounting and payroll services on a national basis. The practice was founded in 1992 and has additional offices throughout China, Hong Kong, Singapore and Vietnam. To contact the firm please email or visit

You can stay up to date with the latest business and investment trends across India by subscribing to Asia Briefing’s complimentary update service featuring news, commentary, guides, and multimedia resources.

Related Reading

China’s Demographics Point to India as the Next Global Manufacturing Hub

Why India is Winning the Entrepreneurial Battle with China

Is Doing Business in India More Difficult than in China?

Asia’s High Net Worth Individuals Concentrated in China & India