India’s Banking Sector Poses an Economic Alternative To China
India's Growth the Result of a 'Global Refresh' Says Citi India Banker
Overt Operator
August 14, 2023
Amidst China's growing geopolitical turmoil and economic uncertainties, multinational corporations and investors are exploring other viable options. The vibrant and diverse Indian market stands out as a credible and increasingly appealing alternative.
Recent statements from Citi India's chief executive officer, Ashu Khullar, only reinforce the belief that India's appeal is on the rise.
Khullar was quoted by the Mint in a recent interview explaining that the company had undergone a "global refresh," in recent years.
The Strategic Shift
Citi's recent strategic shift, which involved selling its retail business to Axis Bank and focusing on institutional business and global capability centers (GCCs), highlighted India's growing prominence in the global economic landscape. The bank is set to employ around 30,000 people in its GCCs by the end of the year, a testament to India's thriving business environment.
The Three-Pronged Approach
Citi's strategy in India emphasizes three main categories: bringing foreign clients to India, aiding Indian clients in their global ventures, and capitalizing on the multinational segment. This three-pronged approach showcases India as a promising market for various economic activities, from equity raising to cash management and trade financing.
India as a Beneficiary of De-Risking
The world is witnessing a de-risking phenomenon around China, with businesses looking to diversify their operations. India has emerged as a significant beneficiary in this scenario. Its robust middle-market segment and growing commercial banking sector make it an attractive option for global investors. The growth of Citi's GCCs from 14,000-15,000 three years ago to 30,000 by year-end underlines this trend.
Technology and Innovation
India is not just a back office anymore. Global companies are now investing in technology, analytics, and front-end product design in India, capitalizing on the availability of best-in-class engineers. Citi's expansion in the country reflects this trend, marking India as a hub for innovation and technological advancement.
India’s Balance With China
India's emergence as a viable option does not negate China's importance in the global market. Clients continue to view China as a vital market, but the need for de-risking is apparent. India serves as a balancing act, offering opportunities without creating dependence on China's manufacturing sector.
A Credible Option
India's burgeoning economy, with its youthful demographics and strategic position, makes it a credible option for global businesses looking to diversify their operations. While China remains four and a half times larger, its slowing growth and increasing geopolitical risks make India an attractive alternative.