India is poised to lead the APAC region in terms of foreign capital inflows, says Kearney’s Shigeru Sekinada

Shigeru Sekinada, director of APAC at Kearney, believes that India could be the country with the largest inflow of foreign capital among countries in the Asia Pacific region. Speaking to CNBC-TV18, Sekinada said that India has a large talent pool and huge consumption potential, making it attractive for foreign companies, including Japanese ones, that want to invest in India.

He also expects the IT, AI and digital technology sectors to see a lot of activity in the country.

Below are the edited excerpts:

Q: How do you see investment flows in India compared to other emerging markets? If we were to ask you about your outlook for 2024, where do you think most of the investment flows in Asia-Pacific will go? Which country is the preferred destination?

Pause: India will be the best place to invest from abroad. China has a lot of manufacturing space and talent, but there is a problem from a geopolitical perspective. Almost every company is looking for the best place to have manufacturing space, including Southeast Asia and India. India is one of the most attractive places because of lower labor costs and government support. In fact, the Japanese government always supports entering the Indian market. That is a good sign for India.

Q: What is your growth outlook for India and what are the factors that could impact this growth trajectory?

Pause: India has huge potential. As the head of Kearney in the APAC region, I would like to accelerate Kearney’s growth in India. I interact a lot with Japanese CEOs and almost all of them see huge potential in India. One of our client’s CEOs visited India last month and shared India’s potential with all the employees. India has a huge population and a lot of cutting-edge talent in the technology space. Almost all CEOs see India’s potential.

Q: As head of APAC at Kearney, what excites you most about the growth opportunities in India compared to other emerging markets?

Pause: India has a wealth of digital and technology talent, so the high-tech, infrastructure and IT sectors are very attractive for the country. On the other hand, other countries have also been looking at AI-related industries. So if India wants to grow from strength to strength, we must definitely think about AI and digital technology industries.

Q: I would also like to ask you about the global factors that are affecting India at the moment and also about supply chains. We are seeing a lot of instability in Bangladesh. Could India be an alternative manufacturing destination to Bangladesh?

Pause: We are currently undertaking a supply chain decentralization project. In this project, CEOs and senior executives looked at where the best place to manufacture was. India, Bangladesh, China, and Southeast Asian countries were the options for the clients. But what is important is how to manage quality assurance and how to find the best people for manufacturing. This criterion is very important. On top of that, the geopolitical element is also important. Almost all of our clients need to think about allocation to mitigate risk from a geopolitical perspective. So they need to think about Southeast Asian countries, India, and other locations. That is the reality when CEOs and senior executives were thinking about decentralizing the supply chain.

Q: When you talk about investor interest in India, are there particular sectors where you expect to see the most interest? And how does it compare to countries like China, Indonesia and Vietnam?

Pause: One of the important elements is that India has a huge consumer base, so manufacturers have some kind of interest in investing in the country. Also, there are high-tech and IT-related industries. India has a lot of IT and technology experts, so one of the best places to invest is in the country. Other countries are also trying to develop IT and technology talent, but India has more talent. That is why almost all my clients are seriously thinking about investing in India.

Q: If we were to ask you what are the key risks you see for the Indian economy at the moment, what do you think?

Pause: In my opinion, the Indian government and companies are trying to mitigate the risks. They have already developed policies to provide some kind of subsidy or something like that. There are no major risks to the development of the industry and to achieve rapid GDP growth. But I think there are external elements: one is the geopolitical problem and the other is the sustainability problem. So these two are external factors that they need to take into serious consideration.