In what ways might Singaporeans gain exposure to Indian investment?

[SINGAPORE] The two largest economies in the world— the United States and China— are currently engaged in an intense "tit-for-tat" tariff battle, and it’s not exactly a thrilling experience for investors. President Trump’s tariffs dealt a harsh blow to portfolios back in early April, leaving many wondering about the future. While the financial markets have somewhat recovered, significant uncertainty still lingers for those invested in US and Chinese stock markets.

However, there’s a silver lining: not all markets are equally affected by the ongoing trade conflict. In fact, many investors worldwide are starting to turn their attention to India, seeing it as a potential long-term beneficiary of the rising tensions between the US and China.

India has shown impressive economic growth over the past decade, with its GDP expanding at an average annual rate of around 6%. This growth has been fueled by several factors, including a rapidly growing middle class, substantial government investments in infrastructure, and an expanding services sector. Additionally, India’s relatively low exposure to global trade fluctuations makes it an attractive option for investors seeking stability amid geopolitical uncertainty.

It's important to note that India maintains a relatively modest 10% tariff rate—similar to most other countries, excluding China—while it negotiates a trade deal with the US. Recently, US Vice President JD Vance visited India, likely aiming to negotiate a deal in line with his boss’s "Art of the Deal" approach.

The trade negotiations between India and the US are part of a broader strategy to diversify India’s trade relationships and reduce dependence on any single market. This strategic pivot is especially important as India seeks to grow its manufacturing base and attract more foreign direct investment. A favorable trade agreement could further enhance investor confidence in India’s long-term economic prospects.

Beyond geopolitics and trade disputes, India’s investment fundamentals remain solid. In 2023, India overtook China as the world’s most populous country, and its young population is increasingly entering the workforce and boosting the economy. India has relatively limited trade exposure to the US and a smaller manufacturing sector, making it less vulnerable to trade conflicts with President Trump.

So, how can Singapore-based investors gain exposure to India’s economy? There are several options to consider.

One of the key growth drivers in India is its flourishing technology sector. Companies like Infosys and Tata Consultancy Services have become global leaders in IT services, and their success reflects India’s broader digital transformation. This sector is not only a key contributor to the nation’s GDP but also a significant source of employment and innovation. For investors, this presents an opportunity to tap into a high-growth industry expected to continue expanding in the coming years.

Best Ways to Invest in India

Exchange-Traded Funds (ETFs)

One of the easiest ways to invest in India is through an ETF that tracks one of the country’s main stock market indices.

MSCI India Index

When choosing an ETF, it's important to look at the underlying index. The MSCI India Index (USD) is commonly used for ETFs in India. Over the past decade (as of April 30, 2025), the MSCI India Index has delivered annualized returns of +9.1%, and over the last five years, it has posted an annualized return of +18.1%. By comparison, the S&P 500 Index, a benchmark for US stocks, has posted annualized returns of +12.3% over 10 years and +15.6% over the past five years.While Indian stocks have slightly lagged behind their US counterparts over the past decade, they’ve outperformed since 2020. So how can Singapore investors access Indian stocks via ETFs?

Top ETF for India Exposure

UCITS ETFs listed in Europe are an excellent option for their favorable dividend tax withholding for non-US investors. One of the key ETFs listed in London is the iShares MSCI India UCITS ETF (LSE: NDIA), which reinvests dividends through its Accumulating share class. This ETF has delivered a remarkable annualized return of +19.7% over the past five years, outperforming the gross return of the MSCI India Index.While this ETF has a slightly higher annual management fee (0.65%), it remains a solid choice for investors seeking exposure to India. If accessing the London Stock Exchange is not possible, the US-listed version of the ETF, the iShares MSCI India ETF (NYSE: INDA), is also a good option, tracking the same index.

Indian Stocks via ADRs

Foreign investors looking to buy individual Indian stocks face a challenge: to directly purchase stocks on Indian exchanges, you must be an Indian citizen or a non-resident Indian (NRI). However, investors can buy Indian companies listed as American Depository Receipts (ADRs) on US exchanges like the New York Stock Exchange or NASDAQ. While the pool of available ADRs is limited, some of India’s largest companies, such as HDFC Bank (NYSE: HDB), ICICI Bank (NYSE: IBN), and Infosys Ltd (NYSE: INFY), offer ADRs for international investors. This option may appeal to those who want direct exposure to specific companies and sectors in India.

Unit Trusts

For Singapore-based investors preferring a hands-off approach, unit trusts (actively managed funds) offer an easy option. These funds can be purchased through banks or fintech platforms like Endowus and Syfe. Popular funds include the Fidelity India Focus Fund (SGD) and Goldman Sachs India Equity Portfolio (SGD). While these funds are more expensive (e.g., Fidelity’s annual management fee is 1.50%), they can be a good option for those who want professional management of their investments.

For most investors, ETFs are the simplest and most cost-effective way to gain exposure to India. The main downside is the need to open a brokerage account and invest manually, but the potential cost savings compared to pricier unit trusts are significant. For those interested in individual stocks, keep in mind that ADRs typically overlap with the holdings of Indian ETFs, making ETFs the more efficient choice for the majority of investors.