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The Motley Fool's unofficial India bureau is now officially up and running (essentially, this guy and a laptop). Today, I have three big-picture themes for you to consider regarding India's explosive marketplace.
Take these themes with a grain of salt. India's growth thesis is one that will manifest over the next few decades, not the next few months. But don't let that deter you from researching and investing now. These are powerful subcurrents pushing a 1-billion-strong population toward economic maturity.
In no particular order, here they are:
1. A vibrant media growing more vibrant
Unlike comparable emerging markets in China and Russia, India's media industry is not only free, it is downright attractive. Journalists report the news with unbridled energy and a candid sense of truth-telling that is refreshing. Of course, members of the Indian media are occasionally embroiled in the type of pay-for-journalism bribery stories that would bury a paper in the U.S. But newspapers here are doing quite well nevertheless. They have sizable growth opportunities in underserved rural areas and within smaller regional markets. Plus, the breadth of their story-selection is impressive, especially when considering the death spiral that papers in the states have fallen into as of late.
This vibrancy extends beyond print journalism. Cable news outlets have built a significant position as well. It's no surprise that giant American media companies, for their part, have found a way to exploit this niche. Both Time Warner's (NYSE: TWX ) CNN and Comcast's (Nasdaq: CMCSA ) newly purchased CNBC have developed strategic partnerships with domestic India names (IBN and TV-18, respectively) that are thriving. For these companies and others, the growing appetite for information is creating an arms race for viewers that should prove incredibly lucrative in the long run. India has a long, long way to go until it turns into a mature market for media consumption, a la the U.S. of A. Savvy investors can take advantage.
The last time I was in India, in December 2008, the mobile phone had only recently hit mass popularity. Now, it's the smartphone's turn.
For now, top-branded smartphones are mainly in the hands of professionals and upper-class consumers. In the days since I've arrived, for example, just about everyone I've met with in circles ranging from finance to media has pinged me on BlackBerry Messenger (courtesy of Research In Motion (Nasdaq: RIMM ) , of course). And RIM is undoubtedly the dominant smartphone brand here.
Meanwhile, taxi drivers, street vendors and service staff clutch their unsmart mobiles (overwhelmingly from Nokia (NYSE: NOK ) ) with a kung-fu grip that suggests that the mobile addiction is quite advanced and isn't likely to retreat soon. If the last time is anything like this time, we're not far away from a gigantic smart technology movement down the consumer chain and into the hands of most Indian consumers.
Don't forget that the movement toward smarter mobile telecommunication doesn't start and stop with the handset makers. In fact, the potentially more lucrative investments sit with those that help make these devices function properly. Service providers such as Vodafone (NYSE: VOD ) -- whose second biggest emerging market is India, next to South Africa -- provide excellent coverage in the country (so far, for me, at least) and the industry, as a whole, added 23 million new subscribers in November 2010 alone. Pay attention to this trend.
3. Better infrastructure (slowly)
India is notorious for its lousy infrastructure. I recollect making the 150-mile drive from New Delhi to Jaipur in the mid-1990s, and it took seven hours, not including the changing of a flat tire thanks to the unpaved, gravel roads we were forced to traverse -- ridiculous. You can't drink the water, you don't want to take the trains, intracity commutes can be impossible at certain times of the day, shipping goods is a nightmare. All of this is still true.
Guess what: It's changing.
Upon arrival in Mumbai, I was greeted with a handsome new terminal in the international airport -- a place I've honestly had nightmares about. On the drive from the airport to the south end of the city (what can be a three- to four-hour drive during rush hour), we flew into the city on a brand new, over-water bridge connecting one peninsula with another several miles away (See picture below). That link has been a long time in the making, but, so far, I've been cautiously impressed with the trend.
Mumbai's sea link is just one of the new pieces of infrastructure that India has built.
Of course, infrastructure is still generally a nightmare in this city and across the country. The thriving population is adding cars and demand on electricity and water much faster than the system can add roads, transformers, and pipes. But people are working on it. Flyovers are looming above teeming city streets that will soon carry traffic from one neighborhood to another without clogging neighborhood roads. Projects like these can't get finished fast enough, but they are symbolically important.
From an investing standpoint, it's not easy to get a direct piece of this action. Global Gains advisor Tim Hanson has tentatively identified General Electric (NYSE: GE ) and French firm Areva as two firms that can profit from the pent-up demand in electricity infrastructure spending just as one possible play, but perhaps investors should stay big-picture here.
When infrastructure challenges start being met in a given market, it's the collective nation (and all of its individual participants) that benefit the most. The nation as a whole suddenly becomes more competitive, and eventually we see a more investment-friendly market. That's what I'm counting on -- and personally looking forward to.
The Foolish bottom line
Now you have three big trends to keep track of when evaluating the Indian market for investment opportunities. They're not the only ones, for sure, but they are full of potential.
For more content on India and more individual company analysis, you can track my adventures in India by following me on Twitter right here. Plenty more content to come.