India's Growth Drivers - Demographic Dividend and Digitalization
In 2023, India surpassed China to become the world's most populous country with approximately 1.43 billion people. With a median age in its late 20s, India is in a 'demographic dividend' phase where the working-age population will continue to grow through the 2040s. This abundant young labor force is the foundation supporting consumer market expansion and sustained economic growth. According to the IMF outlook published as of August 2026, India's real GDP growth rate is projected to stay in the 6% range from 2026 onward, and its nominal GDP in US dollars is expected to exceed Japan's in 2027 and to approach Germany's scale in the early 2030s.
India's progress in digitalization is also remarkable. Instant payments through the Unified Payments Interface (UPI) reached a scale of more than 10 billion transactions per month by the mid-2020s, making it one of the world's largest real-time payment systems. Digital infrastructure linked to Aadhaar (the national ID system) has accelerated financial inclusion, creating an environment where even rural consumers can access financial services. As of the mid-2020s, the IT services industry accounts for approximately 8% of GDP, with global companies such as Infosys, TCS, and Wipro providing services worldwide.
Structure of the Indian Stock Market - BSE, NSE, and Key Indices
India has two major stock exchanges. The Bombay Stock Exchange (BSE) is the oldest exchange in Asia, and its representative index is the Sensex (30 BSE stocks). The National Stock Exchange (NSE) is India's largest by trading volume, with the Nifty 50 (50 NSE stocks) as its flagship index. The Nifty 50 has shown strong long-term growth in rupee terms, but past performance is no guarantee of future returns.
How to Invest in Indian Stocks from Japan, and the Risks
The primary ways for Japanese investors to invest in Indian stocks are through Indian equity index funds and ETFs. Representative products include iFreeNEXT India Stock Index and NEXT FUNDS India Stock Index ETF (1678). In 2024, multiple asset management companies launched new India equity funds, significantly expanding the range of options. However, expense ratios for India equity funds tend to be higher than those for developed market funds, and as of 2026 they are typically in the 0.4-0.8% range.
Risks of investing in India include rupee exchange rate fluctuations, political risks (religious tensions, geopolitical strains), high inflation rates, and regulatory uncertainty.
Next Steps for Starting Indian Stock Investing
To begin investing in Indian stocks, it is important to first understand the basic structure of the Indian economy. Regularly follow the Reserve Bank of India's (RBI) monetary policy, the progress of the Modi administration's economic reforms (Make in India, Digital India), and trends in key sectors (IT, financials, consumer goods). For information in Japanese, JETRO (Japan External Trade Organization) reports on India and brokerage research reports on the Indian market are valuable resources.
For specific investment products, low-cost funds tracking the Nifty 50 - such as iFreeNEXT India Stock Index or SBI iShares India Stock Index Fund - are among the candidates worth examining. A rational approach is to start with small monthly systematic investments through your NISA tsumitate allowance and gradually acclimate to the volatility characteristic of the Indian market. Keeping Indian stocks to around 5-10% of your total portfolio and combining them with developed market equities for geographic diversification is a widely used way of thinking.