India Capital Growth (IGC) is gearing up for its AGM which is scheduled for 11 June. If you are shareholder and you are free, I would urge you to go along. Listen to the investment adviser’s presentation and put questions to him and the board. I know that if it was not for the demands of my day job, this is something I would be doing much more of.

Fortunately, I recently had the chance to hear the investment adviser Gaurav Narain speak at the Master Investor event at the Business Design Centre in Islington. It is rare that I am willing to give up my Saturdays for work, but as an opportunity to hear from and chat to a multitude of trusts, there is little to match it. My only gripe – which I have long expressed – is that there should be similar events arranged outside London.

I know I have made this point before, but I think this ability to question and engage with the stewards of your money is a core part of the attraction of investment companies, and at the AGM, you get to exercise your voting rights too. As recent events have shown, however small your shareholding is, your votes still matter.

Returning to IGC, I was keen to hear Gaurav speak because this past year or so has been a more difficult period for Indian stocks. The NAV peaked in mid-December 2024 and has had a bumpy ride since. That said, it is worth highlighting that, relative to peers, IGC is the best-performing Indian trust over the past 12 months. Nevertheless, the share price return is about -10% and the question in my mind is when will things turn around.

Gaurav observed that India is the fastest-growing large economy globally and the Indian government is keen to move it from an emerging to a developed economy by 2047 (the 100th anniversary of independence). It is already about the fourth-largest global economy and is poised to overtake Germany to move up into the number three slot. If it achieves its goal, it could overtake the US and vie with China for number one status.

The Modi government is pulling out all the stops to make this happen, putting policies and infrastructure plans in place to support this. Having a stable government and a long-term vision helps a lot (are you listening in Downing Street?) – it is spending about $225bn per annum on infrastructure and the private sector is spending about another $100bn on top of that.

It also helps that India has more favourable demographics than rivals such as China (where the population is ageing and may soon be shrinking rapidly). That is helping to drive strong growth in the consumption of goods and services, which is boosted by rising disposable incomes. The scale of the opportunity is enormous. For example, in India there are about 38 cars for every 1,000 people. By contrast, in China the figure is 330 and in the US, it is closer to 800.

Part of the reason India can sustain faster growth is that it has invested heavily in its technological infrastructure. Mobile devices are used for banking and communications with government agencies. Everyone has a digital ID that speeds up transactions. Gaurav says that by embracing technology, India is better able to raise the living standards of its rural population.

Various obstacles have appeared along the path to growth – Gaurav cited a cautious central bank constraining lending growth, elections, the flare-ups between India and Pakistan (and also China), and the Trump factor. The tariffs that he proposed for Indian goods were penal and dented India’s burgeoning export sector. This slowed GDP growth last year and had a knock-on effect on market confidence.

Valuations were elevated, reflecting growth prospects, and a setback in markets was perhaps inevitable.

Early in 2026, things looked to be recovering – the tariff rate had been cut from 50% to 18%, credit growth rebounded, and the government held onto power and injected stimulus to revive the economy – but more recently, we have had the impact of the Iran war.

India is a big importer of oil from the Middle East and – something that I had not really thought about until I heard Gaurav mention it – it also receives a lot of valuable foreign exchange from remittances of 9m+ Indian workers in the Gulf (about $50bn comes home each month).

Fortunately, the impact on power prices should be relatively limited. India’s electricity generation relies on a mix of coal (about 15% of which is imported from countries such as Indonesia and Australia) and renewables. However, when it comes to fuel, especially for cooking, there is a bigger issue. The government has been subsidising fuel prices but this comes at a growing cost, and it is now appealing for Indians to moderate consumption of fuel and fertiliser (supplies of which have also been impacted by the war) and help conserve its foreign exchange reserves by curbing foreign travel and buying less gold, for example.

Gaurav also highlighted inflation risks and the potential impact this might have on demand. He also observed that foreign investors have pulled money from the Indian market and this is putting pressure on the currency.

The market selloff has, however, made valuations look more reasonable relative to other emerging markets. One factor in that is the absence of AI-related plays relative to other markets in Asia.

IGC has a focused portfolio of good quality small- and mid-caps that the team see as leaders in their respective fields. These are companies that have very strong growth (the target is to buy those with the prospect of 15%–18% earnings growth).

There is no way of knowing whether and when Trump will concede defeat (however he dresses it up as a win) in the Middle East. It seems likely though that when this happens, the Indian market will rebound strongly and, in time, so too will the economy. For investors looking for a structural growth story that is not heavily reliant on AI, India may fit the bill.