Baring Asset Management is to launch a new India fund on 7 December, to be run by its recently-appointed head of Indian equities, Ajay Argal.

The Baring India Fund will be at least 70 per cent invested in companies listed in India, or which carry out the majority of their business there. Up to 30 per cent of the fund will be invested in firms listed outside of India and within the Indian subcontinent which still conduct a significant proportion of their business within India.

Barings is of the view that India will be able to keep up its GDP growth in light of its fast-developing upper middle and high-class consumer segments, low personal and national debt, and extensive government spending.

Argal joined Barings team in Hong Kong in the summer, having previously been lead manager of the Birla Sunlife India Advantage Fund and the India Excel Fund.

Argal notes that, unlike many other emerging economies, India’s main export is information technology services – a sector where its well-educated workforce and cost advantages make it a global leader. The country’s IT sector is also shielded from the extremes of the global economic cycle by the fact that IT services tend to be supplied on a long-term contract basis, Argal says. In fact, India’s IT sector is predicted to grow from $8 billion today to $15 billion by 2014.

Other investment themes likely to feature in the Baring India Fund are consumer consumption, which is predicted to grow across the board, and financial services, as market penetration is currently very low.

“With a stable and vibrant political system in place, we believe the Indian economy is well positioned to embark on a period of productivity-led growth and that this should translate into a period of strong equity returns for investors,” said Argal.

“Domestically, India's youthful population is fast developing a preference for consumer goods, while demand for housing and for financial services is likely to remain strong for many years to come as the pace of urbanisation accelerates. The government plans to invest $1 trillion on upgrading India’s roads and energy sectors and this should help improve productivity as well as provide a further boost to growth.”