India ETFs Are a Hot Emerging Market Play

Among the best performing areas of the emerging markets, India country-specific exchange traded funds have made a drastic surge since the start of the new year.

Specifically, the India ETFs that focus on small capitalization stocks have been among the best performers in the emerging markets category year-to-date, with the Columbia India Small Cap ETF (NYSEArca: SCIN) up 15.8%, VanEck Vectors India Small-Cap Index ETF (NYSEArca: SCIF) 15.3% higher and iShares MSCI India Small-Cap ETF (BATS: SMIN) up 14.6%.

New Delhi projects India’s economy could expand between 6.75% and 7.5% in 2017-18 as the government shifts tactics on its economy.

India’s market suffered a blow at the end of 2016 after Prime Minister Narendra Modi yanked about 86% of all cash from the economy to fight so-called black money to fight back against the huge shadow economy.

While the economy may experience a short-term setback from the move, the results of demonetization could usher in long-term benefits to the economy.

Moreover, the Indian economy is set to implement other structural reforms, including a proposed Goods and Service Tax that could bolster growth by another 10%.

Prime Minister Modi has also hinted at encouraging SMEs, or small and medium enterprises, with tax relaxation and new incentives offered toward small business owners. The government has brought a renewed focus on SMEs to capture a larger market space.