Investors Find the 'Other' Billion-Person Nation; It's India, and Portfolio Managers Say It Might Outshine China; Foreign Investing Is Opening Up
AT A TIME WHEN China commands more attention from investors than any other emerging market, many U.S. fund managers are starting to take a closer look at the other billion-person nation: India.</br></br>India has received only a fraction of the money that corporations have invested in China, but portfolio managers say India is in a number of ways the more attractive stock-market investment.</br></br>The South Asian giant has spawned a greater number of companies that can compete on a global scale and whose management style more closely resembles their U.S. competitors. That list includes Indian software firms such as Infosys Technologies and Wipro and pharmaceutical companies such as Dr. Reddy's Laboratories, all of which trade in New York. Investors also credit India with having better corporate disclosure, stronger property rights, and a more investor-friendly legal system than China.</br></br>India is about a dozen years behind China in liberalizing its economy, lowering tariffs, and opening up industry to foreign investors. But it is beginning to close that gap. Just recently, in fact, the government raised the ceiling on foreign investment in private banks and abolished foreign limits on private oil exploration and marketing companies.</br></br>New Delhi is forecasting Indian economic growth of about 8% for the fiscal year ending next month -- on par with China's official growth forecast for 2004 -- and it has emerged as the world leader for outsourcing and call centers.