For years, India has had to play second fiddle to China when it comes to attracting investment.
China had a booming economy, an enormous population and some of the planet’s leading technology firms.
But, last month, India usurped China as the world’s fastest-growing economy, rising at 7 per cent a year.
And now, experts believe it’s the ‘jewel in the crown’ of the emerging economies, which also include the Philippines, Taiwan, Vietnam and even Brazil, Mexico and Russia.
Top pick: Indian car maker Mahindra & Mahindra manufactures tractors, cars and 4×4 vehicles Last month, the firm revealed a convertible sports utility vehicle, the TUV Stinger
India has a young, educated workforce (the average age in India is 27, compared to 40 in the UK) that will be the largest in the world by 2025. It is already the world’s biggest democracy — and is increasingly pro-business.
Prime Minister Narendra Modi, who has a clear majority, has made a play of wooing foreign investment, with Japan backing a $17 billion project to build a bullet train between Mumbai and the industrial city of Ahmedabad that will cut the journey from eight hours to under three.
At home, Mr Modi has introduced a Goods & Services Tax — similar to Britain’s VAT — to replace a complicated patchwork of taxes imposed across India’s regional states.
He has also launched a biometric identity system for direct benefits payments, which uses fingerprints, iris scanning and photos to ensure the money goes safely into the right bank accounts. This has drawn millions of the rural population into the banking system.
India is also now one of the world’s major car manufacturers, pumping out 3.8 million vehicles a year. That puts it on par with South Korea and quickly catching up with Germany.
Jason Hollands, of fund supermarket Bestinvest, says: ‘While China tends to grab the most attention of the emerging market economies, the long-term prospects for India are exciting with the programme of reforms being made in the country.’
For savers new to investing in India, it’s worth considering a so-called emerging markets fund.
These split your money across shares in a number of different growing countries, including India. That way, if one country dips, it won’t put too large a dent in your pension or Isa.
Mr Hollands tips Stewart Investors Asia Pacific Leaders fund. A hefty £31.19 in every £100 of savers’ money is invested in India — by far the largest proportion of the fund. By comparison, £19.80 is in Taiwan and £14.83 in Hong Kong.
Bustle: Last month, India usurped China as the world’s fastest-growing economy, rising at 7 per cent a year
The fund’s biggest pick is Tata Consultancy Services, India’s largest IT firm. It employs more than 391,000 people across 46 countries. In January, Tata signed a $2 billion (£1.5 billion) deal — its biggest ever — to look after U.S. insurer Transamerica’s computer systems.
Another of the fund’s top picks is Mahindra & Mahindra, which manufactures tractors, cars and 4×4 vehicles.
Last month, the firm revealed India’s first convertible sports utility vehicle, the TUV Stinger, as well as a number of electric concept cars.
The company says the SUV is designed to appeal to ‘young, active’ buyers — a business strategy designed for a growing economy where two-thirds of the country are under 35 and which has a booming middle-class that wants to spend new-found wealth.
The fund has turned £10,000 into £15,216 in five years.
Another fund tipped by Mr Hollands is JPMorgan Emerging Markets Investment Trust, which invests nearly a fifth of its money in India.
One of its biggest Indian holdings is IndusInd Bank, a Mumbai-based lender that launched in 1994. It has had a successful decade, with its share price rising by 2,400 pc.
The bank is hunting for insurance and investment firms to buy so it can keep growing at a similar pace.
JPMorgan Emerging Markets Investment Trust has turned £10,000 into £14,790 in five years.
One option, says Ben Yearsley, of adviser Shore Financial Planning, is Fidelity Emerging Markets, which invests nearly £1 in £10 in India. It has turned £10,000 into £16,474 in five years.
The two main Indian companies that it backs are HDFC Bank, the country’s largest private sector lender, and mortgage provider Housing Development Finance Corporation.
If you want to invest only in India, look to specialist funds. Darius McDermott, of broker Chelsea Financial Services, tips the Ashburton India Equity Opportunities Fund.
Its top ten picks include Eicher Motors, the parent company of the famous, once-British motorcycle maker Royal Enfield.
The firm started making motorbikes in 1901 out of its Worcestershire base, but went out of business in 1970.
The Indian offshoot, Enfield of India, continued — and boss Siddhartha Lal wants to turn the company into a global leader.
Last month, Royal Enfield launched its no-frills adventure motorbike, Himalayan, in the UK for just over £4,000.
Nearly £5 in every £100 of savers’ money is invested in Phoenix Mills, which makes shopping malls including High Street Phoenix in Mumbai.
This houses brands such as H&M and Vans.
The fund has turned £10,000 into £22,351 in five years.