India is very much in the news at the moment due to the problems it has had meeting deadlines for Commonwealth Games facilities in Delhi.
The Games construction and associated infrastructure has reportedly cost 15 billion rupees .
There have been outrages about relocating 120,000 people in the way of the development and security measures are considered inadequate by Western standards.
The phenomenal cost is considered excessive by the Indian people, but at the same time they hope the Games will show India in a different light from most Westerners' perception that it is a dirty, dangerous, overcrowded place to visit.
Economic growth in India has been exceptional in the past 10 years, averaging around 9% per annum.
The Indian stock market index, the BSE 200, rose 243% in the nine years from January 1, 2000, to December 31, 2009.
Compare that to the rise in the NZX-50 since its establishment in 2003 of 24%, Australia's ASX-200 growth from 2000 of 57% and the United States' Standard and Poor's 500's contraction of -23% since 2000.
India's growth is due to several factors.
It is considered debt free; it has a population of 1.15 billion, of whom half are under the age of 25, with around 400,000 university graduates a year; it has a high savings rate; domestic demand is very high; and it has a pro-reform government.
India is now 20 years into a reform programme and its success is often compared to the UK's similar growth in the 19th century.
As it is early into its development, the growth is considered sustainable for some time.
The recent national poll re-elected Manmohan Singh as prime minister for five years.
He is very much a reformist and is driving change as fast as he can. Growth is expected to be in double figures for the next five years.
The International Monetary Fund expects India's growth to mirror China's and possibly surpass it over the next decade.
Unfortunately, it is difficult to invest in India.
As an individual, you can buy companies directly on the BSE 200 exchange.
You need to know what you are doing and deal with an internationally connected stock broker through major trading banks such as UBS or Deutsche Bank.
They would probably not be interested unless you have a large sum to invest.
An easier way is to invest in a managed fund.
There are several UK listed funds that can be used.
In the case of using a listed UK managed fund or buying directly, you are subject to FIF rules regarding tax.
There are one or two Australian managed funds, such as from Fidelity and the listed India Equities Fund Limited.
All investments in this manner are subject to currency risk.
In New Zealand dollar terms, you can buy into several of the listed UK funds that are dual-listed on the New Zealand exchange.
For example, the Templeton Emerging Markets Trust has two of India's top companies (Sesa Goa Ltd, an iron ore exporter, and Tata Consultancy, an IT company) as a total of 10.3% of the total fund, with further smaller holdings in another five companies.
These dual-listed funds are still subject to FIF rules.
Several New Zealand dollar managed funds in international shares and Asian shares have smatterings of holdings up to 10% of their funds in Indian companies.
These are the best for Kiwi investors as they are not affected by the FIF rules and most are PIE.
In time I expect it will become easier for New Zealanders to invest in India as more fund managers employ overseas advisers with offices in India to advise on what to buy.
It is possible that eventually a New Zealand fund manager will introduce an India-only fund.
(The author acknowledges an article on moneymanagement.com.au as the source for this article).
Peter Smith is a certified financial planner and is the Principal of Peter Smith Financial Services Limited Dunedin. Email: finance@petersmith.co.nz A disclosure statement is available on request and free of charge.
