India may outshine China in receiving foreign investments because of its better corporate disclosure, stronger property rights and a more investor-friendly legal system.
Though till date India has received only a fraction of the money that corporations have invested in China, it is a much attractive stock market destination for foreign investors, portfolio managers say.
"The South Asian giant (India) has spawned a greater number of companies that can compete on a global scale and whose management style more closely resembles their US competitors," a US business daily said in its report.
Investors credit India with having better corporate disclosure, stronger property rights, and a more investor-friendly legal system than China, The Wall Street Journal said in its report titled Investors Find the 'Other' Billion-Person Nation.
The list of companies include 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, it said.
India, said the Journal, is about a dozen years behind China in liberalising its economy, lowering tariffs, and opening up industry to foreign investors. But it is beginning to close that gap with the government raising the ceiling on foreign investment in private banks and abolishing foreign limits on private oil exploration and marketing companies.
At a time when China commands more attention from investors than any other emerging market, the paper said, many US fund managers are starting to take a look at India.
New Delhi, the Journal notes, is forecasting Indian economic growth of about 8 per cent 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 on outsourcing and call centres.
Some economists, the Journal notes, say India may be entering a period of rapid growth reminiscent of China's powerful economic expansion of the 1990s, enabling India to evolve over the next few years from a fringe to a more mainstream emerging market.
"India looks like it is at the beginning of a multi-year upswing," said Mark Madden, who manages the Pioneer Emerging Markets Fund and counts India as one of his three top country picks this year, along with Brazil and Turkey.
Some investors, said the Journal, maintain that there are compelling reasons to expect something better from India than from China, even if the stock market stumbles in the near term following last year's big gains.
Unlike China, in India, about 80 per cent of the publicly traded companies have no state ownership. That percentage is poised to rise as privatisation and restructuring gather steam, Arindam Bhattacharjee, a portfolio manager at Emerging Markets Management in Arlington, Virginia told the daily.
Unlike China, where few companies have much presence overseas, several Indian companies rely on exports for the bulk of their revenue.