Indian equities have had a rocky start to 2008, after years of double digit growth, but that has not stopped providers coming to the market with fund launches.
New Star, for example, has launched the Indian Equity Fund, which opens for investment today. The Luxembourg-based Sicav will be benchmarked against the BSE Sensex index and will hold approximately 40 stocks.
HSBC Global Asset Management, meanwhile, is expanding its Indian product range and is increasing the number of markets its India funds are available in.
Farley Thomas, global head of wholesale distribution for HSBC, says: "India is a very long term and attractive investment; there are huge opportunities there as the country develops."
For New Star's India offering, the company teamed up with Tata Asset Management, the Mumbai-based asset management subsidiary of the Tata Group, which will manage its funds to achieve medium-to-long-term capital growth. The portfolio of equities will have a predominantly large-cap bias.
Tata is known in the UK as a result of its acquisition of Corus, the steel maker, and its recent purchase of Jaguar and Land Rover.
HSBC launched its first India fund in 1996 and, as of April 2008, the assets under management of its existing GIF Indian Equity fund totalled $7.2bn compared with $6.3bn in April 2007.
On the back of that growth, HSBC plans to launch a spin-off in Canada later this year, a by-product of the success its Chinese equity fund had in Canada when it launched a couple of years ago.
The company also launched an India hedge fund in 2007, the India Alpha Fund, lead-managed by Sanjiv Duggal.
It is not all plain sailing, however. David Cornell, an investment manager at New Star, acknowledges that India faces challenges in the short-term but says it offers a strong growth story in the medium-to-long-term.
"India has been expensive in the past, but that premium is now much more in line with other emerging markets," says Mr Cornell. "In the short term, the country is struggling, it is a net importer of oil and inflation is not yet under control."
The Indian economy has grown at an average of 8.8 per cent a year over the past four years and is estimated to have grown 8.7 per cent over the year to March 2008.
Economists put that growth down to strong domestic consumption, which is being fuelled by a growing and affluent middle class, a low level of consumer debt and significant infrastructure spending.
Sam Mahtani, manager of F&C's India Investment Company fund, also acknowledges problems: "Interest rates and inflation are moving up and the domestic economy is slowing down," he says.
He points to the start of a new election cycle with national elections expected in the first quarter of 2009 as a possible driver of market volatility.
The stock market has suffered a significant correction this year, following average returns of 45 per cent over the last four years. Since January it has fallen 23.9 per cent partly because of a slowdown in the economy and partly because of profit taking.
"India is not cheap by any standard, but investors entering now are taking a longer term view on the market," Mr Mahtani says.
Indeed, figures from Lipper Feri show that European mutual fund investors were net sellers of Indian equities in the first quarter with outflows of 971.7m (£774m, $1.5bn), a figure admittedly dwarfed by outflows from European equity funds of 74.7bn.
For the whole of 2007, however, flows into Indian equities from European investors were positive at 270m, while for European equities there were outflows of 12.8bn. "Clearly, the easy money has been made - investors coming in now would need to be willing to tie up their money for at least 18 months," says Mr Mahtani.
Another challenge ahead for the Indian fund market is investor sentiment. Divyesh Hindocha, principal at Mercer, says the trouble with India funds is that institutional investors do not look at equity allocations on a per country basis.
"The current design looks at blocks of investing. For most institutions, India will be a part of their regional investment or global emerging markets allocation. Investors tend only to invest country specifically in their home country."
This, he points out, reduces the demand for a separate India - or any other country - fund. He notes, however, that there are some investors, mainly from the Middle East, beginning to change their view.
Mr Hindocha adds that there needs to be a change in the way investors approach emerging markets, urging them to "think intelligently" about allocations.
Both New Star and HSBC remain undeterred. "The investment story in India is compelling and the message for investors is to take a long-term view and they will see positive results," says Mr Thomas.
Heather Dale is a reporter on Ignites Europe, an FT publication