Investing in India: Where Is the Smart Money Going Now?

It seems as though everyone is investing in India. During the past few years, every type of investment in the country -- including private equity and venture capital -- has exploded. Last year, net foreign institutional investment inflows topped $17 billion. In contrast, just four years ago, in 2004-05, total FDI (foreign direct investment) in India stood at $3.75 billion.

At first, investment tended to focus on the technology sector; today's investments are in everything from real estate to infrastructure. In a keynote speech at this year's Wharton India Economic Forum, Vinod Dham, managing director of the NEA-IndoUS Ventures and former vice president and general manager of the microprocessor products group at Intel (INTC Quote), noted that online services, business process outsourcing and mobile value-added services were the top three investment areas in 2007. While the bulk of the investments are still in the IT and IT-enabled services sector, health care is beginning to pick up, Dham noted, and opportunities are often regional: Bengaluru (formerly Bangalore) for IT, Hyderabad for life sciences, Mumbai for mobile and media, Chennai for manufacturing, and Delhi for business process and knowledge process outsourcing.

So how are companies getting into these opportunities, and how are the deals changing over time? A panel discussion at the conference, moderated by Bain & Company private equity practice head Sri Rajan, explored the current environment and gave the audience a taste of what is to come.

The Investment Landscape ...