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The passage to India's nascent tech world just widened a little, but that doesn't mean the road ahead won't be bumpy.

India Technology fund, an India-focused open-end fund, recently debuted, only the second of its kind (there are three closed-end India funds out there as well). Still, assuming our bulging e-mail accounts are any barometer of investor interest, there are a bunch of you out there looking for an Indian investment.

"I'm very, very bullish on India. And software companies are the best play there. This is the place to be in Asia," says David Lui, manger of the


Strong Overseas and

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Strong International Stock funds. He's invested 5% of each fund in the country, the limit allowed by his funds' prospectus, given the country's emerging-market label. What gives?

Many pros see India's burgeoning software industry as an intriguing, albeit risky, way to play

Silicon Valley

. India's software firms are highly regarded as the outsourcers of choice for firms large and small. Tech titans such as


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farm out coding work to Indian companies, Lui says.

"Why pay someone in Silicon Valley $50 an hour when you can pay $5 an hour in India and have them be happy as a clam? The best play in India right now are the software companies, which are growing revenue at 70% annually," he adds.

Few Indian companies trade in the U.S., but his favorites that do are

Infosys Technologies

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and Internet-service provider

Satyam Infoway

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. Infosys' ADRs are up 746% since they started trading in the U.S. on March 12 and Satyam's are up 281% since they started trading on Oct. 19.

Those are exactly the kind of holdings Vik Mehrotra, president of Boston-based

Venus Capital

, is betting on in the India Technology fund. The fund, launched on April 25, will typically hold 25 tech stocks, covering the media, software, B2B, telecom and Net infrastructure subsectors, but he's most bullish on software, which he believes is only in the "second inning" in terms of its long-term growth.

Before you start getting psyched to the strains of sitar music, there's a big catch in Indian investing. If it seems tough to find passages into Indian stocks, finding a quick route out can be even more difficult.

Stocks listed on the

Bombay Stock Exchange

tend to be smaller and more volatile than U.S. stocks. Also, while liquidity isn't a problem if you're trading larger companies, it can be tough to find buyers if you're trying to sell a smaller stock or one that's tanking. That could leave a fund stuck with a sinking position.

"You can't necessarily get out when everyone rushes to the exit," says Venus' Mehrotra. He plans to avoid liquidity problems by investing some 30% of his fund into U.S. tech stocks with founders or key executives of Indian descent like

Juniper Networks

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Sycamore Networks



Red Back Networks



There are also political risks involved. International fund managers say the Indian political structure is relatively stable, even though power changes hands frequently. But the government typically isn't a huge fan of foreign investors. Although the government recently raised the level of foreign ownership allowed in Indian stocks from 30% to 40%, some managers say it's tough to get a license or ID clearing a fund to trade stocks in the country.

"Getting an ID is a long, drawn-out process with a lot of legal rigmarole," says Eric Ritter, portfolio manager of


Driehaus Asian Pacific Growth.

Ritter reduced his Japan exposure this year, putting some of the cash into Indian stocks. Without an ID, he had to go through a U.S. broker with Indian offices, which entails higher commissions than if the fund had an ID.

There's also currency risk, meaning that the value of your investment will drop with India's currency. Mehrotra says Indian tech firms exporting their products and services can be a natural currency hedge because they sell their wares for dollars.

And, as you might expect, tech and telecom stocks in India aren't sheltered from tech-stock volatility in the U.S.

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Eaton Vance Greater India, which has more than half of its assets invested in tech, was up 106% last year and is down 23.8% this year. These returns closely mirror the rest of the

Century Club that bets heavily on U.S. tech.

Mehrotra says the correlation is modest, but clearly rising as Indian software shops draw more and more of their income from U.S. businesses.

If you're ready to dabble in India, how should you do it?

You might want to steer clear of India Technology until you can get a feel for Mehrotra's style. Also, his no-load fund can get pretty expensive.

Its steep fee structure is as unique as its charter. Unlike most funds, which charge a flat, asset-based rate of around 1%, this fund's expenses are tied to Mehrotra's performance vs. the

IFC India Index

, an index of 150 Indian stocks. If Mehrotra shoots the lights out vs. the index, the fund can get pretty pricey. Annual expenses will range from 1.25% to 6.25%, depending on how much the fund beats or trails the index. If the fund performs in line with the index, its expenses are 3.75%.

Eaton Vance Greater India seems fairly similar, with a longer track record. The fund launched six years ago, and Hong Kong-based lead manager Scobie Dickinson has been on it ever since. The broker-sold fund isn't cheap, either. In addition to front- and back-end loads, the fund's expense ratio is 3.59%.

Many investors aren't thrilled with closed-end funds, which trade like stocks and often sell for less than their net asset value. So maybe the best route for less aggressive investors is to scout out solid-performing, diversified Asia or emerging markets funds that give you access to Indian stocks with less risk. Some possibilities:

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Evergreen Emerging Markets Growth,


Pilgrim Emerging Countries and


Pioneer Indo-Asia. Pioneer used to offer an India Fund -- that would've brought the total to three -- but gave up on the fund in 1998 due to the market's volatility and investors' lack of interest.