The U.S. private-equity establishment is falling in love with India. Although the trend began a decade ago, it has accelerated lately as the fast-growing Indian economy has started to outpace its domestic financing options. The latest expatriate on the scene is restructuring impresario Wilbur Ross, who said this week that his WL Ross & Co. will join the country's biggest mortgage company, Housing Development Finance Corp., to invest in corporate turnarounds. With help from the $9.5 billion development bank, Ross will do what he does best: take runs at special or distressed situations, such as bankruptcies, spinoffs, reorganizations, privatizations and other special situations. Why India? The country badly needs money to maintain its more than 7% annual economic growth. Private equity sees an especially good opportunity to streamline a famously inefficient corporate culture and realign its interests to shareholders. The allure is enhanced by the dearth of opportunity at home. "Some deals can't get done in the developed countries due to excess of capital chasing the same deals," says Anil Suri, alternative investment strategist at Merrill Lynch. "In India, there is a relative scarcity of capital. Many deals can be done on better terms with better prospects." To be sure, India presents challenges to private-equity investors. The biggest is the immaturity of its local markets, particularly for bonds. "India does not have a mature debt market at the present," says Daniel O'Donnell, chair of the private equity group at law firm Dechert. Until one exists, O'Donnell says, buyout shops will have to operate by raising some of their money in overseas forums. "There are plenty of examples of the U.S. debt market being successfully combined with the European debt market in order to enable U.S. private-equity sponsors to do very large European deals," he says. The same could happen in India as a precursor to the development of better domestic markets.