India's Strong Growth Potential

When investors focus on Asia, they tend to look at China. After all, the potential to tap into the 1.3 billion residents and their increasing wealth is one the greatest growth stories going forward. However, many analysts believe that the Chinese economy and its subsequent equities may be approaching bubble status. The broad based SPDR S&P China (NYSE:GXC) is still $23 above its 52 week low. Chinese real estate (NYSE:TAO) prices are up nearly 27% in a year and the Beijing government has recently taken steps to cool of its growth. Investors worried about the situation may want to look at an another Asian BRIC superstar; India IN PICTURES: 8 Tips For Starting Your Own Business

Approaching the Elephant
The Indian economy has emerged from the credit and recession as one of the strongest growth-based economies in the world and is expected to bypass the United States by 2025. Fueling this anticipated 14% annual growth rate is rising public spending, an increased demand for automobiles and infrastructure and overall developing industrial production.

Several recent economic statistics are pointing in the right direction for nation. Accounting for more than 55% of the $1.2 trillion Indian economy, the service sector showed growth for the 13^th month in a row. In addition, industrial outputs rose nearly 13% in March and after massive droughts throughout 2009, analysts expect monsoon rains to be in the normal range. This will help the nation's farms output, which currently contributes to 16% of GDP.

Finally, President Obama has made it clear that of his intent to increase American-Indian relations with several meetings with officials there. The United States is currently India's largest trading partner, and any ever increasing healthy relationship between the two will certainly benefit India. America's involvement in India's much needed infrastructure build out, through increased energy grid investment and road construction, could add an estimated extra 2% to India's annual GDP.

An Indian Portfolio
India, typically accounts for the bottom tier of holdings in a BRIC fund, such as SPDR S&P BRIC 40 (NYSE:BIK). In this case, just 8% of assets. Investors wanting to add additional exposure to the Asian nation can do so with the PowerShares India (NYSE:PIN) and WisdomTree India Earnings (NYSE:EPI), however several individual Indian equities have dual listed on U.S. exchanges and may offer just as many opportunities as the ETFs.

With the recent passing of the landmark healthcare bill, increased attention is being placed on cost controls. One of the areas that will certainly grow over the next decade is the use of generic drugs. Dr. Reddy's Laboratories (NYSE:RDY) operates throughout India, the U.S, Europe and Russia and manufactures a wide range of generic drugs and pharmaceutical ingredients. While already a strong business, Dr. Reddy recently partnered with GlaxoSmithKline (NYSE:GSK) in which to help market its generic drugs in other emerging markets.

Sify Technologies (Nasdaq:SIFY) provides internet, network and electronic commerce services primarily in India. Aside from the company's telecommunications infrastructure, Sify may be an under the radar play on consumer growth. The company operates 1,600 ePort internet cafes that open up the worldwide web to many Indian citizens who cannot afford a computer.

Sterlite Industries (NYSE:SLT) is one of the nation's largest non-ferrous metals miners, specializing in copper, aluminum and zinc. As both India's and the rest of the emerging world continue its commodities binge in order to provide better infrastructure to its citizens, Sterlite should benefit. The miner recently reported Revenue for the fourth quarter increased 64%.

The Bottom Line
As more and more analysts predict that China is moving into overvalued territory, the strength of India continues to grow. The nation has made great strides to climb out of the global recession, and investors can reap the rewards by choosing individual Indian equities or exchange traded funds such as the iShares S&P India Nifty 50 Index (Nasdaq:INDY) for a long term play. (For more stock analysis, take a look at European Value Buys.)

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