It is rapidly becoming a major power as a result of the boom in technology. Typically, it cost 500 rupees to open an email account at an internet cafe in Delhi a decade ago. By contrast, today most urban homes own a computer whilst mobile telephones have ceased to be a luxury and are held by most city teenagers.

India though suffers from an inadequate infrastructure. Whilst the country has a better IT and telecom network than the US, its roads are still poor and both electricity and water are not properly distributed.

As one of the leading emerging markets, India will go through volatile times – but that has been so evident in the 'mature' West over the last three weeks.

The MSCI Asia Pacific ex-Japan index rose over 35 per cent last year.

If saving in this region, many investors prefer to concentrate on India as there are continuing concerns whether China's communist leadership will reclassify their shares to the cost of non-residents. If the appeal is India as a major emerging nation, it offers greater investment diversity than such markets as Russia, where oil dominates, or Brazil, which relies excessively on commodities.

The MSCI India net index rose a staggering 71.04 per cent last year, showing a low/high of 176.47-333.41. However, this key indicator of the Indian stock market has fallen over 83 per cent this year, showing a range of 179.91-349.95. This means a long term view should be taken of at least five and preferably 10 years. Do not invest money which may be required at short notice.

India's statistics are inviting. Since 2000:

economic growth has averaged 8.6 per cent;

per capita income has doubled;

a middle class has materialised from virtually nowhere (expected to increase tenfold to 583m by 2025, according to McKinsey consultants);

now the third largest economy in the world after the US and China, according to the OECD.

For decades the Indian economy suffered from Soviet-style controls on industry, known as the 'Licence Raj''. Moves to reduce regulation and allow foreign investment started in 1991 and accelerated eight years ago.

Following the success of foreign owners helping the telecommunications industry, India plans to allow overseas firms to build retail chains and allow greater investment in banking and insurance. However, inflation is now running at eight per cent, above its central bank's 5.5 per cent threshold.

Already India is producing some of the management stars of the day: Arun Sarin (CEO of Vodafone), Vinod Khosla (founder of Sun Microsystems) and Ajit Jain (heir apparent to Warren Buffet).

Traditionally, India has been relatively little exposed to the slowdown in the global economy with exports representing only 16.5 per cent of GDP in 2007.

Its stock exchanges trade the shares of thousands of companies and almost 5,000 are listed on Bombay alone. A balanced fund using local specialists is likely to be the best approach.

New Star launched such a fund in June, entrusting the investment management to Tata, India's largest private sector business conglomerate. In the UK, Tata has acquired Jaguar and Land Rover and the steel manufacturer, Corus.

One of Tata's novel innovations is a four-seater, three-metre long car that does 65mph and costs just £1,250. The hatchback, known as Nano, should transform the way rural India travels to work.

The New Star fund aims to allocate 11 per cent to industrial capital goods, nine per cent to consumer non-durable and eight per cent to finance. John Duffield of New Star is looking particularly at companies which can build India's infrastructure.

Duffield is impressed with the number and quality of educated people by comparison with other third world states. He cites an impressive statistic: a million students graduate in engineering every year in India.

Bestinvest, a noted financial advisory firm, recommends buying both Aberdeen Global India Opportunities and First State Indian.

Their research analyst, Marcel Porcheron, says: "Both funds are defensively positioned and managed by strong investment teams with a focus on high quality investments."

They avoid Neptune India. Over 12 months, the fund is down over 24 per cent.

A fund of funds usually means that the best talent is secured but in Forsyth Indian Opportunities the stock pickers have not been able to beat the India equity market and the extra layer of fees associated with such a structure are not justified.

One of the more recent country funds is Jupiter India, which launched in February. Managed by Avinash Vazirani, who has over 12 years' experience in India's equity market, the fund accepts lump sums from £500 and monthly from £50.

Its main sectors are consumer goods, technology, health care and financials.

Vazirani finds that many firms invest heavily in their businesses and consequently cashflow and dividend growth are often unhelpful tools for stock selection. Instead he focuses on profit growth.

F&C, the first investment trust, has a strong emerging markets team. Their specialist, Jeff Chowdhry, predicted in July 20 per cent earnings growth over the next 12 months. He favours Reliance Industries – a dominant player in the oil and gas market – and HDFC, India's largest mortgage lender.

Fidelity has offered its India Focus fund for over four years, typically with a higher allocation in small and medium-sized companies. Arun Mehra, with offices in Mumbai and London, has managed the fund for two years.

The major sectors are financials, IT, consumer discretionary, industrials and energy.

JP Morgan's Indian Investment Trust has been running 14 years and, like the others mentioned, is available as an ISA. It also offers a share plan. Its major holdings are in financials, energy, industrials, IT and telecommunications.