A view of the ICICI Onesource call centre office in Bangalore, India.
(Indranil Mukherjee/AFP-Getty Images)

Bhim Asdhir remembers what it was like 10 years ago when he tried to get people to invest in a new mutual fund he was starting in Canada — a fund that invested solely in India.

"People were very skeptical," he told CBC News Online. "Ninety per cent would say negative things — corruption, poverty, the geopolitical problems. People didn't think of India as a place to invest."

Asdhir doesn't have any trouble raising money now. His Excel India Fund has returned 35 per cent annually over the past five years, making it one of the best performing mutual funds in Canada. India has clearly arrived as an investment destination.

The story of modern India — the new India — has been written many times and in many ways. But the world at large tends to perk up and notice only when the story shakes up its view of the world's second-most-populous country.

Chairman of Tata Motors Ratan Tata, right, and Tata vice president Rajiv Dubey pose with the Tata Indigo XL car at its launch in Mumbai, India, in January. (Associated Press/Rajesh Nirgude)

Oct. 20, 2006 was a time for one of those shakeups. India's Tata Steel announced it would buy Corus Group (formerly British Steel). The shock spurred one headline writer to declare: "The Empire Strikes Back" — underscoring just how radically times had changed since 1947 — the year India cast off its status as a British colony.

That an Indian company could engineer such a takeover may have surprised those with only passing knowledge of the Indian subcontinent. But that sepia-toned image of India as little more than an agricultural backwater has been out of step with reality for years.

Anyone who has made it their business to track the world's economies has seen India's rising faster than almost any other country's. The transformation has dragged millions out of poverty, created a burgeoning middle class and allowed Indian entrepreneurs and companies — Tata Steel among them — to mount serious competitive challenges in areas that western companies once had to themselves.

Why the turnaround?

Analysts trace India's economic boom to 1991, when the Indian government began to liberalize the economy by opening it up to more foreign trade, investment and competition.

It dismantled the Licence Raj — a system set up in 1947 that required anyone setting up a business in India to obtain a licence and abide by restrictive regulations. It was all part of India's attempt to centrally control its economy. It ended up being an investment killer and invited widespread corruption.

Now, the Licence Raj is history and India's economy expanded exponentially as the reforms of the '90s took hold and the rest of the world noticed the change.

Today, India's huge English-speaking labour force clamours for jobs in a variety of burgeoning outsourcing markets. The country's population is confident, eager, well-educated, and willing to work for a fraction of what westerners expect. And with more than half of India's 1.1 billion people under the age of 25, that's a recipe for a formidable and lasting labour advantage.

These days, it's hard to challenge India's label as an economic powerhouse. The central bank, the Reserve Bank of India, forecasts economic growth will "slow" to 8.5 per cent in the current fiscal year, down from 9.4 per cent the year before. That put it just behind China's headline-grabbing, double-digit growth rate.

Indian economy could overtake U.S. by 2050

India's GDP now tops $1 trillion a year. By 2040, it could be $40 trillion. The investment bank Goldman Sachs says India's economy has the potential to grow faster than any other economy in the next 30 to 50 years. It could even surpass the American economy in size by 2050. Goldman Sachs is not alone in that view. Western countries are busy sending huge trade delegations to India, hoping for a piece of that growth.

India has already captured as much as 60 per cent of the world's offshore call centre business — with hundreds of thousands of workers answering customer calls for clients like British Telecom, Dell Inc., LinkSys and AOL.

An Indian stock broker speaks to his client as he watches a trading terminal at the Bombay Stock Exchange in Mumbai, India, in March. (Associated Press/Rajesh Nirgude)

But 21st century India is about much more than call centres. Indian entrepreneurs have built national businesses into multinational success stories. One need look no further than some of the companies listed on the main index of the Bombay Stock Exchange.

Tata Motors — India's largest vehicle maker — is rumoured to be kicking the tires of Jaguar and Land Rover, pondering a possible bid to buy them from Ford. India's ICICI Bank has a presence in 17 countries — including Canada — with assets of $85 billion. India's biggest software company, Infosys Technologies, also lists on the Nasdaq, where it boasts a market worth of $27 billion US.

Surging GDP numbers have powered corporate earnings exponentially higher and attracted billions in foreign investment.

Forbes Magazine says there are now more billionaires in India than there are in Japan (36 versus 24). Collectively, India's billionaires are worth an astonishing $191 billion US.

Economic 'miracle' has its problems.

Behind all that prosperity, however, the reality is that poverty remains a daily fact of life for hundreds of millions of Indians.

It's true that the ranks of the middle-class have surged in the last decade. But more than a quarter of the country — 300 million people — still live below the official poverty line (27.5 per cent of the population, according to Indian government estimates, down from 36 per cent in 1993-94.).

The country's economic reforms still have some distance to go. Foreign direct investment is still limited in many industries and high tariffs are a fact of economic life. The rupee is still not fully convertible.

India's infrastructure is straining at the seams. Traffic on many roads is perpetually clogged. Power outages and water shortages are routine. Ports are jammed.

The reality is that most Indians still work in agriculture. The rural majority of India has not shared equally in the economic prosperity that the urban middle class has experienced — leading to a growing gap between the haves and have-nots. Half of India's women are illiterate.

Sixty years after Mahatma Gandhi launched "Swadeshi" — a campaign for economic self-sufficiency at the village level — India is facing fierce worldwide competition from other developing countries determined to attract the world's attention.

But given what the country has accomplished so far, few are predicting any pause in what has been a remarkable and ongoing transformation.

India's main exports (US $) 2005

Engineering goods	$20.9 bn
Textiles & clothing	$15.6 bn
Gems & jewelry	$15.1 bn
Oil and crude products	$11.2 bn
Agriculture	$9.9 bn
Source: The Economist

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