Lured by regulatory changes, foreign asset managers are scrambling to set up shop in India.

The Wall Street Journal reported Friday morning that assets under management in the emerging powerhouse nearly doubled to about $48 billion over a three-year period. Half of the assets are managed by fund firms with ties abroad.

At present, there are 28 mutual-fund companies in India, of which at least 13 have foreign connections. These include ING Groep NV and ABN Amro Holdings NV of Holland and HSBC Holdings PLC and Standard Chartered PLC of Britain.

Other foreign firms are eager to get a piece of the action. Last month, J.P. Morgan Chase announced its intention to put up a mutual-fund business in India in the latter half of the year. The announcement came months after Fidelity Investments International unveiled its first domestic Indian mutual fund. It has since added two more funds to its lineup.

American International Group and Temasek Holdings are also planning to set up Indian operations.

Why the attraction? The industry's growth sprang from a confluence of factors, among them government deregulation. In 1992, the Securities and Exchange Board of India was established, providing a framework under which funds would operate. And due to a slew of economic reforms, foreigners are now able to invest directly in some local businesses, mutual funds included.

Then there is the growth of the Indian economy, which expanded by eight percent for the two fiscal years beginning with April 2003 which, coupled with the stock market boom and decline in interest rates, has made India an attractive destination for money managers. 

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