High investment returns in India outweigh fear of terrorism

NEW DELHI, November 29, 2009 (AFP) – Last week’s one-year anniversary of the Mumbai siege was a reminder of India’s vulnerability to militant attacks. But analysts say high returns for investors in the country this year show they are unfazed by the risks.

“The attacks haven’t deterred investors,” said senior Asian economist Robert Prior-Wandesforde at HSBC in Singapore. “The perceived advantages of India as an investment location are clearly dominant.”

Indian markets have seen a surge in foreign capital flows that has driven the benchmark 30-share Sensex index up more than 70 percent so far this year and the rupee to a one-year high against the dollar.

The lure of strong returns with many developed nations mired in economic slowdown has outweighed concern about the threat of more attacks like the rampage last November by 10 Islamist gunmen in which 166 people died, analysts say.

“Institutional investors and companies see Asia as the future, not the Western world, and within Asia, India — along with China — is attracting a lot of interest for very good reasons,” Prior-Wandesforde told AFP.

Mumbai is the financial hub o