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BRITISH businesses and their counterparts elsewhere in the West have ploughed millions of pounds into India in recent years as economic growth accelerated on the back of a consistent, if unspectacular, reform programme.
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Executives hoped the Asian giant, with more than a billion people, would prove to be a profitable domestic market. They also saw a cheap but effective base for outsourcing many service functions.
But the rosy vision was blurred this week as investors and local voters digested the shock result of national elections.
Out went the reformist, Hindu nationalist BJP-party-led coalition and in came the secular Congress Party alliance.
The handover sent investors running for cover because the Congress Party's electoral allies included two small communist parties. Their support was viewed as potentially diluting or even rolling back the nascent free-market friendly reforms.
But analysts say there is little cause for concern. Many key reforms are already entrenched, they point out, adding the second-round choice for Prime Minister, Manmohan Singh, will help sustain current economic policy.
'I think that the economy will continue to be quite strong. I think that people make too much of the kind of reforms that might be impeded by the left-wing allies,' said India watcher Manu Bhaskaran at consultancy Centennial Group.
Singh orchestrated India's economic reforms in the 1990s when Congress was last in power. He was lined up for the top job this week after current Congress Party leader Sonia Gandhi surprised her supporters by declining to assume office.
Economists said vital reforms such as cutting red tape, progressive privatisation, improving infrastructure and freeing the banking sector had already acquired sufficient momentum to endure. They added that Singh, 71, was committed to reform and was viewed with respect by local and foreign investors.
The Congress Party has vowed to raise growth to 10% a year and tackle tough areas, such as introducing VAT to help put the State on a sounder fiscal footing. It also promised development 'with a human face' - a bid for more socially inclusive programmes vital in the still-poor country.
If there is a change in emphasis with the new administration in the coming months, it is likely to be a greater focus on rural development, especially extended irrigation.
Pundits say millions of disaffected rural voters effectively booted the BJP Party out of office.
Trade is worth £5bn
BRITISH businesses have beaten a path to India's door in recent years, hoping to sell goods and services there or use the country as a base for call centres and data processing.
Among them are Cairn Energy, which has struck oil in the northern desert state of Rajasthan. Emerging markets bank Standard Chartered has a network of branches in the country while financial giant HSBC has invested heavily in outsourcing back-office functions, as has online travel agency Ebookers.
In return, the flotation earlier this year of Indian miner Vedanta is expected to open the door to more London listings from the subcontinent.
India is Britain's 17th largest export market with bilateral trade worth about £5bn.
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