This article has been adapted from Fool U.K., our sister site across the pond.

Go on, name Britain's single largest manufacturing company. BAE Systems, perhaps? Or GlaxoSmithKline (NYSE: GSK)? Or even Unilever?

No, it's none of those. According to the BBC's economics editor Stephanie Flanders, it's actually Indian conglomerate Tata. "As a result of buying Tetley, Corus, Jaguar Land Rover and the rest, Tata is now the single largest manufacturer in the U.K.," she writes.

Quite how she's measuring size, she doesn't say. Employment, presumably. But in any case, the precise definition of size is not especially relevant to the central point that I want to make today: that India as an investment opportunity is becoming too big to ignore.

Steady progress
And yes, I know, I've said it before. I've looked in detail at India here at The Fool on two other occasions, most recently -- back in February -- concluding that valuations were a little high.

But six months on, has anything changed?

Back then, I spoke with two fund managers: London-based Avinash Vazirani, manager of Jupiter's well-regarded India fund; and Sanjiv Duggal, the Singapore‑based manager of HSBC's flagship India fund -- the largest offshore India fund in the world, with over $6 billion over assets under management.

So as a starting point, I checked back in with them to see what they were saying now. Here are the highlights:

  • India's GDP continues to grow strongly. Q1 GDP came in at an annual rate of 8.6%, and figures from the Reserve Bank of India this week point to that level of growth or thereabouts being achieved throughout the rest of the year.
  • Inflation, which is high at around 10%, appears to be being addressed by interest rate rises -- no fewer than four of them in the past year. Inflation is expected to peak in the current quarter, though, with the monsoon that is currently drenching Pakistan also expected to help bring about lower foodstuff prices.
  • Manufacturing comprises around 20%-25% of the Indian economy, around half of which is exported. The health of these export markets is provoking some cause for concern, but only moderately.
  • A new rule requiring listed companies to have at least 25% of their shares publicly available is likely to create something of an overhang on the Indian market, but it is generally seen as a good thing.
  • The Indian government is benefiting from higher‑than‑expected tax revenues, and seeing tangible results from its long‑voiced attempts to reduce the national budget deficit.
  • Additional revenue has come from the auction of the 3G mobile phone spectrum, partial deregulation of fuel prices, the consequent removal of fuel subsidies, and the divestment of government holdings in a number of companies.

All of which sounds like reasonably good news, I would have thought.

A worrying P/E
When I last wrote about India, Bombay's Sensex index was trading at 16,500. Yesterday, it closed at 18,116. That's equivalent to a P/E of 21.5, versus the FTSE's closing P/E of 14.5 yesterday.

Predictably, fund prices tell the same story -- even when, as in the case of HSBC's Indian fund, a recent rise in sterling compared to the fund's US dollar base currency has helped to soften the blow. Compared to 4 February, for instance, when I last looked at India, it's up 12%. Jupiter's India fund, even though invested in very different shares, is up by an identical amount.

Put another way, the Sensex itself is not far from its 2007 peak of just short of 21,000. And to put that in its starkest perspective, at that level it's a very long way indeed from its 2003 Gulf War low of 2,950 -- when our own FTSE 100 bottomed out at 3,287 on 12 March 2003.

Off the scale
In short, to many Western investors, that just doesn't "feel" right. It's difficult to look at a chart of the Sensex over the past 10 years or so and think that India is anything other than overvalued.

The trouble is, India itself has become enormously transformed over those 10 years. And it continues to be transformed, with an economy growing at 8% or so. So it's easy to lose touch with the modern reality on the ground.

Here's what Jupiter's Avinash Vazirani says, for example, having just returned from a trip there:

There are huge, palpable changes that have taken place since my previous visit, which was only last February. New metro systems, railway lines, ports, power plants, roads and airports are appearing at an unprecedented rate.

The new international Delhi airport opened a few days ago, ahead of schedule, having taken 33 months to build from start to finish. It is the third largest in the world behind Beijing and Dubai, accommodating up to 126 flights at any one time.

A comprehensive example of this development is visible in the achievements of Adani Enterprise in the state of Gujarat. Within six years, the company has metamorphosed from an energy trading company to the owner and operator of three massive ports, oil storage tanks, power plants, and all the roads and railways that connect each project in the 45 km seafront site.

Do I, or don't I?
The cash is there, and it would be easy to press the buy button.

I'm not looking at a short-term trade, but a longer-term stake that would grow over 10 years or so.

Yet India feels fully valued, and the significant foreign capital inflows into its markets continue to worry me -- despite the new offerings and privatizations that help to soak up some of that cash.

But the truth is that I've spent 18 months finding reasons not to invest in India at the moment, and I'm wondering just how long I should continue to dither.

What do you think? Comments in the box below, please!

More from Malcolm Wheatley:

Malcolm owns shares in BAE Systems and GlaxoSmithKline.

Abbie Redmon prepared this article for publication. She does not own shares in any company mentioned. The Fool owns shares of GlaxoSmithKline. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.