You've heard the hype: India is growing ... fast.

But who is really putting their money where their mouth is? More important, where is it going?

George Soros and Kenneth Fisher are just some of the legendary names getting a piece of the action. Need proof? Peer into Fisher's investment into Tata Motors (NYSE: TTM) as evidence.       

While my own perspective may be biased (I've spent a great deal of time in India and like its prospects), you can't ignore the millions that some of these gurus have invested.

The dawn of an economic empire
Goldman Sachs
issued a report in 2003 predicting that India's economy will be the world's third largest by 2035. The report cited expected annual growth rates of 5.3% to 6.1%.

Are you kidding me -- 6.1%? Since 1996, the nation has averaged more than 7%. In the last few years alone, India's been pumping out growth in the neighborhood of 10%.

Though it may be a bumpy ride, India has the potential to fulfill these optimistic promises. Unfortunately, I'm about as confident in "potential" macroeconomic projections as I am in my own ability to read the future. After all, questions about economic reform, infrastructure, and education must be addressed first.

But if these projections are even close, the Indian stock market will show you the money.

China vs. India: showdown of the 21st century
The real question is: How much of these two looming giants should you have? Both are growing at accelerated rates, so it's not a simple decision. You really need both -- a good piece of China will pay off over the next few decades.

That said, I look to India to exploit an edge: its commitment to the democratic process. Yes, this may sound cliched. India's government has long been criticized for extended periods of unremarkable reform. Yet I prefer it.

Eager to highlight China's swift ability to prioritize resources (often at the expense of its own citizens), most experts give that nation the advantage. As a simplistic hypothetical, if PetroChina (NYSE: PTR) needs to demolish a neighborhood to create a refinery, poof, it's done.

If our own local governments could operate with that kind of unencumbered authority, we'd have fewer potholes, better public schools, and less congested roadways. But at what cost?

Think about it. If strategic interest were all we were concerned about, ExxonMobil (NYSE: XOM) or Chevron (NYSE: CVX) would have long ago tapped the Arctic National Wildlife Refuge without a second thought. And we might have a short-term answer to rising oil prices ... but that's not the government I signed up for. Let the people have their say, debate it in Congress, and then do it.

Advantage: India
In the long term, India's commitment to democracy is a massive benefit. The economies of Brazil, Taiwan, South Korea, and, yes, even the United States can testify to that.

At its simplest, India is attempting to build a foundation of sustainable yet powerful growth. And it is doing it through a functional democratic process, which is accountable to its citizens.

Taking stock
When it comes down to particular companies, India has some specific areas of critical advantage. The IT outsourcing world has been hit before. But I think Patni Computer Systems (NYSE: PTI) is still an intriguing investment opportunity.

In the financial world, our Global Gains team of analysts picked up on two banks that have tremendous potential to capitalize on the rising tide of India's middle class.

Down the road, India's advanced medical system should begin to reveal profitability in a big way. Though the sector is still immature, look to pharma companies like Dr. Reddy's Labs (NYSE: RDY) to help promote growth. Though it is one of India's largest medical firms, its $3 billion market cap is just a blip compared to that of Pfizer (NYSE: PFE). In other words, there's plenty of room for growth.

Investing legends have picked up on India's potential. So should you. The Motley Fool Global Gains team is here with precise advice on how to do just that. Click here to try the service free for 30 days.

This article was first published Sept. 28, 2007. It has been updated.

Fool analyst Nick Kapur owns no shares of any stock mentioned in this article, though he is invested in India. Pfizer is an Inside Value and Income Investor recommendation. Tata Motors is a Global Gains selection. The Fool has a disclosure policy.