To be fair, that keeps changing. The reason FPIs like India is that it offers high growth, low inflation and reasonable interest rates. Also, Indian government has made an attempt to keep the fiscal deficit in check and that is an important consideration for FPIs. Typically, FPIs also prefer to invest in countries where the local currency is likely to strengthen. That is why you will find that FPIs normally like to invest in India when the rupee is strengthening and sell out when the rupee is weakening.

When the BRICS story was first put up by Goldman Sachs in 2002, the logic was that Brazil and Russia will benefit from a commodities super-cycle while India and China would benefit from an explosion in consumer demand. Both their assumptions turned out to be right as all these markets gave phenomenal returns between 2002 and 2007. However, things have changed drastically in the past 3-4 years. China has been plagued by overcapacity in most sectors which is driving prices down. There is also the spectre of shadow banking in China which has stifled economic growth. Brazil and Russia have been the worst hit by the commodity downturn. Russia has paid a huge price due to cheap oil while Brazil has paid a price for cheap commodities, weak Chinese demand and political uncertainty. Under these circumstances, India remains the only BRICS nation with GDP in excess of $2 trillion that can provide alpha for FPIs. That largely explains why foreign investors find the India story so attractive.