India Inc.: How to Ride the Elephant

India also has a younger population than any other major country. According to Ridham Desai, Morgan Stanley's head of Indian equities research, about 125 million Indians will join the workforce in the next decade, and they will be key to the country's growth. Foreign firms will hire legions of them to drive down costs, and their prosperity will fuel demand for stylish clothes, cars and other baubles. Thanks to this demographic advantage, "India will grow faster than the rest of the world," says Desai.

The question for investors is how richly to pay today for a stake in companies that will profit from these trends in the future. The Indian market trades at a 20% premium over other emerging markets, making it too pricey to jump into now, says Adrian Mowat, JP Morgan's chief Asian equities strategist. Jon Thorn, a portfolio manager at India Capital Fund, disagrees. "The long-term case for investing there is without question the best in the world. I'm going around to all my investors saying, Now is the time," Thorn says. "You need to buy when there are moments of panic." Savvy investors, he says, should stash some of their assets in Indian stocks or funds for the long haul. Faber is even more bullish. "If someone put a gun to my head and said, 'You have to put all your money in India or all of it in the U.S.,'" he says, "I'd choose India."