For the first time in a decade India is giving its larger geopolitical rival China a run for its money in attracting foreign investment.

The two countries are neck and neck on the volume of cash allotted this year from overseas mergers and acquisitions, representing what some experts call a counter-balance to an investment landscape in Asia that until recently favoured China.

In the first nine months of the year, China attracted $41.6bn in inbound M&A investment against India’s $40.6bn, according to data from Refinitiv.

The boost in investment into India, which is up 64 per cent on the same period last year, has come as multinational corporations shift their outlook on the country’s domestic market from that of a poor, under-developed economy to one in which a rising middle class has started to generate and spend disposable income, say experts.

Much in the way that Chinese technology and ecommerce companies began attracting foreign investment several years ago, Indian companies such as ecommerce group Flipkart and payments company Paytm have been at the centre of India’s inbound investment boom.

“Large, offline [consumer] players are starting to ask, ‘how do I make the Indian market relevant to me?’,” said Sonjoy Chatterjee, chairman of Goldman Sachs in India. “You are seeing a completely different theme in terms of technology and fintech.”

Not since 2008 have India and China attracted a similar level of foreign M&A investment. Between 2012 and 2016 China mustered at least double, sometimes triple, the level of inbound M&A attracted by India, whose deal volume fell to $8bn as recently as 2014.

Walmart’s record-breaking acquisition of a $16bn stake in Flipkart bolstered the figure for India this year, while a $14bn fundraising round for payments group Ant Financial played a similar role for China.

Warren Buffett, a longtime investor in Chinese companies such as battery and electric carmaker BYD, made his first large acquisition in India in August when his company Berkshire Hathaway agreed to invest $300m in Paytm.

“In China, the technology sector is full-blown but in India it is still in a growth phase, maybe three to five years behind China,” said Ravi Kapoor, head of global banking at Citi in India, adding that the industry was attracting foreign investors looking for the same growth story experienced in China.

China and India are at vastly different stages of development, but as they have opened to foreign investment since the 1990s, the two have drawn constant comparisons on economic achievement, growth and investment potential.

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The trade war between the US and China, which is clouding China’s economic outlook, has turned the attention of some investors towards India as an alternative for investment in the region, said Reshmi Khurana, a Singapore-based managing director for business intelligence and investigations at Kroll.

“With what’s happening with the trade war and the balance of geopolitical power in the region, India is seen as an alternative to China,” Ms Khurana said.

For decades China and India have been geopolitical rivals. They fought a brief war in 1962 and have continued to clash on their shared 4,000km border.

With a gross domestic product of about $12.9tn, China’s economy was nearly five times that of India last year. However, India’s GDP grew by 7.7 per cent in the first quarter of 2018 and is expected to accelerate, while China’s growth rate is expected to decline over the next decade.

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