Seymour Pierce, a leading brokerage firm that tracks Indian companies on AIM with its own index, said the Indian companies had grown from a market value of 250 million pounds to 3.3 billion pounds since January 2006.
The Seymour Pierce India Index comprises 22 Indian companies and funds. They are predominantly financial almost half - followed by media and utility companies. Two Indian companies that have performed particularly well are KSK Power Venture, which has developed power plants in India, and entertainment giant Eros International.
Nicholas Linington, an analyst at Seymour Pierce, wrote in a report last week: "There has been a steady addition of Indian companies listing on Aim in the last two years. We expect a greater number of small and medium-sized Indian companies to seek international investors as the economy opens up."
Seymour Pierce found that Indian companies on AIM had delivered 21 per cent absolute performance over the past year, compared with flat results for the rest of the market, according to the report quoted in The Independent.
Three Indian companies have floated on AIM in the past three months, and all are trading at a premium to their listing price. They include the clean energy group Greenko, DQ Entertainment and Origo Sino-India.
Linington wrote that the number of Indian companies on AIM was expected to increase during 2008 as the economy opened up.
"In our view, India's growth drivers are, arguably, more favourable than China. This stems principally from the ability of companies to raise funds in their domestic markets, and the desire of those companies to bring on board international investors and gain an international stock market presence," Linington added.
The AIM is a sub-market of the London Stock Exchange, allowing smaller companies to float shares with a more flexible regulatory system than is applicable to the Main Market.
The AIM was launched in 1995 and has raised almost 24 billion pounds for more than 2,200 companies.