After a six-year bull run, stocks fell more than 50 per cent in 2008, its worst slump ever, and 17 IPOs worth more than $10 billion were withdrawn in 2008, Thomson Reuters data showed.

"Once rosy, the same project is now seen as risky," said Saumitra Chaudhuri, a member of the Prime Minister's Economic Advisory Council. "People don't want to seize the opportunity as much as before. It was much easier to raise money last year."

Foreign investors are also cautious. Many executives, already having trouble amid a credit crunch persuading their CEOs to invest in India, have postponed meetings since Mumbai.

Other Indians are waiting for the first quarter to see if hotels get packed, the norm during one of the most popular times to do business in India because of the temperate climate.

For some, the risks are creeping up.

"India's low-cost advantage is well preserved at this time. It's still an attractive investment destination," said Bundeep Singh Rangar, Chairman of IndusView Advisors, an India-focused M&A firm based in London:

"But no matter how great the cost advantage is, if safety and reputation are suspect, then that's not good. We've also got a critical election coming up, and often political goals don't match economic goals."

"You've got a downturn, terrorism and scandal. Yes, the growth, even at 7 per cent, is still attractive, but do you want to go into a market that has all these other issues?"

That said, many investors see India rebounding.

"Many have realised that Indian is not an island," said Russell Parera, CEO of KPMG consultancy in India.

... contd.