Exchange traded funds (ETFs) that track India’s economy have been smacked by a host of fears about the direction of the country, but a cash infusion from the United Kingdom might be what gets them back on track.

With inflation picking up steam, there are worries central banks will have to raise rates and pull in growth. Food prices have already skyrocketed and this is sure to trickle down into emerging markets. [This Sector Could Power India ETFs In 2011.]

India stocks have “clearly broken” their uptrend relative to the United States over the past two years, reports John Spence for MarketWatch:

  • WisdomTree India Earnings Fund (NYSEArca: EPI) has lost 9% so far this year
  • PowerShares India Portfolio (NYSEArca: PIN) has fallen 9.1%
  • iShares S&P India Nifty 50 (NYSEArca: INDY) has declined 9.2%

Even EGShares India Infrastructure (NYSEArca: INXX) has lost 10.2% this year, but that the downtrend might not be the case for long.

Britain is set to make a renewed pitch for making greater investment in India’s infrastructure sector. Spending could amount to as much as $1 trillion-$2 trillion over the next few years, reports SME Times. It’s long been estimated that India’s lack of infrastructure costs the economy several points in economic growth each year. [India ETFs: Don’t Write Them Off.]

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.