Korean institutional investors are pumping money into the Indian market to avail opportunities from the fastest-growing major economy’s robust domestic demand and infrastructure projects.

With estimates suggesting the economy could expand by 7 to 8 percent this year and the Indian government's policies designed to revive the manufacturing industry, including the "Make In India" program, the country has emerged as an investment destination for foreign investors.

As large investors ranging from credit unions and pension funds to venture capital funds and insurance companies flocked to Shanghai and Beijing some 10 years ago, they are now moving to India’s financial capital Mumbai. Korean investors are no exception.

"As China's economic slowdown and conflict with the United States prolong, investors' interest in emerging markets is increasingly moving to India," said Hong Ji-yeun, a senior researcher at the Korea Capital Market Institute.

Korea's sovereign wealth fund, Korea Investment Corp., is leading the pack among public institutional investors with its plan to open an office in Mumbai in April after receiving the green light from India’s central bank in January.

The KIC will seek to discover opportunities in alternative investment through the Mumbai office, focusing on venture capital and private equity areas expected to burgeon against the backdrop of India’s abundant IT ecosystem and strong domestic demand.

As India is undergoing a massive wave of infrastructure development, with significant investments aimed at boosting the economy, the KIC also plans to allocate its capital to infrastructures and properties.

With big-name asset management firms now established or planning to set up bases in India, the KIC expects that investors will grow the pie together.

“Investment companies gather in India because they see investment opportunities, but they also know that high levels of capital formation could lead to further investment opportunities,” KIC official Lim Jeong-jin said.

India has been considered a strong contender among other Asian markets for Korean institutional investors looking for a broad class of investments beyond stocks and bonds to delve into hedge funds, private equity, infrastructure, real estate and natural resources.

“Since the KIC is an institution that actively invests overseas, we will quickly take the lead in India's market and discover good investment opportunities. we thought we would act as a bridgehead when other Korean investment institutions will also invest in India in the future," Lim said.

Investors' expectations are increasing as India Prime Minister Narendra Modi, who has in since 2014 achieved high economic growth, expanded foreign investment and developed infrastructure, is likely to be reelected to a third term in this year's general elections, according to Hong.

Major Korean mutual aid associations have made moves to allocate funds in India.

The Korea Teachers' Credit Union, which controls 43 trillion won ($32 billion), hired Mirae Asset Global Investments as the management company to make an investment worth 50 billion won in the Indian stock market.

The Public Officials Benefit Association, which has 21 trillion won in assets under management, also selected Mirae Asset as a consignment management company to invest in Indian equity funds in August.