Cisco Systems says it will invest $1.1 billion in India over the next 3 years in research and development and other support services. "We have never done anything of this magnitude," remarked president and CEO John Chambers on the sizeable investment.

There's one major concern, however-the country's poor infrastructure. Many companies have already voiced their concern over the government's slow pace in building new roads, airports, and rail links to the seaports.

In fact, a new report commissioned by Neptune Orient Lines says that the country's weak infrastructure is hampering global companies from meeting just-in-time requirements as well as slowing growth in foreign direct investment. According to the report entitled "Connecting India: Transport Challenges and Opportunities," India's internal transport makes up 11 percent of the total landed cost compared to the global average of 6 percent. Therefore, foreign direct investment comprises only 1 percent of GDP at $4 billion to $5 billion a year versus China's $50 billion per year.

Not only are India's roads and ports in bad shape, even water supply and power generation need upgrading.

To its credit, the government has begun enlisting the help of the private sector to improve the infrastructure, especially in the area of port development. While India's seaports handled 6 million TEUs last year, that number is expected to reach 15.2 million TEUs in 2012, which would be adequate to handle the projected growth in containerized trade.

Nonetheless, India continues to attract a significant amount of foreign investment largely because of its huge market and talented labor pool. In the past year, Siemens AG of Germany, LG Electronics of South Korea, and PepsiCo of the U.S. have pledged millions of dollars in investments. In June, South Korea's Posco signed an agreement to build a $12 billion steel plant, the largest foreign investment to date for India.