Foreign investment in India in the year to March shot up by 65% to $4.06bn (�2.8bn) with the information technology sector the main driving force, according to government figures.

The Indian government has an annual target of $10bn for foreign direct investment (FDI), but has recently managed only about $3bn a year.

"The rise stems from increased investment in information technology, particularly back-office and in fact call centres," Gareth Price of the Economist Intelligence Unit told the BBC's World Business Report.

"There was a submarine cable laid between Singapore and India which probably had quite an effect, and export processing zones were redesignated so there would have been some industrial investment due to tax breaks," he said.

But he warned religious violence which has claimed more than 850 lives since February in the western state of Gujarat, India's second-most industrialised state, could affect future foreign investment.

Neighbouring China has recently attracted between $30bn and $40bn in foreign investment every year.

US access

Meanwhile, the US has called on India to cut red tape so more US companies can invest in the country.

"Excessive bureaucracy, government controls and protectionism limit the potential of the entrepreneurs of India, limit the potential of its workers and also the potential and interest of its trading partners," said US Assistant Secretary of Commerce for Market Access and Compliance, William Lash, at a meeting with business leaders in New Delhi.

India and the US have been expanding their political and strategic relations in recent months after India supported US forces fighting in Afghanistan.

Mr Lash also urged India to speed up economic reforms and lower tariffs to further boost trade, which has doubled to $12bn in the last decade.