U.S. sanctions have done little to slow investment in India, and there are signs that authorities may be stepping up their announcements to counter any possible damage.

In the past week, the Indian press has reported a flurry of deals and approvals for projects, most notably with U.S. companies. Although the impact of sanctions is uncertain, the activity seems to defy predictions that the penalties for the nuclear testing that began May 11 would bring the Indian economy and investment to a halt.In fact, some Indian stocks are becoming attractive, said Franklin Templeton Investor Services, a major California-based brokerage firm, according to reports by Bridge News and India's Business Standard. The statement last week by Franklin Resources Inc. Chairman Charles B. Johnson expressed confidence in the Indian economy's long-term growth.

That was before Moody's Investor Service downgraded India's debt by two notches to below investment grade Friday, further hammering stocks and threatening a liquidity crisis for the country's banks. But business seems to have largely anticipated that the Clinton administration would avoid the harshest possible penalties under the Nuclear Proliferation Prevention Act of 1994. Last Thursday, Deputy Secretary of State Strobe Talbott said that sanctions would be applied under a ''surgical approach,'' saying that it in the past, ''they have sometimes been more of a sledgehammer than a scalpel.''

''It's not a matter of sanctions are always wrong. It's just a question of what effect they have,'' said Gideon Rose, deputy director of national security studies at the Council on Foreign Relations. ''In this case, it just doesn't seem like you're going to get much for it.''

''People expected it was going to be the end of trade, and it's not,'' said Paul Freedenberg, a former Commerce Department official, now a consultant at Baker & Botts in Washington. ''It's punishment, but it's not the end of trade.''

Among the deals highlighted is a software project by Oracle Corp. The government of the Indian state of Karnataka announced its approval for the 520 million rupee ($12 million) venture in Bangalore, which was described as ''the largest in India by a software multinational.'' A spokeswoman at Oracle headquarters in Redwood Shores, Calif., was unable to provide information on the project, which is being handled from offices in Singapore.


Last week, India's Tata conglomerate said that American International Group and Singapore Investment Corp. have offered to take a 40 percent share in Tata Airlines Ltd.

India's Reliance Industries, a major petrochemicals producer, also announced a letter of intent for a mining and power plant project in southern Tamil Nadu state with North American Coal Corp., Foster Wheeler Corp. and Consolidated Electric Power Asia. An official at New Jersey-based North American Coal expressed surprise at the announcement, noting that Reliance was reluctant go public with any information about a far larger cooperative project last year. The publicity suggests that Indian officials may be pumping up the news of preliminary agreements and approvals of deals with U.S. companies as part of a campaign to brush off the psychological effect of sanctions. On Monday, for example, India's Foreign Investment Promotion Board said it has allowed Ford Motor Co. to raise its interest in a car production joint venture.

The government of Premier Atal Bihari Vajpayee also is taking steps to lure investment in spite of the sanctions threat.


Last week, the government decided to give automatic approval to foreign equity investments of up to 100 percent in any power project that does not exceed $355 million. The previous limit was 74 percent. The government is also changing some policies on private enterprise in order to deal with the sanctions.

Defense Minister George Fernandes said last week that he would increase cooperation with private companies in research, production and marketing. India's Defense Research and Development Organization plans to open some of its laboratories to the private sector, Agence France-Presse reported. Mr. Fernandes has previously opposed such moves.


The sanctions threat has had no effect on big U.S. ventures in India, like the $2.5 billion Dabhol power project of Enron Corp. Whitney Anderson, a spokeswoman in Houston, said Monday that the first phase of the project will be completed and start generating revenue for the company this year. Enron is confident that it will proceed with the second phase, she said.

By contrast, there have been few announcements of new business with Pakistan as the country tightens its belt. The comparison seems to give weight to statements of some Indian officials and commentators that New Delhi's strategy was not to prepare for nuclear war, but to draw Pakistan into testing so that its smaller economy would collapse under sanctions.