INDIA FUND INC /NY NEW, N-30D, 1997-02-28

INDIA FUND INC /NY NEW
N-30D, 1997-02-28

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The India Fund, Inc.

January 15, 1997

Dear Fund Shareholder,

We are pleased to present the audited financial statements of The India Fund,
Inc. (the "Fund") for the fiscal year ended December 31, 1996. Beginning on page
two, the Fund's Investment Adviser provides a detailed look at the Fund's
investments and allocations as well as the economic and market conditions in
India during the past 12 months. On December 31, 1996, the Fund's common stock
closed on the New York Stock Exchange at $7.625 per share, a 0.9% premium to its
net asset value (NAV) of $7.56 per share.

It was not an easy year for the Indian stock market in 1996, with several
rallies and selloffs that created a challenging investment environment.
Larger-capitalization securities continued to outperform mid-cap and small-cap
securities. Over the course of the year, the Bombay Sensex of 30 large companies
fell just 0.8%, while the broader-based Dollex Index of 200 stocks fell 4.8%.

Nonetheless, corporate earnings continued to grow during 1996, although at a
slower rate than the previous year. In October, the government eased its
monetary policy, with the intent that lower interest rates could relieve a
business environment burdened with high interest costs. With these and other
fundamentals in line, the Investment Adviser continues to believe that India's
economy will continue to develop and expand over the long term.

If you have questions about the Fund, please call our toll-free number, (800)
421-4777. On behalf of the Board of Directors, thank you for your participation
in The India Fund.

Sincerely,

/s/ Alan Rappaport
- -------------------
Alan Rappaport

<PAGE>

Report of the Investment Adviser The India Fund, Inc.
For The Year Ended December 31, 1996

Overview of India's Stock Markets

It was a volatile year in the Indian markets. After a weak start, investor
sentiment towards India turned suddenly positive in the first quarter of 1996. A
rally ahead of the general election in the first half of 1996 propelled the
widely-followed Bombay Sensex index of 30 leading companies up over 40%, but a
subsequent selloff eroded all these gains by December. A sudden year-end rebound
returned the Sensex close to its starting level such that the narrow index
finished almost flat, with a mere 0.8% fall for the entire year.

Corruption allegations levelled at several politicians from the ruling Congress
Party and the opposition BJP led to the Sensex dropping to a 52-week low in late
January, before foreign buying and substantial local speculative interest caused
a reversal of momentum. The upward move in the market was narrowly focused,
affecting only large-capitalisation, liquid stocks, which also dominate the
indices. Smaller stocks remained at depressed levels.

The market stabilised by June, when the general election results were announced,
and then fell in the second half of the year as fears grew of a significant
slowdown in Indian industrial growth. Compounding this, the budget in July
introduced a number of revenue-raising measures that affected corporate
profitability, and earnings forecasts were correspondingly cut. The late
recovery in December was precipitated by a substantial loosening in monetary
policy, with the government expressing the intention to stimulate both the
economy and the capital markets.

Politics

The general election in April/May was widely agreed to be the fairest and least
violent in India's history, but did not produce a conclusive result. The
Congress Party, under Prime Minister Narasimha Rao, suffered its worst ever
electoral defeat. The Hindu nationalist BJP won the most seats, although not
enough to form a parliamentary majority, and it could not muster sufficient
support from the other parties. The reins of government were picked up by a
coalition of thirteen smaller, mainly regional parties known as the United
Front, led by H.D. Deve Gowda, former Chief Minister of the southern state of
Karnataka. The coalition was promised Congress support in parliament as part of
a so-called "secular front" against the BJP.

The United Front administration enjoyed only a brief honeymoon. The stock
markets fell into a five-month tailspin soon after the new government's ascent
to power. Finance Minister Chidambaram emphasised commitment to continuing
economic reform, fiscal prudence and policies designed to attract foreign direct
investment, but it soon became apparent that tensions existed within the
coalition over economic issues.

- --------------------------------------------------------------------------------
Fund Updates

The Fund's toll-free phone number, (800) 421-4777, provides callers with a
recorded monthly update of the markets in which the Fund invests. It also offers
details about the Fund, its portfolio and performance. The Fund's net asset
value (NAV) is calculated weekly and published in The Wall Street Journal every
Monday under the heading "Closed End Funds." The Fund's NAV is also published in
Barron's on Saturdays and in The New York Times on Mondays. The Fund is listed
on the New York Stock Exchange under the ticker symbol IFN.

- --------------------------------------------------------------------------------

<PAGE>

The markets became increasingly frustrated by the new administration's lack of
progress. The perception was that the government was hostage to the varying and
influential constituencies within the coalition and was deferring tough
decision-making. To be fair, the government had inherited an economy in a
precarious position, with a fiscal 1996 budget deficit at 5.9% of GDP.

Chidambaram's first budget in July attracted favourable headlines, aiming to
reduce the deficit to 5% of GDP, but antagonised the markets by raising fuel
prices and introducing a new minimum tax on reported corporate profits. This tax
was designed to affect the numerous companies not paying any tax by taking
advantage of various allowances. Analysts quickly responded by revising
corporate profit forecasts downward.

Economics

Evidence built up through 1996 that continued high interest rates were
constraining the growth of Indian industry. The effect of tight monetary policy,
in place since late 1994, was finally seen in a deceleration in industrial
production growth in 1996. Industry grew 12% over the year ended March 1996, but
forecasts suggest the growth rate may dip into single digits in fiscal 1997. A
sharp drop in capital goods imports and sluggish lending growth by the financial
institutions are also indicative of this slowdown.

Corporate results for the first half of fiscal 1997 demonstrated the impact of
this deceleration on corporate profits; interim numbers for 1,000 companies
showed a 2% drop in net profits, a major contributor being an average 30% jump
in the interest charge.

Recognising industry's need for relief from high interest rates, the Reserve
Bank of India significantly eased its monetary policy in October. The portion of
bank reserves deemed necessary to be held on deposit with the RBI was cut by two
percentage points to 10%. Each percentage point cut is estimated to release $1.2
billion into the banking system. The intent was to pull down interest rates, and
it succeeded at the short end at least, with bank lending rates dropping 1.0-1.5
percentage points.

Performance

The net asset value per share of The India Fund fell 15.4% over the year and
underperformed the benchmark 200-share Dollex index, which fell 4.8%. The Fund's
underperformance for the year was concentrated in the period between February
and April when the market ran up sharply. The Sensex rose 23% in two weeks at
the beginning of February, and not only did the broader market not participate
in this rally, but the Fund was caught with a comparatively high percentage of
cash. These liquid holdings were a residual from 1995, when the Fund's cash
position helped to cushion it from a down market.

The Fund is two-thirds invested in smaller and mid-cap stocks. This strategy,
despite delivering earnings growth that exceeded that of the Sensex's 30
corporate giants, did not deliver appropriate share price appreciation in the
first half of 1996. The Fund's cash cushion helped the Fund outperform in the
third quarter, when sentiment towards mid-cap companies continued to be weak,
but there were healthy signs of a turnaround by the end of the year. An upsurge
in interest from domestic investors stimulated significant appreciation among
smaller stocks, and the Fund comfortably beat the Dollex in the fourth quarter.

3
<PAGE>

Portfolio Strategy

In light of India's industrial slowdown, the Fund's positions in commodity and
heavy cyclical stocks were reduced over the year. Significant additions were
made to holdings in infrastructure-related and defensive sectors. Due to fears
of a slackening in the growth of demand, the position in vehicles was reduced
over the year, although it remains the Fund's single largest industry sector.

Holdings in pharmaceutical and technology companies were further increased, and
continue to be large positions for the Fund. In both sectors India is considered
to be globally competitive. Holdings in the telecommunications sector were also
increased, given its defensive nature under the current uncertain industrial
outlook. Metals and petroleum stocks were selectively increased, reflecting a
combination of more favourable global pricing trends and local volume
expansions.

Significant portfolio restructuring took place over the year. A number of
smaller positions were sold or reduced, particularly during the buoyant market
conditions prevalent in the first half of the year, in order to make the Fund
more flexible and able to respond more quickly to developments. Therefore, the
number of companies held by the Fund was reduced from 228 at the end of 1995 to
160 at the end of 1996.

The India Fund remains focused on mid-cap stocks, because the greater growth
potential offered by these companies will, we continue to believe, provide
stronger capital appreciation in the medium- to long-term. As a consequence of
this focus, the weighted average market capitalisation of The India Fund's
holdings at year-end was estimated at $960 million compared with over $2 billion
estimated for the Sensex constituent companies.

Our Outlook for India

India's economic growth during the fiscal year ending March 1997 is still
expected to be robust. The latest official estimate for GDP growth is 6.2%,
representing a marginal deceleration from the 6.6% recorded in fiscal 1996. The
headline figure is supported by the strong rebound forecast in agricultural
production. This year's monsoon has been described as the best in at least six
years, and the forecasted 4% agricultural growth would be a sharp improvement
over the 0.9% contraction in fiscal 1996.

Furthermore, given this potential boost to rural incomes and the importance of
the rural sector, we feel confident about end-consumer demand. Nevertheless,
corporate profitability will likely turn down this year; market earnings per
share are now expected to grow at between 5% and 10% compared to last year's
20%.

The macroeconomic picture also gives some cause for concern. It is widely
recognised that the United Front's economic mandate, for example to improve the
fiscal balance and accelerate disinvestment from state-owned companies, is being
constrained by the realities of coalition politics. We feel that a deficit for
fiscal 1997 of 5.5% is more likely than the official target of 5%. Therefore,
there seems little scope for lower interest rates over the longer-term since
government demand to finance the deficit is likely to remain strong for the
foreseeable future.

The projected deficit has been exacerbated by the lack of budgeted revenues from
privatisation. The government clearly needs to focus on raising revenue, since
there is little room to curb expenditure either at the national or state levels.
A major challenge in 1997 will be to reduce the debt burden; interest costs
currently absorb nearly 50% of government revenues. Furthermore, the experience
of 1996 has shown clearly that substantial investment in infrastructure is
needed if India is going to lift its growth rate beyond the current 5% to 6%
level.

4
<PAGE>

We believe the outlook for the Indian stock markets is positive for 1997,
however. We believe that the industrial slowdown evident through most of 1996
will be reversed by the recent sharp fall in real interest rates. As the year
ended, a market rally was gaining momentum, inspired by government promises to
take steps to support the economy and revive the capital markets.

We find it encouraging that the rally was fuelled by domestic investors rather
than foreigners, and so extended beyond the larger-capitalised index
heavyweights. Fundamentals--ample liquidity with inflation still relatively
subdued, good earnings prospects in fiscal 1998, a cheap market by historical
standards and also regionally, and an improving outlook for several important
commodity prices--also indicate that market sentiment should be improving. The
political situation could be uncertain in 1997, with the Congress under new
leader Sitaram Kesri angling for a role within the coalition government or even
at the helm of an independent administration. So although there might be
significant volatility in the short term, we believe the Indian market, and The
India Fund, are well positioned to deliver reasonable returns in the year ahead.

Key Sector Holdings as of December 31, 1996

Vehicles -- 11.6% of the Fund's total investments

After rapid advances in 1995 and 1996, the automobile sector has seen slower
growth over the past six months. This shift is hardly surprising, given the
strong correlation between vehicular demand in India and industrial demand,
which also has been weak. Over the year, the Fund reduced its exposure to the
sector and consolidated its position in companies geared to growth in the rural
sector and thus relatively insulated from industrial slackening.

Following a good monsoon, agricultural growth is expected to reach 4% this year.
With increasing rural prosperity and continued budgetary support by the
government for agriculture, we anticipate healthy demand for the tractors and
utility vehicles used to transport agricultural produce and people in India. The
Fund has increased its position in Mahindra & Mahindra, India's largest
manufacturer of utility vehicles and tractors, which we expect will show 30%
earnings growth over the next two years.

Following exceptional share price performance, Punjab Tractors, India's third
largest tractor manufacturer, has become the Fund's fourth largest holding.
During the first half of fiscal 1997, Punjab Tractors recorded 31% volume
growth, more than twice the industry average. Capacity expansion and a wider
distribution network in southern and western India is expected to drive sales
growth of over 30% in fiscal 1997 and 1998.

Pharmaceuticals -- 11.3% of the Fund's total investments

The large but fragmented Indian pharmaceutical industry is entering a period of
major restructuring. In the coming years we expect considerable merger and
acquisition activity, with the larger, more cash-rich companies buying out
smaller niche players. In the process we are likely to see Indian pharmaceutical
companies transform from being specialised intermediary and bulk drug
manufacturers to multinational companies active in the international generics
market. Domestic demand is also expected to show steady growth as income levels
rise and access to healthcare widens.

A prime example of this new genre of Indian pharmaceuticals companies is Ranbaxy
Laboratories, the Fund's fifth largest holding. Apart from being a leading
player in both domestic formulations and bulk drugs, Ranbaxy is now firmly
established in the international generics business. In the past two years, it
has grown significantly through a strategic alliance with Eli Lilly and
acquisitions of smaller

5
<PAGE>

manufacturers in Europe and the U.S. Ranbaxy plans to consolidate its domestic
market share through further acquisitions and in the process move up the value
chain away from lower-margin bulk drugs. In interim results reported last
October, Ranbaxy showed profits up 21%, buoyed by 41% growth in exports.

Extractive Industries -- 9.5% of the Fund's total investments

India's abundant bauxite reserves form the basis for a globally competitive
aluminium industry. After a sluggish performance in 1996, when consumer
destocking meant that demand did not live up to expectations, aluminium prices
are expected to recover in 1997. Global aluminium inventories are falling,
indicating that the destocking phase is coming to an end, and we feel that
consumption could reach record levels in the year ahead. One of the key drivers
for this increased usage of the light metal is demand from the world's transport
industry, based upon requirements for better fuel economy.

The Fund's largest holding in the sector is Hindalco, a fully integrated,
low-cost producer of primary aluminium and semi-fabricated aluminium products
that ranks second in terms of volume sales in India. Volume growth, improved
product mix and lower production costs, in addition to the expected recovery in
global aluminium prices, set the stage for a promising 1997 for Hindalco. Both
new purchases and price appreciation of stocks in this sector have contributed
to the Fund's increased weighting in extractive industries.

Technology -- 8.6% of the Fund's total investments

Over the past few years the Indian software industry has developed an enviable
international reputation as an inexpensive, high quality provider of customised
services. In fact, it is one of the key industries where India boasts a
significant competitive advantage in the global economy. A software programmer
in India of equal calibre to that in the U.S. is available at a substantially
lower cost. With a high-quality pool of technical skills, the use of the English
language and the time zone differential between the U.S. and India, Indian
software companies can provide, through satellite links, real-time software
solutions to U.S. clients.

Recognising these advantages, several of the largest international software
companies have established research and development centres in Bangalore,
India's "Silicon Valley." Revenues in this sector are booming and, despite a
slowing economy, domestic software sales were up 62% and exports grew 61% during
the first half of fiscal 1997.

The Fund's major holding in the sector is NIIT, the largest computer training
company with a 40% share in the information technology (IT) market. IT has
become a career of choice for educated Indian youth. Strong demand for courses
at NIIT's 300 training centres drove the 53% growth in revenues and 43% profits
growth reported for fiscal 1996. From an initial focus on software training,
NIIT is aggressively positioning itself in the instructional software market,
exporting products to major IT training companies in the U.S. The non-cyclical
nature of its business and the dollar-denominated revenues are additional
attractive features of this investment.

Petroleum -- 6.6% of the Fund's total investments

After keeping pace with GDP growth over the past 15 years, growth in oil
consumption is now running ahead, fired by industrial expansion, a rapid
increase in vehicular transport, and higher dependence on oil-burning power
plants. Integrated oil companies with refining and marketing operations are the
primary beneficiaries of this spurt in demand.

6
<PAGE>

Pricing in the oil sector is government-regulated and allows a 12% post-tax
return on assets, a policy that insulates domestic refiners from volatility in
the international oil price, interest rates and foreign exchange rates. Under
this pricing regime, we expect oil refining companies to average 20% earnings
growth. The Indian government is currently reviewing proposals for deregulation
of domestic oil pricing and we believe profit margins will rise significantly
when prices are eventually liberalised.

The Fund's third largest position is in Hindustan Petroleum Corporation (HPCL),
which is India's second largest integrated refining and marketing company in
terms of turnover, and the country's third largest in terms of market share.
HPCL is planning a major pipeline expansion and has exclusive marketing rights
in two joint venture refinery projects. We believe that the extensive marketing
network and depreciated refining assets will give HPCL an immense competitive
advantage over new entrants once the oil sector is deregulated.

Electronics & Electrical -- 6.6% of the Fund's total investments

India remains a country with large pockets of chronic power shortages, which
disrupt both industrial activity and the day-to-day to lives of ordinary people.
Peak energy shortfall is around 25%, yet continued industrial expansion in India
is expected to result in 9% annual growth in electricity demand over the next
five years. Recognising that India's growth potential is constrained, the
government has introduced important measures to attract foreign and domestic
private investment in the power sector.

After a slow start, India's post-liberalisation thrust into the power sector
appears to have finally taken off. In the southern state of Andhra Pradesh, the
first of several fast-track power plants is now operational, and construction
work for the multi-billion dollar Enron power plant in Maharashtra is
proceeding. With a long pipeline of both current and expected power projects, as
well as upgrades of existing government-run power plants, we expect healthy
demand for vendors of power equipment and have therefore maintained the Fund's
exposure to the electrical equipment industry.

The Fund's largest holding in the sector, Asea Brown Boveri (ABB), is one of
India's largest manufacturers of power generation equipment. During the six
months ended June 1996, the company reported net profit growth of 32% on the
back of a 49% increase in sales. With a healthy order book amounting to one
year's sales, we expect the company to maintain solid profit growth in the
coming years.

Other Significant Holdings

The Fund's largest holding is Mahanagar Telephone Nigam Limited (MTNL), the
government-controlled fixed-line telecom service provider in the prime franchise
areas of Delhi and Mumbai. These two metropolitan cities account for 18% of the
total subscriber base and 28% of telecom revenues in India, and we expect these
to grow over 10% per annum. MTNL is likely to maintain its market leadership,
despite increasing competition, due to the advantage of its existing
infrastructure and low cost of providing additional lines, backed by a strong
balance sheet and cash flow position. Given these advantages, we feel MTNL can
deliver in excess of 400,000 new lines per year. In line with expectations, the
company reported first-half fiscal earnings growth of 35%.

The Fund's ninth largest holding, Hindustan Lever, a 51%-owned subsidiary of the
Anglo-Dutch group Unilever, is India's largest private sector company in terms
of market capitalisation. Along with the soon-to-be-merged group company, Brooke
Bond Lipton, Hindustan Lever is the premier consumer products company in India

7
<PAGE>

with dominant positions in such segments as personal and fabric wash, processed
foods and ice cream. In the recent weaker economic environment, the company's
noncyclical product characteristics insulate it to some extent from a demand
slowdown. We forecast earnings to grow at a consistent 20% per annum over the
next three years.

Oriental Bank of Commerce (OBC), a medium-sized, North India-based,
government-controlled bank with an uninterrupted profit record, is The India
Fund's tenth largest holding. OBC combines the best features of private and
government banks. Like private banks, OBC's asset quality is among the best in
the industry, and deposit/loan growth rates and productivity have been
maintained at above average levels. OBC also boasts the traditional advantages
of a government bank, such as a low-cost deposit base and large branch network.
For the first half of fiscal 1997, the bank reported 21% net profits growth.

Barclays Global Investors
London
January 17, 1997

8
<PAGE>

Schedule of Investments The India Fund, Inc.
December 31, 1996

<TABLE>
<CAPTION>
Number Percent
of Shares Security of Holdings Cost Value
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
INDIA 94.76%
====================================================================================================================================
COMMONSTOCKS 91.27%
====================================================================================================================================

Cement 3.25%
27,095 Associated Cement Companies ....................................... $ 2,179,757 $ 925,305
78,100 Chettinad Cement .................................................. 409,108 213,198
133,000 Dalmia Cement Bharat .............................................. 1,583,260 907,660
395,100 Gujarat Ambuja Cement ............................................. 4,013,901 2,591,812
228,001 Gujarat Ambuja Cement GDR ......................................... 2,088,102 1,960,809
160,000 India Cement GDR .................................................. 676,000 360,000
69,232 Jaiprakash Industries+ ............................................ 193,469 33,652
940,700 Mysore Cements .................................................... 2,132,391 524,067
369,700 Shree Cement ...................................................... 906,336 235,825
---------- ---------
14,182,324 7,752,328
---------- ---------
Chemicals 0.87%
57,450 Atul Products ..................................................... 127,677 53,209
6,020 Caprihans India ................................................... 25,571 8,888
515,500 ICI (India) ....................................................... 2,743,334 1,967,228
2,100 India Glycols ..................................................... 4,863 1,445
25,900 Indian Organic Chemicals+ ......................................... 72,580 8,730
137,000 JF Laboratories+ .................................................. 208,036 19,462
200 Punjab Alkalies ................................................... 448 197
54,750 Tuticorin Alkali Chemicals & Fertilizers+ ......................... 102,205 17,996
----------- ----------
3,284,714 2,077,155
---------- ---------
Construction & Building Materials 0.06%
205,500 Novopan Industries ................................................ 580,683 157,703
----------- ----------
Consumer Miscellaneous 1.32%
400,000 Hytaisun Magnetics+ ............................................... 464,758 32,312
41,500 Mideast (India) ................................................... 105,057 12,138
100 Nahar Spinning Mills .............................................. 2,587 615
177,800 Namaste Exports+ .................................................. 662,410 39,621
459,650 Premier Vinyl Flooring ............................................ 776,120 230,465
25,975 Surya Roshni ...................................................... 68,907 19,535
951,900 Timex Watches+ .................................................... 2,267,836 914,779
770,800 Titan Industries .................................................. 3,811,716 1,894,794
----------- ----------
8,159,391 3,144,259
---------- ----------
Consumer Non-Durable 4.81%
376,750 Hindustan Lever ................................................... 8,353,151 8,290,599
346,100 ITC ............................................................... 2,889,203 $3,186,723
----------- ----------
11,242,354 11,477,322
---------- ----------
</TABLE>

9
<PAGE>

Schedule of Investments (continued) The India Fund, Inc.
December 31, 1996

Diversified Industries 3.01%
8 Century Textiles .................................................. $ 2,509 $ 438
395,000 DCM Shriram Consolidated .......................................... 2,601,209 797,702
125,000 DCM Shriram Consolidated Warrants, (exp. date 11/08/99)*+ ......... 0 0
200,150 EID Parry (India) ................................................. 1,761,912 395,840
170,600 Grasim Industries ................................................. 3,580,508 1,976,869
192,900 HMG Industries .................................................... 394,439 37,613
422,850 Indian Rayon ...................................................... 8,317,544 3,498,230
56,000 Indian Rayon GDR .................................................. 420,000 476,000
1,400 J K Corporation ................................................... 12,456 2,125
10,300 Kesoram Industries ................................................ 48,971 11,648
---------- ----------
17,139,548 7,196,465
---------- ----------
Electricity 0.64%
439,000 CESC Ltd. ......................................................... 3,614,573 682,957
439,000 CESC Ltd Class B Warrants, (exp. date 9/30/99)*+ .................. 2,982,038 213,997
185,450 Tata Power Co. .................................................... 1,045,814 645,459
---------- ----------
7,642,425 1,542,413
---------- ----------
Electronics & Electrical 6.56%
573,333 Asea Brown Boveri ................................................. 9,307,796 9,246,797
250,000 Asian Electronics ................................................. 1,884,571 746,518
1,226,600 Crompton Greaves .................................................. 7,977,610 4,100,056
150,000 Crompton Greaves GDR+ ............................................. 645,000 596,250
604,250 KEC International ................................................. 2,481,425 935,830
3,850 Siemens India ..................................................... 85,667 45,631
---------- ----------
22,382,069 15,671,082
---------- ----------
Engineering 0.80%
657,150 Advani Oerlikon ................................................... 1,796,760 896,946
108,100 Kabra Extrusiontechnik ............................................ 522,090 174,646
7,500 Lakshmi Machine Works ............................................. 3,028,735 825,209
2,700 Larsen & Toubro ................................................... 21,122 16,696
----------- ----------
5,368,707 1,913,497
---------- ----------
</TABLE>

10
<PAGE>

Schedule of Investments (continued) The India Fund, Inc.
December 31, 1996

Extractive Industries 9.53%
563,725 Hindalco Industries ............................................... $11,512,184 $10,286,804
60,000 Hindalco Industries GDS ........................................... 1,063,000 1,477,500
7,346,200 Hindustan Zinc .................................................... 2,827,355 1,677,962
631,750 Indian Aluminium .................................................. 3,977,572 2,714,413
505,000 Indian Aluminium GDR .............................................. 3,662,906 2,550,250
590,900 National Aluminium Company ........................................ 545,505 493,788
541,580 Sesa Goa .......................................................... 8,257,762 3,560,248
---------- ----------
31,846,284 22,760,965
---------- ----------
Fertilizers 1.29%
8,625,500 Chambal Fertilizers & Chemicals ................................... 7,359,937 3,063,374
11,900 Nagarjuna Fertilizer & Chemicals .................................. 13,061 5,237
6,200 Southern Petrochemicals Industrial Corporation .................... 24,273 5,570
---------- ----------
7,397,271 3,074,181
---------- ----------
Finance 3.41%
259,500 Autoriders Finance** .............................................. 1,400,125 151,796
3,689,300 Oriental Bank of Commerce ......................................... 9,048,405 7,990,058
---------- ----------
10,448,530 8,141,854
---------- ----------
Food 0.18%
290,200 American Dry Fruits+ .............................................. 587,817 99,832
450 Brooke Bond Lipton India .......................................... 7,356 4,199
1,350 Nestle India ...................................................... 12,016 8,202
124,000 Praj Industries ................................................... 962,734 289,794
250,000 Rahul Dairy & Allied Products*+ ................................... 80,041 19,150
700 Rank Aqua Estates+ ................................................ 1,784 62
766 Western Hatcheries ................................................ 3,418 798
---------- ----------
1,655,166 422,037
---------- ----------
Healthcare 0.01%
200,000 Trans Plastics*+ .................................................. 163,258 15,599
---------- ----------
Hotels & Leisure 0.57%
70,250 Indian Hotels ..................................................... 1,184,614 1,360,482
Household Appliances 0.70%
133,200 BPL Refrigeration ................................................. 203,759 45,451
381,700 IFB Industries .................................................... 3,069,891 471,543
2,700 Kalyani Sharp+ .................................................... 3,712 1,429
</TABLE>

11
<PAGE>

Schedule of Investments (continued) The India Fund, Inc.
December 31, 1996

Household Appliances (continued)
150 MIRC Electronics .................................................. $ 1,395 $ 270
12,200 Phil Corporation .................................................. 33,502 9,889
30 Phillips India .................................................... 29 64
1,082,100 Samtel Colour ..................................................... 2,592,636 423,496
3,747 Videocon Appliances ............................................... 22,001 2,474
17,000 Videocon International ............................................ 55,776 17,994
78 Voltas ............................................................ 364 73
519,400 Whirlpool of India+ ............................................... 2,810,701 693,739
---------- ----------
8,793,766 1,666,422
---------- ----------

Packaging 0.92%
660,320 Flex Industries ................................................... 4,123,925 1,471,465
77,310 Flex Industries Warrants, (exp. date 11/30/97)*+ .................. 0 151,282
443,300 Peacock Industries ................................................ 720,028 196,954
588,100 Polyplex Corporation .............................................. 2,042,135 331,728
700 Sharp Industries+ ................................................. 1,131 185
386,450 Universal Prime Aluminium Ltd+ .................................... 612,377 37,676
---------- ----------
7,499,596 2,189,290
---------- ----------

Petroleum Related 6.60%
1,236,700 Hindustan Petroleum Corporation ................................... 15,594,791 11,678,031
518,400 Indian Petrochemicals ............................................. 1,976,879 1,696,713
110,000 Indian Petrochemicals GDR ......................................... 968,750 1,265,000
1,316,350 Madras Refineries ................................................. 4,899,545 1,116,514
---------- ----------
23,439,965 15,756,258
---------- ----------

Pharmaceuticals 11.29%
636,800 Dr. Reddy's Laboratories .......................................... 5,619,953 2,793,760
500,000 Dr. Reddy's Laboratories-GDR ...................................... 4,191,687 2,062,500
474,850 E. Merck (India) .................................................. 3,340,536 2,053,495
169,950 German Remedies ................................................... 1,611,294 790,575
318,550 Glaxo (India) ..................................................... 2,261,477 2,271,554
127,000 Merind ............................................................ 1,566,109 449,276
718,800 Orchid Chemicals & Pharmaceuticals ................................ 2,250,016 2,474,755
800 Pfizer India ...................................................... 9,967 4,677
629,950 Ranbaxy Laboratories .............................................. 12,882,802 10,265,202
182,800 Rhone-Poulenc India ............................................... 2,326,609 3,137,133
100,000 Sun Pharmaceuticals ............................................... 582,057 654,596
---------- ----------
36,642,507 26,957,523
---------- ----------
</TABLE>

12
<PAGE>
Schedule of Investments (continued) The India Fund, Inc.
December 31, 1996

Pulp & Paper 0.93%
1,098,100 Andhra Pradesh Rayons ............................................. $ 3,215,730 $1,108,806
11,400 Ballarpur Industries .............................................. 82,728 19,370
250,000 Orient Paper Industries ........................................... 1,863,346 564,067
1,250 Pudumjee Pulp & Paper ............................................. 10,275 1,880
835,000 Rama Newsprint+ ................................................... 674,424 119,784
458,200 Seshasayee Papers ................................................. 1,281,758 403,318
---------- ----------
7,128,261 2,217,225
---------- ----------
Steel 1.32%
9,300 Essar Steel ....................................................... 35,932 5,259
300,000 Isibars ........................................................... 951,953 267,409
9,700 Jindal Strips ..................................................... 128,604 24,993
1,700 Kirloskar Ferrous Industries+ ..................................... 1,842 391
1,054,100 Steel Authority of India .......................................... 2,150,336 588,710
200,000 Steel Authority of India GDR ...................................... 2,274,875 1,922,600
72,900 Tata Iron & Steel ................................................. 555,115 340,335
---------- ----------
6,098,657 3,149,697
---------- ----------
Steel Products 0.31%
800 Choksi Tubes ...................................................... 1,906 1,415
192,300 Rajinder Pipes .................................................... 277,188 38,299
310,000 Saw Pipes ......................................................... 2,383,953 523,287
649,100 Super Forging+ .................................................... 991,359 189,848
---------- ----------
3,654,406 752,849
Technology 8.65%
1,617,800 Digital Equipment (India) ......................................... 3,460,579 3,785,382
200,000 Infosys Technologies .............................................. 3,133,989 4,289,693
100,000 Mastek Limited .................................................... 558,204 374,652
1,272,700 NIIT .............................................................. 6,946,592 9,181,875
323,300 Pentafour Software and Exports .................................... 1,316,324 964,497
961,780 Satyam Computer ................................................... 1,967,314 1,018,040
966,500 Silverline Industries ............................................. 1,365,216 491,326
705,200 Square D Software ................................................. 1,160,741 550,017
---------- ----------
19,908,959 20,655,482
---------- ----------

Telecom 5.90%
2,135,000 Mahanagar Telephone Nigam Limited ................................. 13,044,971 13,678,273
15,700 Videsh Sanchar Nigam .............................................. 580,949 415,460
---------- ----------
13,625,920 14,093,733
---------- ----------
</TABLE>

13
<PAGE>

Schedule of Investments (continued) The India Fund, Inc.
December 31, 1996

Telecom Equipment 0.44%
600 Bhagyanagar Metals ................................................ $ 1,455 $ 368
175,000 MSL Industries .................................................... 728,724 341,226
200,000 Punjab Wireless ................................................... 2,306,295 420,334
355,400 Telephone Cables .................................................. 1,658,353 98,997
95,900 Vindhya Tele-Links ................................................ 1,090,879 192,601
---------- ----------
5,785,706 1,053,526
---------- ----------
Textiles - Cotton 2.46%
1,290,750 Arvind Mills ...................................................... 4,512,264 4,458,301
111,500 Arvind Mills GDR .................................................. 491,865 507,325
187,550 Coats Viyella India ............................................... 1,163,471 292,557
133,350 HP Cotton Textile Mills ........................................... 323,524 70,575
385,650 Morarjee Goculdas Spinning & Weaving .............................. 2,270,227 554,842
450 Vardhaman Spinning & General Mills ................................ 3,201 886
---------- ----------
8,764,552 5,884,486
---------- ----------
Textiles - Synthetic 2.52%
1,932,000 DCL Polyesters .................................................... 3,838,801 591,978
1,600 Ester Industries+ ................................................. 1,681 579
366,300 Haryana Petrochemicals+ ........................................... 433,857 24,998
942,500 JCT ............................................................... 1,830,861 265,160
552,809 Reliance Industries ............................................... 3,127,458 3,172,107
125,000 Reliance Industries GDR ........................................... 1,374,375 1,500,000
1,167,300 Sanghi Polyesters ................................................. 2,177,048 356,043
197,800 Shree Rajasthan Syntex ............................................ 841,054 108,818
5,800 SRF ............................................................... 15,691 4,968
---------- ----------
13,640,826 6,024,651
---------- ----------
Transport 0.21%
1,521,800 Modiluft .......................................................... 2,707,661 194,994
118,700 NEPC Micon ........................................................ 249,602 62,491
1,374,000 NEPC Micon GDR .................................................... 4,062,820 240,450
---------- ----------
7,020,083 497,935
---------- ----------
Vehicles 10.33%
10,700 Bajaj Auto ........................................................ 221,819 266,755
4,900 Hindustan Motors .................................................. 6,448 2,505
592,950 Mahindra & Mahindra ............................................... 4,399,889 5,286,174
51,800 Majestic Auto ..................................................... 522,438 87,295
1,000,000 Punjab Tractors ................................................... 6,987,757 11,476,323
</TABLE>

14
<PAGE>

Schedule of Investments (continued) The India Fund, Inc.
December 31, 1996

Vehicles (continued)
284,260 Tata Engineering & Locomotive ..................................... $ 3,992,280 $2,692,156
551,650 TVS Suzuki ........................................................ 3,503,054 4,849,603
---------- ----------
19,633,685 24,660,811
---------- ----------
Vehicle Components 2.38%
113,525 Antifriction Bearings Corporation ................................. 449,115 184,676
231,650 Auto Corp of Goa .................................................. 1,194,182 367,801
136,425 FAG Precision Bearings ............................................ 366,900 330,612
100 Gleitlager (India) ................................................ 96 21
676,500 Goetze India ...................................................... 1,951,924 1,035,478
348,500 Kirloskar Oil Engines ............................................. 1,652,136 679,526
100 Laser Lamps ....................................................... 141 50
4,390 Motor Industries Company .......................................... 615,662 697,020
950,000 Patheja Forgings & Auto Parts ..................................... 2,747,362 975,139
15,995 SKF Bearings India ................................................ 1,606,946 1,147,274
37,500 Wartsila Diesel India ............................................. 157,575 256,703
---------- ----------
10,742,039 5,674,300
---------- ----------
Water 0.00%
100 EPC Irrigation .................................................... 297 33
----------- -----------
TOTAL COMMON STOCKS 335,056,563 217,941,563
=========== ===========
</TABLE>

<TABLE>
<CAPTION>
Par Value Percent
(000) Security of Holdings Cost Value
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>

====================================================================================================================================
BONDS 3.49%
====================================================================================================================================

Construction & Building Materials 0.03%
3,000 INR Bharat Earth Movers NCD 12.50%, 02/26/02* ......................... $ 96,065 $ 70,306
----------- -----------

Diversified Industrials 0.13%
4,250 INR DCM Shriram NCD 13.00%, 11/6/01* .................................. 136,222 106,037
4,125 INR DCM Shriram NCD 13.00%, 11/6/02* .................................. 132,216 102,918
4,125 INR DCM Shriram NCD 13.00%, 11/6/03* .................................. 132,216 102,918
----------- -----------
400,654 311,873
----------- -----------

Pulp & Paper 1.00%
$ 2,500 Ballarpur Industries Convertible 4.00%, 04/01/99 .................. 2,703,676 2,387,500
----------- ----------
</TABLE>

15
<PAGE>

Schedule of Investments (continued) The India Fund, Inc.
December 31, 1996

Steel 1.02%
$ 2,500 Jindal Strips Convertible 4.25%, 03/31/99 ......................... $ 2,740,809 $2,450,000
----------- ----------
Vehicles 1.31%
$ 3,000 Mahindra & Mahindra Convertible 5.00%, 07/09/01 ................... 3,072,846 3,127,500
----------- ----------
TOTAL BONDS 9,014,050 8,347,179
----------- ----------
TOTAL INDIA 344,070,613 226,288,742
----------- ----------

====================================================================================================================================
SHORT TERM OBLIGATIONS 5.24%
====================================================================================================================================

$ 8,375 Bank Of Montreal Fixed Deposit 5.375%, 01/08/97 ................... $ 8,374,874 $8,374,874
$ 4,135 Bank Of New York Call Deposit 6.775%, 01/02/97 .................... 4,134,905 4,134,905
----------- ----------
TOTAL SHORT TERM OBLIGATIONS 12,509,779 12,509,779
------------ ------------
TOTAL INVESTMENTS*** 100.00% $356,580,392 $238,798,521
============ ============
</TABLE>

- ---------------
Footnotes and Abbreviations

GDR - Global Depository Receipt
GDS - Global Depository Security
INR - Indian Rupee
NCD - Non Convertible Debenture

+ Non-income producing security.
* At fair value as determined under the supervision of the Board of
Directors.
** Passive Foreign Investment Company.
*** Aggregate cost for Federal income tax purposes is $356,763,367.
The aggregate gross unrealized appreciation (depreciation) for all
securities is as follows:

Excess of value over tax cost $14,331,019
Excess of tax cost over value (132,295,865)
------------
($117,964,846)
=============

See accompanying notes to financial statements.

<PAGE>

Statement of Assets and Liabilities The India Fund, Inc.
December 31, 1996

<TABLE>

<S> <C>
Assets
Investments, at value (Cost $356,580,392) ...................................... $ 238,798,521
Cash (including Indian rupees of $5,171,474 with a cost of $5,187,761) ........ 24,563,502
Receivables:
Dividends and reclaims of excess taxes withheld .......................... 588,504
Interest (net of withholding tax of $3,266) .............................. 395,118
Securities sold .......................................................... 925,261
Unamortized organization costs ................................................. 138,591
Prepaid expenses ............................................................... 97,681
-----------
Total Assets ............................................................. 265,507,178
-----------
Liabilities
Payable for securities purchased ............................................... 6,895,150
Distribution payable ........................................................... 340,071
Due to Investment Manager ...................................................... 227,893
Due to Administrator ........................................................... 48,597
Accrued expenses ............................................................... 839,312
-----------
Total Liabilities ........................................................ 8,351,023
-----------
Net Assets ..................................................................... $ 257,156,155
===========

NET ASSET VALUE PER SHARE ($257,156,1551/434,007,133) .......................... $ 7.56
===========

Net assets consist of:
Capital stock, $0.001 par value; 34,007,133 shares issued
and outstanding (100,000,000 shares authorized) .......................... $ 34,007
Paid-in capital ................................................................ 473,199,468
Distribution in excess of net investment income ................................ (180,772)
Accumulated net realized loss on investments ................................... (97,280,421)
Net unrealized depreciation in value of investments and on translation of
other assets and liabilities denominated in foreign currency ............. (118,616,127)
-----------
$ 257,156,155
===========
</TABLE>

See accompanying notes to financial statements.

<PAGE>

Statement of Operations The India Fund, Inc.
For the Year Ended December 31, 1996

<TABLE>

<S> <C> <C>
Investment Income
Dividends (net of Indian taxes withheld of $834,882) ........................... $ 4,750,714
Interest (net of Indian taxes withheld of $23,158) ............................. 1,940,573
------------
Total investment income ..................................................... 6,691,287
------------
Expenses
Management fees .............................................. $ 3,271,198
Custodian fees ............................................... 1,580,379
Administration fees .......................................... 622,165
Insurance..................................................... 206,245
Legal fees.................................................... 174,901
Audit fees.................................................... 137,999
Transfer agent fees .......................................... 84,000
Amortization of organizational costs ......................... 64,701
Printing...................................................... 51,000
Directors' fees .............................................. 49,542
NYSE fees .................................................... 32,341
Interest expense.............................................. 21,427
Miscellaneous expenses........................................ 13,001
------
Gross expenses ............................................................... 6,308,899
Less: Custody fee waiver ..................................................... (286,498)
------------
Net expenses ................................................................. 6,022,401
------------
Net investment income ........................................................ 668,886
------------
Net Realized and Unrealized Gain (Loss) on Investments, Foreign Currency
Holdings and Translations of Other Assets and Liabilities Denominated in
Foreign Currency:
Net realized loss on:
Security transactions .................................................... (69,929,361)
Foreign currency related transactions .................................... (467,015)
------------
(70,396,376)

Net change in unrealized appreciation in value of investments, foreign currency holdings
and translation of other assets and liabilities denominated in foreign currency. 23,283,691
------------
Net realized and unrealized loss on investments, foreign currency holdings
and translation of other assets and liabilities denominated in foreign currency (47,112,685)
------------
Net decrease in net assets resulting from operations ........................... $ (46,443,799)
=============
</TABLE>

See accompanying notes to financial statements.

18
<PAGE>

Statement of Changes in Net Assets The India Fund, Inc.

<TABLE>
<CAPTION>
For the Year For the Year
Ended Ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income (loss) ................................................ $ 668,886 $ (1,438,232)
Net realized loss on investments and foreign currency
related transactions .................................................. (70,396,376) (25,489,363)
Net change in unrealized appreciation (depreciation) in value of investments,
foreign currency holdings and translation of other assets and
liabilities denominated in foreign currency ........................... 23,283,691 (142,373,403)
------------- -------------
Net decrease in net assets resulting from operations .................. (46,443,799) (169,300,998)
------------- -------------
Distribution to shareholders
Net investment income ($0.01 per share) ..................................... (340,071) --
------------- -------------
Decrease in net assets from distributions ............................. (340,071) --
------------- -------------
Total decrease in net assets ................................................ (46,783,870) (169,300,998)

Net Assets
Beginning of year ........................................................... 303,940,025 473,241,023
------------- -------------

End of year ................................................................. $ 257,156,155 $ 303,940,025
============= =============
</TABLE>

See accompanying notes to financial statements.

19
<PAGE>

Financial Highlights The India Fund, Inc.
For a Share Outstanding throughout Each Period

<TABLE>
<CAPTION>
For the Period
February 23,1994
(Commencement
For the For the of Operations)
Year Ended Year Ended Through
December 31, 1996 December 31, 1995 December 31, 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
Per Share Operating Performance
Net asset value, beginning of period ................................ $8.94 $13.92 $3.98(1)
------------- ------------- -------------

Net investment income (loss) ........................................ 0.02 (0.05) (0.01)
------------- ------------- -------------

Net realized and unrealized gains (loss) on investments,
foreign currency holdings, and translation of other
assets and liabilities denominated in foreign currency ........... (1.39) (4.93) 0.08
------------- ------------- -------------

Net increase (decrease) from investment operations .................. (1.37) (4.98) 0.07
------------- ------------- -------------

Less Dividends and Distributions
Dividends from net investment income ............................. (0.01) -- --
Distributions from net realized gains ............................ -- -- (0.13)
------------- ------------- -------------

Total dividends and distributions ................................... (0.01) -- (0.13)
------------- -------------

Net asset value, end of period ...................................... $7.56 $8.94 $13.92
============= ============= =============

Per share market value, end of period ................................. $7.625 $8.875 $10.75
Total Investment Return Based on Market Value(2)....................... (14.08)% (17.44)% (23.32)%

Ratios/Supplemental Data
Net assets, end of period (in 000s) ................................. $257,156 $303,940 $473,241
Ratios of expenses to average net assets(4) ......................... 2.03% 2.03% 1.98 %(3)
Ratios of net investment income to average net assets4 .............. 0.22% 0.38% 0.06%(3)
Portfolio turnover .................................................. 33.57% 25.28% 20.93%
Average commission rate paid(5) ..................................... $0.0176 N/A N/A
</TABLE>

- ---------------
1 Initial public offering price $15.00 per share less underwriting discount
of $0.98 per share and offering costs of $0.04 per share.
2 Total investment return is calculated assuming a purchase of common stock
at the current market price on the first day and a sale at the current
market price on the last day of each period reported, except that for the
period ended December 31, 1994, total investment return is based on a
beginning of period price of $14.02 (initial offering price of $15.00 less
underwriting discount of $0.98). Dividends and distributions, if any, are
assumed, for purposes of this calculation, to be reinvested at prices
obtained under the Fund's dividend reinvestment plan. Total investment
return does not reflect brokerage commissions or sales charges and is not
annualized.
3 Annualized.
4 Includes expense waivers by the Custodian. If such expenses had not been
waived, the ratio of expenses to average net assets and the ratio of net
investment income to average net assets would have been 2.12% and 0.13%,
respectively, for the year ended December 31, 1996.
5 Computed by dividing the total amount of brokerage commissions paid by the
total number of shares of investment securities purchased and sold during
the period for which commissions were charged as required by the SEC for
fiscal years beginning on or after September 1, 1995.

See accompanying notes to financial statements.

20
<PAGE>

Notes to Financial Statements The India Fund, Inc.
December 31, 1996

NOTE A: Summary of Significant Accounting Policies

The India Fund, Inc. (the "Fund") was incorporated in Maryland on December 27,
1993, and commenced operations on February 23, 1994. The Fund has established a
branch in the Republic of Mauritius. The Fund is registered under the Investment
Company Act of 1940, as amended, as a closed-end, non-diversified management
investment company. Prior to commencing its operations on February 23, 1994, the
Fund had no activities other than the sale of 7,133 shares of capital stock to
Oppenheimer & Co., Inc. ("Oppenheimer"). At December 31, 1996, Oppenheimer owned
7,141 shares of the Fund's capital stock.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.

Significant accounting policies are as follows:

Portfolio Valuation. Investments are stated at value in the accompanying
financial statements. All securities for which market quotations are readily
available are valued at

(i) the last sales price prior to the time of determination, if there was a
sale on the date of determination,
(ii) at the mean between the last current bid and asked prices if there was no
sales price on such date and bid and asked quotations are available, and
(iii) at the bid price if there was no sales price on such date and only bid
quotations are available.

Securities that are traded over-the-counter are valued, if bid and asked
quotations are available, at the mean between the current bid and asked prices.
Securities for which sales prices and bid and asked quotations are not available
on the date of determination may be valued at the most recently available prices
or quotations under policies adopted by the Board of Directors. Investments in
short-term debt securities having a maturity of 60 days or less are valued at
amortized cost which approximates market value. Securities for which market
values are not readily ascertainable, which totaled $782,207 (0.30% of net
assets) at December 31, 1996, are carried at fair value as determined in good
faith by or under the supervision of the Board of Directors. The net asset value
per share of the Fund is calculated weekly and at the end of each month.

Investment Transactions and Investment Income. Investment transactions are
accounted for on the trade date. The cost of investments sold is determined by
use of the specific identification method for both financial reporting and
income tax purposes. Interest income is recorded on the accrual basis; dividend
income is recorded on the ex-dividend date or when known. The collectibility of
income receivable from Indian securities is evaluated periodically, and any
resulting allowances for uncollectible amounts are reflected currently in the
determination of investment income.

Tax Status. No provision is made for U.S. Federal income or excise taxes as it
is the Fund's intention to continue to qualify as a regulated investment company
and to make the requisite distributions to its shareholders that will be
sufficient to relieve it from all or substantially all Federal income and excise
taxes.

At December 31, 1996, the Fund had a net capital loss carryover of $90,041,406
which is available to offset future net realized gains on securities
transactions to the extent provided for in the Internal Revenue Code. Of the
aggregate capital losses, $24,657,681 will expire in the year 2003 and
$65,383,725 will expire in the year 2004.

21
<PAGE>

Notes to Financial Statements (continued) The India Fund, Inc.
December 31, 1996

The Fund's capital losses and foreign exchange losses incurred after October 31,
1996, but before December 31, 1996, are deemed to arise on the first business
day of the following year. The Fund incurred and elected to defer such capital
losses and foreign exchange losses of $7,056,040 and $98,879, respectively.

Foreign Currency Translation. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts are translated into U.S. dollars on
the following basis:

(i) market value of investment securities, assets and liabilities at the
prevailing rates of exchange on the valuation date; and
(ii) purchases and sales of investment securities and investment income at the
relevant rates of exchange prevailing on the respective dates of such
transactions.

Securities denominated in currencies other than U.S. dollars are subject to
changes in value due to fluctuations in foreign exchange.

The Fund generally does not isolate the effect of fluctuations in foreign
exchange rates from the effect of fluctuations in the market prices of
securities. However, the Fund does isolate the effect of fluctuations in foreign
currency rates when determining the gain or loss upon the sale of foreign
currency denominated debt obligations pursuant to U.S. Federal income tax
regulations; such amounts are categorized as foreign currency gains or losses
for both financial reporting and federal income tax purposes. The Fund reports
certain foreign exchange realized gains and losses on foreign currency related
transactions as components of realized gains and losses for financial reporting
purposes, whereas such components are treated as ordinary income for Federal
income tax purposes.

Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin as a result of,
among other factors, the level of governmental supervision and regulation of
foreign securities markets and the possibility of political or economic
instability, and the fact that foreign securities markets may be smaller and
have less developed and less reliable settlement and share registration
procedures.

Distribution of Income and Gains. The Fund intends to distribute annually to
shareholders, substantially all of its net investment income, including foreign
currency gains, and to distribute annually any net realized gains after the
utilization of available capital loss carryovers. An additional distribution may
be made to the extent necessary to avoid payment of a 4% Federal excise tax.

Distributions to shareholders are recorded on the ex-dividend date. The amount
of dividends and distributions from net investment income and net realized gains
are determined in accordance with Federal income tax regulations, which may
differ from generally accepted accounting principles. These "book/tax"
differences are either considered temporary or permanent in nature. To the
extent these differences are permanent in nature, such amounts are reclassified
within the capital accounts based on their Federal tax-basis treatment;
temporary differences do not require reclassification. Dividends and
distributions which exceed net investment income and net realized capital gains
for financial reporting purposes but not for tax purposes are reported as
dividends in excess of net investment income and net realized capital gains. To
the extent they exceed net investment income and net realized gains for tax
purposes, they are reported as distributions of additional paid-in capital.

22
<PAGE>

Notes to Financial Statements (continued) The India Fund, Inc.
December 31, 1996

During the period ended December 31, 1996, the Fund reclassified $467,015 from
accumulated net realized loss on investments to undistributed net investment
income as a result of permanent book and tax differences primarily relating to
realized foreign currency losses during the year ended December 31, 1996. Net
investment income and net assets were not affected by the reclassifications.

Other. Costs of $322,971 incurred by the Fund in connection with its
organization are being amortized on a straight-line basis over a five-year
period beginning with the commencement of operations of the Fund.

NOTE B: Management, Investment Advisory and Administrative Services

Advantage Advisers, Inc., a subsidiary of Oppenheimer, serves as the Fund's
Investment Manager under the terms of a management agreement (the "Management
Agreement"). Barclays Global Investors International Inc. (formerly known as BZW
Investment Management, Inc.) serves as the Fund's Investment Adviser under the
terms of an investment advisory agreement (the "Advisory Agreement"), and
Infrastructure Leasing & Financial Services Limited serves as the Fund's Country
Adviser under the terms of an advisory agreement (the "Country Advisory
Agreement"). Pursuant to the Management Agreement, the Investment Manager will
supervise the Fund's investment program, including advising and consulting with
the Fund's Investment Adviser. Pursuant to the Advisory Agreement, the
Investment Adviser will be responsible on a day-to-day basis for investing the
Fund's portfolio in accordance with its investment objective and policies.
Pursuant to the Country Advisory Agreement, the Country Adviser will furnish
advice and make recommendations to the Investment Adviser regarding the
purchase, sale or holding of particular Indian securities, provide research and
statistical data to the Fund and assist in the implementation and execution of
investment decisions. For its services, the Investment Manager receives monthly
fees at an annual rate of 1.10% of the Fund's average weekly net assets and the
Investment Adviser and Country Adviser each receive from the Investment Manager
monthly fees at an annual rate of 0.30% of the Fund's average weekly net assets.
For the year ended December 31, 1996, fees earned by the Investment Manager
amounted to $3,271,198.

Oppenheimer serves as the Fund's Administrator (the "Administrator") pursuant to
the terms of an Administration Agreement. For its services, the Administrator
receives a monthly fee at an annual rate of 0.20% of the Fund's average weekly
net assets. For the year ended December 31, 1996, these fees amounted to
$594,764. The Administrator subcontracts certain of these services to PFPC Inc.
In addition, Multiconsult Ltd. (the "Mauritius Administrator") provides certain
administrative services relating to the operation and maintenance of the Fund in
Mauritius. The Mauritius Administrator receives a monthly fee of $1,500 and is
reimbursed for certain additional expenses. For the year ended December 31,
1996, fees and expenses of the Mauritius Administrator amounted to $27,401.

The Fund pays each of its directors who is not a director, officer or employee
of the Investment Manager, the Investment Adviser, the Country Adviser or
Administrator or any affiliate thereof an annual fee of $5,000 plus up to $700
for each Board of Directors meeting attended. In addition, the Fund reimburses
all directors for travel and out-of-pocket expenses incurred in connection with
Board of Directors meetings.

23
<PAGE>

Notes to Financial Statements (continued) The India Fund, Inc.
December 31, 1996

NOTE C: Portfolio Activity

Purchases and sales of securities, other than short-term obligations, aggregated
$106,831,634 and $84,707,035, respectively, for the year ended December 31,
1996.

At December 31, 1996, the Fund owned securities valued at approximately
$7,022,000 which were in the process of being registered in the name of the
Fund. Significant delays are common in registering the transfer of securities in
India, and such transfers can take a year or longer. Indian securities
regulations normally preclude the Fund from selling such securities until the
completion of the registration process.

NOTE D: Foreign Income Tax

The Fund invests in India through a registered branch office established in
Mauritius and expects to obtain benefits under the double taxation treaty
between Mauritius and India. To obtain benefits under the double taxation treaty
the Fund must meet certain tests and conditions, including the establishment of
Mauritius tax residence and related requirements. The Fund has obtained a tax
residence certification from the Mauritian authorities and believes such
certification is determinative of its resident status for treaty purposes. A
fund which is a tax resident in Mauritius under the treaty but has no branch or
permanent establishment in India, will not be subject to capital gains tax in
India on the sale of securities but is subject to a 15% withholding tax on
dividends which has been provided for by the Fund. The Fund is subject to and
accrues Indian withholding tax on interest earned on Indian securities at the
rate of 20%.

In Mauritius, the Fund is not liable for income tax under the current Mauritian
legislation. However, the Fund may, in any year, elect to pay tax on its net
investment income at any rate between 0% and 35%. For the year ended December
31, 1996, no provision for Mauritius taxes has been made. Moreover, to the
extent that it is later determined that the Fund would be unable to obtain the
benefits of the treaty, the Fund would be subject to tax on capital gains in
India on the sale of securities and would be subject to the applicable tax on
dividends, which is currently at the rate of 20%.

The foregoing is based on current interpretation and practice and is subject to
any future changes in Indian or Mauritius tax laws or in the tax treaty between
India and Mauritius.

NOTE E: Other

At December 31, 1996, substantially all of the Fund's net assets were invested
in Indian securities. The Indian securities markets are among other things
substantially smaller, less developed, less liquid, subject to less regulation
and more volatile than the securities markets in the United States.
Consequently, and as further discussed above, acquisitions and dispositions of
securities by the Fund involve special risks and considerations not present with
respect to U.S. securities.

Concentration of Credit Risk. The Fund maintains cash at Bank of New York
("BONY"), its custodian, in interest and non-interest bearing accounts and the
State Bank of India ("SBI"), its sub-custodian, in a non-interest bearing
account. Total cash of the Fund at December 31, 1996, represents 9.6% of net
assets.

24
<PAGE>

Report of The India Fund, Inc.
Independent Accountants

To the Board of Directors and Shareholders of
The India Fund, Inc.

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The India Fund, Inc. (the "Fund")
at December 31, 1996, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended and
the financial highlights for each of the two years in the period then ended and
for the period February 23, 1994 (commencement of operations) through December
31, 1994, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1996 by correspondence with the custodians and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
February 21, 1997

25
<PAGE>

Dividends and Distributions The India Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan

The Fund intends to distribute annually to shareholders substantially all of its
net investment income, and to distribute any net realized capital gains at least
annually. Net investment income for this purpose is income other than net
realized long- and short-term capital gains net of expenses.

Pursuant to the Dividend Reinvestment and Cash Purchase Plan (the "Plan"),
shareholders whose shares of Common Stock are registered in their own names will
be deemed to have elected to have all distributions automatically reinvested by
The Bank of New York (the "Plan Agent") in Fund shares pursuant to the Plan,
unless such shareholders elect to receive distributions in cash. Shareholders
who elect to receive distributions in cash will receive all distributions in
cash paid by check in dollars mailed directly to the shareholder by The Bank of
New York, as dividend paying agent. In the case of shareholders such as banks,
brokers or nominees, that hold shares for others who are beneficial owners, the
Plan Agent will administer the Plan on the basis of the number of shares
certified from time to time by the shareholders as representing the total amount
registered in such shareholders' names and held for the account of beneficial
owners that have not elected to receive distributions in cash. Investors that
own shares registered in the name of a bank, broker or other nominee should
consult with such nominee as to participation in the Plan through such nominee,
and may be required to have their shares registered in their own names in order
to participate in the Plan.

The Plan Agent serves as agent for the shareholders in administering the Plan.
If the directors of the Fund declare an income dividend or a capital gains
distribution payable either in the Fund's Common Stock or in cash,
nonparticipants in the Plan will receive cash and participants in the Plan will
receive Common Stock, to be issued by the Fund or purchased by the Plan Agent in
the open market, as provided below. If the market price per share on the
valuation date equals or exceeds net asset value per share on that date, the
Fund will issue new shares to participants at net asset value; provided,
however, that if the net asset value is less than 95% of the market price on the
valuation date, then such shares will be issued at 95% of the market price. The
valuation date will be the dividend or distribution payment date or, if that
date is not a New York Stock Exchange trading day, the next preceding trading
day. If net asset value exceeds the market price of Fund shares at such time, or
if the Fund should declare an income dividend or capital gains distribution
payable only in cash, the Plan Agent will, as agent for the participants, buy
Fund shares in the open market, on the New York Stock Exchange or elsewhere, for
the participants' accounts on, or shortly after, the payment date. If, before
the Plan Agent has completed its purchases, the market price exceeds the net
asset value of a Fund share, the average per share purchase price paid by the
Plan Agent may exceed the net asset value of the Fund's shares, resulting in the
acquisition of fewer shares than if the distribution had been paid in shares
issued by the Fund on the dividend payment date. Because of the foregoing
difficulty with respect to open-market purchases, the Plan provides that if the
Plan Agent is unable to invest the full dividend amount in open-market purchases
during the purchase period or if the market discount shifts to a market premium
during the purchase period, the Plan Agent will cease making open-market
purchases and will receive the uninvested portion of the dividend amount in
newly issued shares at the close of business on the last purchase date.

Participants have the option of making additional cash payments to the Plan
Agent, annually, in any amount from $100 to $3,000, for investment in the Fund's
Common Stock. The Plan Agent will use all such funds received from participants
to purchase Fund shares in the open market on or about February 15.

26
<PAGE>

Dividends and Distributions (continued) The India Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan

Any voluntary cash payment received more than 30 days prior to this date will be
returned by the Plan Agent, and interest will not be paid on any uninvested cash
payment. To avoid unnecessary cash accumulations, and also to allow ample time
for receipt and processing by the Plan Agent, it is suggested that participants
send in voluntary cash payments to be received by the Plan Agent approximately
ten days before an applicable purchase date specified above. A participant may
withdraw a voluntary cash payment by written notice, if the notice is received
by the Plan Agent not less than 48 hours before such payment is to be invested.

The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmations of all transactions in an account, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in the name of the
participant, and each shareholder's proxy will include those shares purchased
pursuant to the Plan.

There is no charge to participants for reinvesting dividends or capital gains
distributions or voluntary cash payments. The Plan Agent's fees for the
reinvestment of dividends and capital gains distributions and voluntary cash
payments will be paid by the Fund. There will be no brokerage charges with
respect to shares issued directly by the Fund as a result of dividends or
capital gains distributions payable either in stock or in cash. However, each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases in connection with the
reinvestment of dividends and capital gains distributions and voluntary cash
payments made by the participant. Brokerage charges for purchasing small amounts
of stock for individual accounts through the Plan are expected to be less than
the usual brokerage charges for such transactions, because the Plan Agent will
be purchasing stock for all participants in blocks and prorating the lower
commission thus attainable.

The receipt of dividends and distributions under the Plan will not relieve
participants of any income tax that may be payable on such dividends or
distributions.

Experience under the Plan may indicate that changes in the Plan are desirable.
Accordingly, the Fund and the Plan Agent reserve the right to terminate the Plan
as applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to notice of the termination sent to members of the Plan at
least 30 days before the record date for such dividend or distribution. The Plan
also may be amended by the Fund or the Plan Agent, but (except when necessary or
appropriate to comply with applicable law, rules or policies of a regulatory
authority) only by at least 30 days' written notice to participants in the Plan.
All correspondence concerning the Plan should be directed to the Plan Agent at
101 Barclay Street, New York, New York 10286.

<PAGE>

The India Fund, Inc.

Investment Manager:
Advantage Advisers, Inc. The India Fund, Inc.
Annual Report
December 31, 1996
Investment Adviser:
Barclays Global Investors
International, Inc.

Country Adviser:
Infrastructure Leasing & Financial
Services Limited

Administrator:
Oppenheimer & Co., Inc.

Sub-Administrator:
PFPC Inc.

Transfer Agent:
The Bank of New York

Custodian:
The Bank of New York

Advantage Advisers, Inc.