Investment bank UBS is advising its clients to gain early exposure to India, which it sees as "potentially the world’s next growth engine."

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In its report titled 'Is India the next China', UBS has said that India is the only country with the scale to match China, but it will not be the next China, and needs to be understood on its terms.

"In the decade ahead, the conditions look ripe for India to fulfill its growth potential. Indeed, a confluence of external and domestic factors are coalescing that could help India’s economy leap forward," the UBS report said.

"With over 9 percent nominal GDP growth projected in the coming years, investors should consider gaining early exposure to potentially the world’s next growth engine," the report said.

UBS does not expect India's economic model to mirror that of East Asia's.

"Its growth will be driven by consumption and services, not exports. It has demographics on its side, a long entrepreneurial tradition, an expanding consumer class, significant headroom for productivity improvements,

and the confidence that comes from a strong sense of its civilizational

pedigree and destiny," the report said.

UBS expects corporate earnings to grow 11.5 percent on average a year over the decade, with led by the financials and infrastructure sectors. The investment bank sees the rupee and bond market as being well-positioned to benefit from a rising economic productivity.

UBS said the challenge with investing in India was not the lack of opportunities, but rather the obstacles hindering foreign investors from tapping the local markets.

"Indeed, it will take more effort for investors to capture opportunities in India than it would in other, more developed markets. But as the bond and stock markets, as well as certain sectors, open up further, waiting for this convenience could mean high opportunity costs," the UBS report said.