iShares, the world’s largest ETF firm, today listed its second India-focused fund with the Kansas City, Mo.-based BATS exchange, this one focused on small companies, as the world’s biggest exchange-traded fund firm builds out both its product offerings focused on India and its relationship with the BATS exchange.

The iShares MSCI India Small Cap Index Fund (NYSEArca: SMIN) comes to market with a competitive edge over competing funds from New York-based Van Eck and Emerging Global. SMIN has an expense ratio of 0.74 percent, while its competitors both cost 0.85 percent.

The Market Vectors India Small Cap (NYSEArca: SCIF) and the EGShares India Small Cap ETF (NYSEArca: SCIN) were launched last summer and have gathered $48.6 million and $23 million in assets, respectively.

India ETFs aren’t new, as many firms are looking to tap into India’s booming growth. iShares itself already offers two of them, the most recent being its large-cap-focused “INDA” listed last week with BATS. India has more than 1 billion people, many of whom are still young, meaning their most productive years are still ahead.

India is one of the bigger and more prospective emerging markets, a growing piece of the investment universe that has attracted a lot of investor attention as investors look outside the heavily debt-laden developed economies for growth opportunities. Accessing India through small-cap stocks is thought to be more directly connected to domestic themes.

Focus On Financials

SMIN complements the iShares MSCI India Index Fund (BATS:  INDA) by focusing on securities from the bottom 14 percent of equity market capitalization in India. INDA focuses on the top 85 percent of companies in India’s equities market. Both funds allocate nearly a quarter of their portfolios to financials.

SMIN has an annual expense ratio of 0.74 percent, compared to INDA’s 0.65 percent price tag,

SMIN tracks the free-float market-capitalization-weighted MSCI India Small Cap Index, which rebalances quarterly. The fund, however, only holds 88 stocks, a fraction of its underlying index’s 236 holdings.

At launch, financials represented nearly 22 percent of the sector allocation, followed by consumer discretionary and industrials stocks.

iShares also launched the iShares India Nifty 50 Index Fund (NasdaqGM: INDY) in late 2009 – a fund with just under 6 percent allocated to financials that that now has about $336 million in assets.

Following The Leaders

iShares’ latest ETF brings the number of India-focused funds or ETNs available to U.S. investors to 12, according to IndexUniverse’s ETF Classification System.

The roster includes sector-focused strategies, large- and small-cap funds as well as a bull-and-bear pair of ETFs by Direxion. The oldest of them is Barclays Capital iPath MSCI India ETN (NYSEArca: INP), launched in December 2006.

INP, which is tied to the MSCI India Total Return Index and owns the top 68 companies in the Indian equities market, has gathered $549 million in assets.

Still, it’s WisdomTree that holds the distinction of being the first to put an India equities strategy in an ETF wrapper with its WisdomTree India Earnings ETF (NYSEArca: EPI) launched four years ago.

EPI came to market right just about the time that developed-market economies were entering recession triggered by a credit crisis in the United States. While emerging market economies got caught in the downdraft, they looked more attractive than developed countries as the global economy stabilized.

EPI owns some 164 securities in a strategy that has attracted nearly $884 million in assets. The fund is the largest India ETF in the market today, and it costs 0.83 percent, in line with other large-cap focused India ETFs.

Building Up A Relationship With BATS

SMIN is iShares’ ninth country-specific listing with No.3 U.S. exchange BATS.

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