India Named Most Attractive Investment Destination
Nov. 25 – After significant changes in FDI policy earlier this year, India was ranked by Ernst & Young as the most attractive investment destination in the world – surpassing both China and the United States.
Ernst & Young (EY), a leading global consulting firm, based the ranking upon a survey of 1600 senior executives from large companies across more than 70 countries.
Part of EY’s Capital Confidence Barometer report, the ranking aims to gauge corporate confidence in economic outlook and understand boardroom priorities by country.
According to EY, macro-economic pressures and heavy debt have caused a number of Indian companies to divest from India and “created a large opportunity for foreign players vying for a greater role in the Indian market.” The report added that “with sharp currency depreciation and the opening up of FDI in various sectors, India has become an attractive destination for foreign investors.”
The report ranked Brazil, China, Canada, and the United States (respectively) behind India. The United States, France, and Japan were ranked as the “top three investors likely to invest in India.”
The report underscores that despite recent doubts about India’s short-term economic prospects, investors continue to have confidence in the Indian economy’s long-term prospects. Sectors with the highest level of anticipated future FDI include automotive, technology, life sciences, and consumer products.
Amendments made this year in Indian FDI policy impact a number of key business sectors, and in many instances eliminate the need for foreign investors to obtain approval from the Indian government before investing. Additionally, policy changes in 2013 alter the legal definition of ‘control’ and regulations for single and multi-brand retail trading.
According to Amit Khandelwal of EY, “the investor outlook for India remains positive, despite the challenges the country’s economy has faced in the recent past. At the same time, the improved condition of the world economy has helped increase confidence amongst deal makers, prompting them to take a bolder stance toward executing transactions. Also the Fed’s reassurance on not pulling back stimulus in the near term has boosted confidence in the board rooms.”
“This does not mean we will see a return to boom-time deal-making. However, deals will continue to be the best route to meaningful growth. Barring any further significant economic or geo-political shocks, we could see the resuscitation of a global M&A market which has flat-lined in recent years,” he added.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
You can stay up to date with the latest business and investment trends across India by subscribing to Asia Briefing’s complimentary update service featuring news, commentary, guides, and multimedia resources
- Previous Article India’s Gold Dilemma
- Next Article World Bank Issues First Offshore Rupee-Denominated Bond