India is an attractive FDI destination: survey
NEW DELHI: India has been touted as an attractive investment destination for developed economies as 44% of 1,200 global business leaders based in the US, UK, Japan, and Singapore plan to make additional or first-time investments in the country, according to a survey by consulting firm Deloitte Touche Tohmatsu India LLP. The survey also says more business leaders, especially in Japan, find India lucrative for its domestic market rather than as a hub for exports
Despite economic disruption due to the Covid-19 pandemic, inflow of foreign direct investment (FDI) in India amounted to a record $81.72 billion, 10% higher than the previous fiscal, and this trend would continue, it said in the report, ‘India’s FDI opportunity’.
India has the strongest positive perception in the US when compared to markets such as China, Brazil, Mexico, and Vietnam. “Given US and UK’s strong
historic ties with India, US and UK business leaders expressed greater confidence in India’s stability. However, respondents from Japan and Singapore currently view Vietnam as their preferred investment destination,” the report said.
“Significantly, among first time investors (44% of 1,200 respondents), nearly two-thirds are planning investments in India within the next two years,” it said. As many as 57% of them find energy infrastructure most likely to see new investments, reflecting India’s plans to significantly grow its renewables capacity, followed by financial services (49%) and healthcare (48%) sectors, according to the survey.
Business leaders rated India higher on economic growth and skilled workforce. While India is perceived as both politically and economically stable, it scored lower on institutional stability — regulatory clarity and efficient judicial redress and mechanisms.
“Inadequate infrastructure was another negative factor cited by existing and potential investors. The survey predated the government’s recent decision to rectify the long-running retrospective taxation issue with an amendment in the tax law, a significant boost for investor confidence,” it said.
The survey revealed that the government needs to publicise policy reforms. “Despite recent reforms to improve ease of doing business in India, awareness among investors remains low. Business leaders in Japan (16%) and Singapore (9%) were least aware of initiatives such as the digitisation of customs clearance and production-linked incentives [PLI] for manufacturers, it said.
India was perceived as a more challenging environment to do business compared to China and Vietnam, it said.