India most attractive global investment destination: EY

16 Oct '15

5 min read

Gaurav Taneja, Partner and National Leader – Government & Public Sector - EY India, says, “With the pro-reform government at the center, the state governments in India have also embarked on adopting policies and processes to attract investments. These include reforms in labor laws, single window clearances, online compliance and land availability, which play a very significant role in investors' choice of locations. Importantly, there is also a perceptible shift in attitude to one of welcoming investments.”

Robust investor confidence is also reflected in FDI inflows, with the 2015 India attractiveness survey citing a sharp turnaround. The report highlights data from FDI Markets data, indicating that in the first six months of 2015, India has become the top FDI destination with $30.8 billion of FDI inflows, moving up from the fifth position in the corresponding period last year. Earlier, during the calendar year 2014, India reversed a two-year decline with FDI inflows of $25 billion, registering a 32 per cent increase over the previous year. In the same period, the number of FDI projects rose 37 per cent to reach 680, contrasting with a 3 per cent decline worldwide.

More than three out of five respondents said they had plans to invest in India over the next year and 62 per cent are looking at manufacturing, both to serve the Indian and global markets from India. Most of these respondents prefer to expand existing operations, followed by expansion through acquisitions and, if necessary, by joint ventures and alliances. Compared to the 2014 survey, the number of respondents who believe that India will be among the world's leading top three destinations for manufacturing by 2020 has increased from 24 per cent to 35 per cent, while those who believe India will evolve as a regional and global hub for operations is up from 9 per cent to 21 per cent.

The survey found that within six months of its launch in September 2014, the Indian Government's Make in India programme resonated with investors, with 55 per cent of respondents saying that they are aware of the initiative. Those aware of Make in India are more upbeat about expansion plans, with 70 per cent stating that they are likely to expand or relocate their manufacturing facilities to India in the next five years.

Bengaluru, Mumbai, Delhi-NCR, Chennai and Pune continue to be the top destinations for overall FDI. Among emerging cities, global business leaders ranked Ahmedabad, Jaipur, Vadodara, Coimbatore and Visakhapatnam respectively as the top five emerging cities for FDI. According to the survey, investors are showing increased enthusiasm for India's emerging cities with a 79 per cent surge in FDI in 2014, and 21 per cent in metropolises. (SH)

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