India jumps to 8th place on Global FDI Confidence Index

Source: The Economic Times, Apr 19, 2017

NEW DELHI: India has jumped one spot to 8th rank in the 2017 A.T. Kearney Foreign Direct Investment (FDI) Confidence Index. Governance and regulatory issues made up 7 of the top-10 factors that investors consider when deciding on an investment destination according to the report. Last year factors such as domestic market size and cost of labour were the top issues for investors.

India’s reforms to enable a ‘transparent’ and an ‘easy’ business environment, have made it an attractive destination for foreign companies, the AT Kearney report said.

While US topped the list, Germany and China were at the second and third respectively. United Kingdom and Canada make up the rest of top 5.

The report said that investors are bullish on Asia-Pacific but are monitoring political risks for abrupt changes to the business environment. For a third year in a row increasing geopolitical tensions topped investors’ list of likely wild cards.

In this year’s survey 31 per cent of the respondents said they were more optimistic about India’s economic outlook over the next 3 years, compared to a year ago. “Reform efforts by the current government have improved the country’s investment environment. This includes the national goods and service tax (GST) reform, the largest non-direct tax reform in India in recent years,” said Vikas Kaushal, Partner and Head of India, AT Kearney.

70% of the respondents plan to maintain or increase their FDI in India in the coming years. India attracted the highest amount of announced greenfield investments in 2016, based on capex, for the second year in a row, with notable gains in manufacturing, the report said.

The Index is an annual analysis of how political, economic, and regulatory changes will likely affect FDI inflows into countries in the coming years. The Index is constructed using primary data from a proprietary survey administered to senior executives of the world’s leading corporations. All companies participating in the survey have annual revenues of $500 million or more.

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