India has been ranked the most attractive investment destination in the world for the next three years, according to EY Survey published today.

Thirty-two per cent of the business leaders from global corporations who were polled for the survey said India is the most attractive investment destination in the world, followed by China, Southeast Asia and Brazil.

This Survey--‘Ready, set, grow: EY’s 2015 India attractiveness survey'--,’conducted during March and April 2015, includes the views of more than 500 decision-makers from multinational organizations across sectors including industrials, automotive, consumer products, life sciences, infrastructure, technology, financial services and others.

The report also presents a detailed overview of foreign direct investment (FDI) inflows and projects, covering sectors, emerging FDI destinations and countries of origin.

It finds major gains in perception in comparison to the findings of the 2014 survey in key areas such as macroeconomic stability (up from 70% in 2014 to 76% in 2015), political and social stability (up from 59% in 2014 to 74% in 2015); relaxation in FDI policy (up from 60% in 2014 to 68% in 2015); and the government’s efforts to ease doing business (up from 57% in 2014 to 67% in 2015). Among India’s most attractive features for doing business, investors rated its vast domestic market and availability of labor as most appealing.

Rajiv Memani, EY Chairman of the Global Emerging Markets Committee and India Regional Managing Partner, said that the survey findings are a testament to India’s growing appeal with the global investment community.

"Over the last year, the improvements in India’s macroeconomic indicators, accompanied with the ongoing efforts to revitalise growth have offered new hope to investors. It is an encouraging start and we need to build upon it further.”

Speaking at the launch of the report, Amitabh Kant, Secretary, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India, said that the Government was determined to make India an extremely easy and simple place to do business. "Our first priority is to do away with the many procedures and rules, followed by bringing in consistency and clarity in all our policies and tax regime and developing a world-class infrastructure”

FDI inflows

Among specific reforms expected to drive growth, 89 per cent of the investors said that investment in infrastructure projects and the 100 Smart Cities project would be significant, while both financial inclusion, including Digital India and proposed corporate tax reduction from 30% to 25%, were considered significant by 83% of the respondents. Implementation of Goods and Services Tax (GST) and legislation on land acquisition were also mentioned by investors as important for attracting FDI.

MANUFACTURING

The increased interest in investing in manufacturing is also reflected in FDI inflows, which showed a 62 per cent increase in calendar year 2014 compared to the previous year, ahead of the 31 per cent growth in the services sector FDI. In the same period, the share of manufacturing in total FDI increased from 37 per cent to 45 per cent. The trend continues in the first six months of 2015 with manufacturing registering a 221 per cent increase in FDI inflows. Among sectors, defense and aerospace, cleantech, automotive, metals and mining, consumer products and energy have shown a sharp increase in FDI, while infrastructure, life sciences and chemicals declined during the year. Financial services FDI inflows grew at 128 per cent year-on-year, outperforming the overall 31% services sector growth.

Make in India

Within six months of its launch in September 2014, the Indian Government’s Make in India program resonated with investors, with 55% of respondents saying that they are aware of the initiative. Those aware of Make in India are more upbeat about expansion plans, with 70% stating that they are likely to expand or relocate their manufacturing facilities to India in the next five years.

“We are driving one and three-year action plans across ministries so that we all work as a team to make India a manufacturing destination,” said Kant. “Aided by measures taken in this year’s budget, we will see India become a nation of young innovators. I believe that India will see a huge number of startups in both digital and manufacturing in the years ahead, and that India will become a nation of job creators rather than job seekers.”

srivats.kr@thehindu.co.in