India most attractive investment destination globally: EY survey

India has been ranked as the most attractive investment destination in the world for the next three years, according to a survey by Global consultancy firm Ernst and Young (EY), released today.

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

"The finding reconfirms and reaffirms many other recent findings," DIPP secretary Amitabh Kant said at the launch of the report.

He said the study clearly brings out an increased focus and emphasis on manufacturing and India's growth in terms of FDI will be driven by manufacturing.

"India must continue the reform process on a sustained basis over a long period of time," Kant said, adding that the challenge for India is to grow at a rapid rate of 9 to 10 per cent per annum for three decades or more.

The survey titled Ready, set, grow, was conducted during March and April, and includes views of over 500 decision-makers from multinational organisations across sectors like industrials, automotive, consumer products, life sciences, infrastructure and technology, among others.

The survey finds major gains compared to the findings of the 2014 survey in perception across various parameters in key areas such as macroeconomic stability (up from 70 per cent in 2014 to 76 per cent in 2015), political and social stability (up from 59 per cent to 74 per cent); relaxation in FDI policy (up from 60 per cent to 68 per cent); and the government's efforts to ease doing business (up from 57 per cent in 2014 to 67 per cent in 2015).

"The prime minister has set us a challenge of taking India to the top 50 position on the World Bank's Ease of Doing Business in the next three years.

"We will marginally improve (our ranking) this year... We will substantially improve next year but in the third year we will definitely reach top 50," Kant pointed out.

The Department of Industrial Policy and Promotion (DIPP) secretary said the government will look at the foreign direct investment policy "with a very open mind".

"We continue to attract investments across and it is important that India becomes a part of the global supply chain," Kant said.

For doing business, investors have rated India's vast domestic market and availability of labour as the most appealing among its most attractive features.

"We are pushing for new bankruptcy laws, easier entry and exit. The Vishwananthan Committee will give its recommendation this month and take it forward so that there are easy entry and exit norms," Kant said.

"Much has been talked about the tax regime, the lack of consistency but we have taken several decisive steps. The prime minister has gone on record to say that India will not resort to retrospective tax," he said.

Kant said Prime Minister Narendra Modi's Startup India, Stand up India initiative "will be launched shortly".

He said, different government departments were working together to smoothen the compliances requirements so as to make it easier for start-ups to move ahead without running around for regulatory clearances.

Asked whether the Trans-Pacific Partnership (TPP) will affect India's foreign trade, Kant said: "We are playing a very major role in RCEP (Regional Comprehensive Economic Partnership). We will arrive at some agreement in RCEP.

"Eventually RCEP will have some linkage with TPP. To my mind, it is important to address these issues of trading blocs with confidence and arrive at win-win agreements so that we can push our manufacturing and exports.

On the impact of TPP on India's generic industry, he said, "I think it is too far-fetched. Right now the TPP has not even been accepted by legislatures across the world. There is a lot of debate and discussion going on and it needs to be accepted by Parliaments. It is a long-term process."

The US, Japan and 10 other Pacific Rim nations recently reached a final agreement on the largest regional trade accord in history dubbed as the Trans-Pacific Partnership (TPP) deal (See: Obama faces flak as US, 11 other nations ink Trans-Pacific trade deal).

EY chairman of the Global Emerging Markets Committee Rajiv Memani said the survey findings are a testament to India's growing appeal with the global investment community.

The report highlights data from FDI Markets data, indicating that in the first six months, 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.