The FDI index shows investor confidence in India has been growing steadily over the last two years, making it one of the top two emerging markets along with China
India has climbed one spot to the eighth rank in the 2017 A.T. Kearney Foreign Direct Investment (FDI) Confidence Index as investors turned bullish on the Asia-Pacific.
The index, released on Tuesday, shows that investor confidence in India has been growing steadily over the last two years, making it one of the top two emerging market performers on the FDI Index, along with China.
In this year’s survey, 31% of the respondents said they were more optimistic about India’s economic outlook over the next three years compared to a year ago.
This year’s Index highlighted another key trend. Governance and regulatory issues made up seven of the top 10 factors that investors consider when deciding on an investment destination. In fact, the top three issues pertained to these aspects. This is in contrast to last year when factors like domestic market size and cost of labour were the top issues for investors.
“Investors see India as a vast and diverse up-and-coming market with plans to increase investments there over the near to medium term. 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 A.T. Kearney.
Among the investors surveyed for this year’s Index, more than half said a successful GST implementation would cause them to significantly or moderately increase their investment in India. Also, 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 index also indicates that investors continue to look at Asia-Pacific as a key driver of growth. Five countries from the region feature in the top 10 rankings this year, highlighting the confidence global business leaders have in the region. The other four countries are: China (ranked 3rd), Japan (retains its 6th place), Australia (down to 9th place) and Singapore (ranked 10th for the second year running).
The US topped the FDI Confidence Index, holding its first-place position for the fifth year in a row. Germany jumped two spots to second with China moving down one position to third. The UK and Canada made up the rest of the top 5.
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