New Delhi, Sept 17: India has moved to 6th place in the FDI confidence index chart of global consultancy firm AT Kearney for the year ‘03, up from 15th place last year, while China, with its acknowledged pluses, has widened the lead over the US to maintain No 1 slot for the second year in a row. Rising confidence in China and other key emerging markets resulted in developing markets dominating the top 10 most preferred FDI destinations for the first time since ‘98, the study based on the outlook of executives from the world’s largest companies, has found.

India’s FDI inflows have only slowed in ‘02 but the global investor’s outlook did not reflect it, according to the study. More than a fifth of all global executives tracked by AT Kearney said their outlook on India improved over last year. The US and British investors ranked India as the third most attractive FDI destination, while Canadian investors gave it 4th position. Overall, European and Asian executives view India more favourably this year, ranking the country 10th and 11th-most attractive respectively.
India is being increasingly viewed as a prime offshore location for low and high-tech activities by the global investor. The negatives include “a highly bureaucratic business climate” and sectoral ceilings on foreign ownership, the study said.
“Recent delays in tax reform, protests against privatisation of state-owned industries and the slowdown in privatisation would limit India’s ability to transform offshore attraction into significantly larger FDI inflows.
As for the US, an 80% dip in actual FDI inflows into that country in ‘02, thanks mainly to the global decline in mergers and acquisitions (M&A) activities, impacted the outlook. While recovery of the economy or absence of that would be the most important factor determining the future outlook on the US’ FDI market, depreciation of the dollar would also be a critical factor. Emerging markets like China, Mexico, Poland, India, Russia and Brazil were rated most attractive for offshoring IT and business processes and also for first-time investments. Four developed markets — France, Italy, Canada and Australia — dropped out of the top 10 most attractive FDI destinations this year, according to AT Kearney.
Bureau Report