India is still an attractive destination for foreign investment as per the results of a survey conducted Consulting firm EY (formerly Ernst & Young). The survey, titled ‘EY India Attractiveness Survey 2014,’ was conducted among 500 foreign investors. Results were broadly as follows
• India remains one of the top global destinations for foreign direct investment (FDI) on account of its low labor cost, domestic market and availability of educated workforce.
• More than half (53.2 %) of the survey respondents were considering increasing their presence in India.
• Of those who are not planning any investment in India, 61.6 % of the respondents do not have any short-term or overseas expansion plans.
• Technology, media and telecom (TMT) continue to remain the most attractive sectors for the future. Together these three sectors had 21.6 % of projects during 2007 and 2012. This group was followed by industrial with 16.6 and business services with 11.4 %.
• 70.8 % of the respondents found China to remain India’s main competitor for FDI. However, 8.8 % of the respondents indicated that new destinations such as Indonesia, the Philippines and Vietnam, were also emerging as competitors.
• The survey recorded that the percentage of respondents responding in the affirmative to the question on whether India would be surpassed by strong competition from more dynamic countries, has come down. In 2012, 11 % of the respondents said ‘yes’ to this question, but in 2013, only 5 % said ‘yes’.
• In order for India to continue to compete retaining its edge, it needs to improve its operating environment and further develop its infrastructure. Issues such as poor infrastructure, land acquisition, regulatory hurdles and the slow pace of reforms have hampered manufacturing projects.