India ahead of US, China as best investment zone
India has emerged as the most attractive investment destination surpassing China and the US, thanks to the government’s measures relaxing Foreign Direct Investment (FDI) norms, said EY, earlier known as Ernst & Young.
In August, the government announced relaxation in FDI norms in many sectors, including multi-brand retail and telecom.
According to EY’s latest Capital Confidence Barometer report India has been ranked as the most attractive investment destination followed by Brazil and China at second and third positions, respectively.
While Canada has cornered fourth sport, the US is placed at fifth position. Other nations in the top ten are South Africa (6), Vietnam (7), Myanmar (8), Mexico (9) and Indonesia (10).
As for investments, the US, France and Japan have emerged as top three investors likely to invest in India.
“With sharp currency depreciation and opening up of FDI in various sectors, India has become an attractive destination for foreign investors,” EY said.
It added that due to the present macro-economic pressures and heavy debt pile, several Indian companies are looking to divest non-core businesses. “This has created a large opportunity for foreign players vying for a greater role in the Indian market,” it added.
Meanwhile, sectors like automotive, technology, life sciences and consumer products have the highest level of anticipated deal-making and a majority of the respondents felt M&A volumes in India were expected to improve over the next 12 months.
“Indian companies also reflect a concerted focus on job creation as well as optimising operations to deliver cost reduction,” the report said.
On the other hand, Indian corporate entities have started looking at developed markets for making acquisitions. “After two years, European countries (UK and Germany) have made a comeback on the potential investment destinations list for Indian companies,” the report added.
According to Amit Khandelwal, National Leader & Partner (Transaction Advisory Services) at EY, the investor outlook for India remains positive, despite the challenges the country’s economy has faced in the recent past.