India has entered the top-ten list in the 2016 A.T. Kearney Foreign Direct Investment (FDI) Confidence Index. India jumped two places to rank number 9 in this year’s Index.
The Index is a forward-looking analysis of how political, economic, and regulatory changes will likely affect FDI inflows into countries in the coming years. Since its inception in 1998, the study has reliably pointed toward firms’ top choices globally for FDI, with the countries ranked in the Index reliably tracking closely with the destinations for actual global FDI inflows.
The Index is constructed using primary data from a proprietary survey administered to senior executives of the world’s leading corporations.
In this year’s survey, 32 percent of the respondents said they were more optimistic about India’s economic outlook over the next three years, compared to a year ago, said the London-based consultancy.
“There is a growing belief among global business leaders that India is finally embarking on a growth path that will see it unlock its full potential. Their confidence stems from the fact that the government has kick-started reforms and has undertaken various measures to boost domestic demand, employment and macroeconomic stability in the country,” said Vikas Kaushal, Managing Director and Country Head India at A.T. Kearney.
“The results are starting to show. Despite the continued uncertainty in the global economic environment, India has seen its growth rate pick up pace. It has emerged as the fastest growing economy in the world, surpassing China as well as Brazil, Russia and South Africa, the other members of BRICS – an acronym of five major fast-growing emerging economies,” he added.
The results of the Index also show that domestic market size, cost of labour, regulatory transparency and lack of corruption are among the top factors that executives look at when making decisions about investing in a country.
Overall, five Asian countries feature in the top-ten rankings in this year’s Index, highlighting the confidence global business leaders have in the region. The other four countries are:
• China: Ranked second for the fourth year in a row.
• Japan: Continues to rise in the rankings, up one spot this year to 6th place.
• Australia: Jumped three spots to take 7th place.
• Singapore: Enjoyed the largest gain in the ranks, rising five places to the 10th spot.
The United States has topped the FDI Confidence Index, holding its first-place position for the fourth year in a row. Global business executives are also more bullish on the U.S. economic outlook than for any other economy.
China claimed second place, also for the fourth consecutive year. However, investor expectations about the Chinese economy turned decidedly more negative this year, and executives say they will reduce their FDI in China if market volatility persists.
“The United States and China have held steady at the top of the Index in the face of significant changes in the global operating environment over the past four years,” said Paul Laudicina, founder of the FDI Confidence Index and chairman of A.T. Kearney’s Global Business Policy Council.
“Executives’ sustained interest in investing in the United States and China demonstrates the undeniable and enduring attractiveness of the two largest economies in the world. Over the 18 years of this assessment we have observed consistent investor preference for large markets with robust economic prospects,” he added.
Global executives are increasingly turning to FDI to ignite growth opportunities, despite the overall trend of slowing globalization.
Global FDI flows jumped 36 percent to an estimated $1.7 trillion in 2015 – the highest level since 2007 – and the vast majority of executives also believe that FDI will become more important for corporate profitability and competitiveness in the near term.
Accordingly, more than 70 percent of firms in the survey plan to increase their level of FDI over the next three years. A likely reason for this is the rise of protectionist sentiments in many countries – creating greater need for a local presence to do business in those markets. fii-news.com
