Bangkok Post: India beats U.S. on direct investment destination

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India beats U.S. on direct investment destination

New Delhi (dpa) - India has displaced the U.S. as the second-most attractive destination for foreign direct investment (FDI) in the world, news reports said Friday.

An annual survey of executives from world's largest companies ranked China as the most favoured destination for the fourth consecutive year.

Global management consulting firm AT Kearney, which conducted the survey, said the U.S. had slipped to the third place, occupied by India last year.

According to Kearney's confidence index, China scored 2.197 points on the Foreign Direct Investment attractiveness ranking while India scored 1.951 points.

India leads the list of countries with the highest level of investor optimism, with over 47 per cent expressing a positive change in outlook as compared to a year ago, the Times of India reported.

Kearney said Britain maintained the fourth place, followed by Poland, Russia and Brazil. Kearney said Germany declined from fifth to ninth, France from sixth to 14th, Italy from ninth to 19th and Spain from 13th to 17th place.

The U.S. has lost ground mainly in the light manufacturing and financial services sector.

India, on the other hand, has become more attractive because of relaxation of ownership restrictions in telecom and positive developments in heavy and light manufacturing industries as well as in the wholesale and retail sectors despite uncertainty about liberalisation, the Business Standard said.

"India is on the cusp of an FDI take-off. However, for India to harness manufacturing investor interest and evolve into an FDI capital-intensive hub, the government must maintain its reform orientation and overcome narrow business interests," Paul Laudicina, managing director of AT Kearney's Global Business Policy Council, said.

Kearney noted that India has yet to build a "critical mass" in FDI, having started investment-attracting reforms in 1991. China's pro-FDI regime has been in place since 1979.

Despite its perceived attractiveness as an investment destination, last year India attracted FDI inflows of only 6 billion dollars, compared to China's 62 billion dollars and U.S.'s 121 billion dollars.