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India’s FDI profile Dynamic, cost competitive and specialized - EY - India

EY's 2012 attractiveness survey: India

India’s FDI profile: Dynamic, cost competitive and specialized

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According to the survey, while India has been one of the leading destinations for shared services, the country is rapidly emerging as a manufacturing location for many foreign corporations. By 2020, 25% of our survey respondents see India among the world’s leading three destinations for manufacturing.

The recent FDI data mirrors the emergence of manufacturing for FDI. In 2011, 78% of investment in terms of value went to the manufacturing sector in comparison to 14% for shared services. This is despite the fact that in terms of number of projects, 54% of FDI projects were related to services and 34% were manufacturing-led.

Underscoring the potential in the domestic market, 35% of the companies surveyed nominated India as an attractive destination for domestic manufacturing and 21% as an attractive base for manufacturing for the global market. When investing in manufacturing projects in India, investors tend to target the industrial machinery, equipment and tools (115 projects) and the automotive (76 projects) sectors.

About 65% of the respondents believe that an improvement in quality of logistics and transportation will accelerate India’s attractiveness as a destination for manufacturing.

What do investors seek in India? Our survey reveals the three most attractive aspects that draw foreign investment.

Our survey reveals the three most attractive aspects that draw foreign investment

Investors show strong faith in India
Investors show strong confidence in India to maintain this performance in the long term. Only 11% of the survey respondents see India being surpassed by more dynamic countries. Twenty-nine percent believe that India will continue to experience rapid growth in the coming years.

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