India has emerged as one of the top three choices for overseas investments in the next 2-3 years, according to the FDI survey released by the Confederation of Indian Industry (CII), in association with EY. The CII-EY FDI survey on the theme, ‘How can India step up its game?” has been brought out to gauge the market sentiment amongst the Indian as well as non-Indian companies. The survey was released in the presence of Dr Krishnamurthy Subramanian, Chief Economic Adviser, here today.
New Delhi, 12 October 2020: The CII-EY survey results strongly indicate that India will be the next global investment hotspot with a high proportion of sample MNCs placing it at the top of their investment agenda. The recent major structural reforms, proactive Government processes and the quick pickup in economic activity following Unlock measures are contributing to global investor interest,” said Mr Chandrajit Banerjee, Director General, CII.
According to the survey, for more than two-thirds of the MNC respondents, India is the number one choice for future investments. The survey shows that more than 80% of all the respondents and 71% of the non-Indian headquartered respondents plan to make investments globally in the next 2-3 years. About 30% of companies are planning to invest more than USD 500 million.
About 50% of respondents see India amongst the top three economies or leading manufacturing destinations of the world by 2025. The respondents have pinned down market potential, skilled workforce, and political stability as the top three reasons to make India their favoured destination.
To aid the economy, the government had recently announced an INR 20 trillion Aatmanirbhar Bharat package. 36% of respondents believe that the package will have a ‘somewhat significant’ impact in tackling the COVID-19 induced slowdown.
Recent reforms in the country such as corporate tax cuts, Ease of Doing Business measures, simplification of labour laws, FDI reforms, and focus on human capital have emerged as the top drivers for FDI.
For 40% of the non-Indian HQ companies, simplification of labour laws and FDI reforms are very significant, while 52% of the Indian HQ companies believe corporate tax rate reduction would be the prime mover of future FDI.
The survey has also brought out some key recommendations sought by the respondents. Infrastructure development, faster clearances, and proper implementation of the improved labour laws and labour availability are the top three issues that the companies want the government to focus on, followed by R&D and innovation, and tax reforms.
In terms of Trade Policy reforms, investors would like to see a faster turnaround time for value-added, improved cargo handling, and trade facilitation measures to be in place.
The survey assesses India’s competitiveness in terms of the high and low performing parameters and analyses whether India is likely to be the “+1” jurisdiction for those seeking to relocate investments or making fresh investments. It goes on to give constructive suggestions to policymakers for the policy push required to attract more investments in India.
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