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India among top three choices for future investments, finds CII survey

The respondents cited market potential, skilled workforce, and political stability as the top three reasons to make India their favoured destination for investment.

India among top three choices for future investments, finds CII survey

Wednesday October 14, 2020 , 3 min Read

India has emerged as one of the top three choices for investments in the next two to three years, with more than two-thirds of respondents in a survey of multinational companies (MNCs) citing the country as their number one choice for future investments.

According to the FDI survey released on Tuesday by CII in association with EY, about half of the respondents see India as the top three economies or leading manufacturing destinations of the world by 2025.

Besides, 25 percent of the respondents, who represent non-Indian headquartered (HQ) MNCs, view India as the first choice for future investments.

The respondents cited market potential, skilled workforce and political stability as the top three reasons to make India their favoured destination. Other key factors which contribute to the attractiveness of India as an investment destination include cheap labour availability, policy reforms, and availability of raw materials.

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 fresh investments, CII stated on the survey's findings.

Non-Indian HQ MNCs opined that major investment in infrastructure and 100 smart cities as well as financial sector reforms will help in establishing India as a favourable destination for FDI, it said.

The survey revealed that over 80 percent of the respondents and 71 percent of non-Indian HQ respondents plan to make investments globally in the next 2-3 years.

About 30 percent of companies are planning to invest more than $500 million.

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"The CII-EY survey results strongly indicate that India will be the next global investment hotspot with a high proportion of MNCs placing it at the top of their investment agenda," CII Director General Chandrajit Banerjee said.

The recent major structural reforms, proactive government processes and the quick pickup in economic activity following Unlock measures are contributing to global investor interest," he added.

According to the survey, for 40 percent of non-Indian HQ companies, effective implementation of labour laws and FDI reforms are very significant, while 52 percent of Indian HQ companies believe corporate tax rate reduction would be the prime mover of future investments.

Infrastructure development, faster clearances, and proper implementation of improved labour laws and labour availability are the top three issues the companies want the government to focus on, followed by research and development (R&D) and innovation, and tax reforms, as per the survey.

In terms of trade policy reforms, investors would like to see a faster turnaround time for exports and imports, improved cargo handling, and trade facilitation measures to be in place.

The survey aims to gauge market sentiment amongst Indian as well as non-Indian MNCs.

It assesses India's competitiveness in terms of key parameters and analyses whether India is likely to be the "+1" jurisdiction for those seeking to relocate investments or making fresh investments.

Edited by Megha Reddy