Foreign direct investment in India is set to swell in coming years as investors stomach a lack of transparency, poor infrastructure and policy paralysis in their search for growth, professional services firm Ernst & Young (E&Y) said in a report.
Overseas investment in Asia's third-largest economy rose for the first time in three years in 2011, the report noted, as global investors put their faith in rising salaries, an expanding middle-class and a large and cheap labour force.
"The fundamentals that make India attractive to investors remain intact," Farokh T. Balsara, head of markets at Ernst & Young India, wrote in the report released on Sunday.
"However, our respondents continue to cite inadequate infrastructure and a lack of governance and transparency as major obstacles to investment."
Foreign direct investment (NYSE:FDI - NewsFDInull) in India rose 13 percent to $50.81 billion in the first 11 months of 2011 frhttp://www.blogger.com/img/blank.gifom a year earlier, while the total number of projects rose 25 percent to 864, the report said, citing data from the Financial Times' FDI Intelligence service.
For graphic on E&Y's India attractiveness survey see:
http://link.reuters.com/ruk36s
For graphic on India's GDP and industrial output see:
http://link.reuters.com/wys35s
Business confidence in India has declined over the past year, as economic growth slowed from an annual rate of 8.5 percent in 2010/11 to about 7 percent, and corruption and policy paralysis discouraged investment in big projects.
Just over half of chief executives in India are still "very confident" of revenue growth in the next 12 months, down from 88 percent a year ago, according to a recent survey by PricewaterhouseCoopers.
The majority of companies surveyed by E&Y were confident in the long-term prospects for investment in India, given sluggish growth in the United States and debt problems in Europe.
Almost 70 percent of 382 international companies surveyed said they plan to increase or maintain their operations in India, said the report, which was prepared for the World Economic Forum gathering in Davos, Switzerland.
Just 19 percent said they had no plans to enter the country or were preparing to withdraw.
Robust domestic demand, cost competitiveness and a cheap, ever-growing labour force were cited India's key benefits.
"Although the ongoing global uncertainty...(has) prompted some discomfort among global investors to make long-term commitments, India's inherent advantages and its proven resilience to counter macroeconomic challenges far outweigh these concerns," Balsara said.
Automakers led the way in investing in India last year, boosting spending by 46 percent, E&Y said.
Technology and life sciences companies were other big spenders, while spending by foreign companies on infrastructure and retail projects declined.
Ford Motor Co, which said this month it would spend $142 million on its Indian operations, and the Renault-Nissan alliance are among companies that are stepping up investment in India.
Other companies, particularly retailers, are not so sure.
Sweden's IKEA, the world's biggest furniture retailer, said this week that would be difficult to set up shop in India because of complex government sourcing rules announced this month.
Plans by companies such as Wal-Mart were set backhttp://www.blogger.com/img/blank.gif in December when the government, under pressure from political allies, abandoned a long-mooted policy to open up the supermarket sector to direct investment by foreign companies.
Source: Yahoo finance
About INgene blog : First ever Indian Youth trend Insights blog
About INgene : First ever Indian Youth trend Insights blog:
This blog explores the detailed characteristics of Young-India and explains the finer & crucial differences they have with their global peers. The blog also establishes the theory of “adopted differentiation” (Copyright Kaustav SG,2007) and how the Indian & Inglodian youth are using this as a tool to differentiate themselves from the “aam aadmi” (mass population of India) to establish their new found identity.
The term youth refers to persons who are no longer children and not yet adults. Used colloquially, however the term generally refers to a broader, more ambiguous field of reference- from the physically adolescent to those in their late twenties.
Though superficially the youth all over the world exhibits similar [degree of] attitude, [traits of] interests & [deliverance of] opinion but a detailed observation reveals the finer differential characteristics which are crucial and often ignored while targeting this group as a valued consumer base. India is one of the youngest countries in the world with 60% of its population less then 24 years of age and is charted as the most prospective destination for the retail investment in the A. T. Kearney’s Global Retail Opportunity Report, 2007. With the first ever non-socialistic generation’s thriving aspiration & new found money power combined with steadily growing GDP, bubbling IT industry and increasing list of confident young entrepreneurs, the scenario appears very lucrative for the global and local retailers to target the “Youngisthan” (young-India). But, the secret remains in the understanding of the finer AIOs of this generation. The Indian youth segment roughly estimates close to 250million (between the ages of fifteen and twenty-five) and can be broadly divided (socio-psychologically) into three categories: the Bharatiyas, the Indians & the Inglodians (copyright Kaustav SG 2008). The Bharatiyas estimating 67% of the young population lives in the rural (R1, R2 to R4 SEC) areas with least influence of globalization, high traditional values. They are least economically privileged, most family oriented Bollywood influenced generation. The Indians constitute 31.5% (A, B,C, D & E SEC) and have moderate global influence. They are well aware of the global trends but rooted to the Indian family values, customs and ethos. The Inglodians are basically the creamy layers (A1,A SEC) and marginal (1.5% or roughly three million) in number though they are strongly growing (70% growth rate). Inglodians are affluent and consume most of the trendy & luxury items. They are internet savvy & the believers of global-village (a place where there is no difference between east & west, developing & developed countries etc.), highly influenced by the western music, food, fashion & culture yet Indian at heart.
This blog explores the detailed characteristics of Young-India and explains the finer & crucial differences they have with their global peers. The blog also establishes the theory of “adopted differentiation” (Copyright Kaustav SG,2007) and how the Indian & Inglodian youth are using this as a tool to differentiate themselves from the “aam aadmi” (mass population of India) to establish their new found identity.
The term youth refers to persons who are no longer children and not yet adults. Used colloquially, however the term generally refers to a broader, more ambiguous field of reference- from the physically adolescent to those in their late twenties.
Though superficially the youth all over the world exhibits similar [degree of] attitude, [traits of] interests & [deliverance of] opinion but a detailed observation reveals the finer differential characteristics which are crucial and often ignored while targeting this group as a valued consumer base. India is one of the youngest countries in the world with 60% of its population less then 24 years of age and is charted as the most prospective destination for the retail investment in the A. T. Kearney’s Global Retail Opportunity Report, 2007. With the first ever non-socialistic generation’s thriving aspiration & new found money power combined with steadily growing GDP, bubbling IT industry and increasing list of confident young entrepreneurs, the scenario appears very lucrative for the global and local retailers to target the “Youngisthan” (young-India). But, the secret remains in the understanding of the finer AIOs of this generation. The Indian youth segment roughly estimates close to 250million (between the ages of fifteen and twenty-five) and can be broadly divided (socio-psychologically) into three categories: the Bharatiyas, the Indians & the Inglodians (copyright Kaustav SG 2008). The Bharatiyas estimating 67% of the young population lives in the rural (R1, R2 to R4 SEC) areas with least influence of globalization, high traditional values. They are least economically privileged, most family oriented Bollywood influenced generation. The Indians constitute 31.5% (A, B,C, D & E SEC) and have moderate global influence. They are well aware of the global trends but rooted to the Indian family values, customs and ethos. The Inglodians are basically the creamy layers (A1,A SEC) and marginal (1.5% or roughly three million) in number though they are strongly growing (70% growth rate). Inglodians are affluent and consume most of the trendy & luxury items. They are internet savvy & the believers of global-village (a place where there is no difference between east & west, developing & developed countries etc.), highly influenced by the western music, food, fashion & culture yet Indian at heart.
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